The money you save today will be the saviour for you tomorrow. We all spend majority of a day to earn money. But if we don’t manage the money we earn properly, all our efforts will be in vain. In most cases, people realize their inefficiency only when they have to spend on a special expense on the last few days of the month. So let’s assess some practical ways to manage your financial resources in an effective way so you will be able to be ready for future problems.
You need to understand the difference between the “NEEDS” and “WANTS”
Needs are considered as the primary requirements of a human being. They are the basic picture of the day to day consumer habits. For example, food, clothes, sanitary requirements, educational requirements, communicational requirements, etc. And the wants are considered as the ways in which a consumer fulfills his or her need. For example, for food, a consumer can consume a burger, pizza, hot dog, or any other food.
So, if you consider why it’s important to differentiate needs from wants is to fulfill the needs first in a way that matches the spending ability of a person. This way should become the habit of a person. A person should always question himself about the reason behind his expenditure. For instance, when people try to follow social trends like fancy clothing, Apple iPhone, or anything a person tries to do live up to their social trends, the first and foremost question they should ask is to why do you spend an extra amount? Is it really necessary for you? Isn’t the money you spend is a wastage? You need to question. Question from yourself. You need to create a living that will make your life easier, not to impress anyone. This living should be created around the future. Even if you want to live a luxurious life, that life should be designed only after making yourself financially strong.
List down your expenses
This can be known as the most convenient way to manage and save money. When you start a day or the month, you can list down all possible expenses easily. And for that, you can even use a small book or a mobile app. It enables yourself to manage your monthly expenditure based on your monthly income. For instance, you can estimate your electricity bill, water bill, mobile bill, monthly household expense, maintenance expenses of home or vehicle, and create a budgeted list. From which you can identify whether your monthly expenses exceed your monthly income and savings and take necessary cost-cutting steps to bring down the expenditure to suit the income.
Also, a daily list of expenses will help you in many ways. Especially when you leave home to get many businesses done at once. For example, it can be an instance when you are leaving to purchase any special product or a service or to purchase requirements for a special occasion at home, so if you have a list with you, you can prevent impulse buying and avoid unnecessary expenses or also you can take just the money that will be enough to purchase the essentials.
However, say it a daily list or a monthly list; it will prevent you from spending on unnecessary expenses and enables you to manage money and save.
Save and spend rather spend and save
It is not a myth that everyone living in the current era has to, and it is a must to save. It should be part of life. But are you a person who is planning to save after incurring all the expenses? Then by now, you should be aware that you are failing to save a target amount at the given period of time. Also, you must be realizing that on unexpected illness, special occasions, or a crisis situation, you may be helpless as you are not reaching your monthly goals. Also, what if you are in a situation to stop your current job or the business you are doing? And what will be the backup or support you until you start over? So isn’t it necessary to do proper planning and management of your financial resources? Not only for the present life but also for the future?
So in this way, first understand the importance of fixing a target amount to be saved. And as soon as you receive the monthly salary or the income for the month, segregate the amount and save it in a bank account. Or the easiest way is if your salary is been credited to an account, create a standing order and transfer the money to the savings account. Because nevertheless, it will take some time for you to practice the habit.
Invest the money you saved
In managing one’s financial resources, the most important decision one has to make is about the investment. But these investment decisions should never curtail your daily essential expenses or interfere with your day to day living and routine. This simply means you need to understand that the money you are going to invest should be allocated out of the money you decided to save. Also, it is so crucial that you direct your money on investment only after having a thorough study and knowledge on investment opportunities.
However, there are numerous investment opportunities. For instance, one can start a fixed deposit. But it is not considered as a feasible opportunity that will bring a good return. Because it brings low return as it possesses low risk, but share market investment, investment in bonds, investment in non-current assets lands and buildings or even participating in an existing business as a partner are considered as famous yet more feasible investment opportunities which also carry higher risk in relative to the fixed deposit. And if these investment opportunities meet the expectations, this will get added to your monthly income of which you can even consider re-investment or to cover up your expenses or save for the future.
So, it is crystal clear that if an individual understands the importance of their financial resource management, they can have a systematic and relatively risk-free life with greater confidence in facing uncertain situations in the future. So, from today, start the habit of saving and be a financially stable individual regardless of what type of job you do.