Earning money and management of earned money are two different key aspects of successful person. If you are young and energetic, then you should learn the best skills to make money that are available in the market and consequently after becoming master of money-making skills, you must own the prowess of best skills to manage money with proper investment and utilization.
We are hereby sharing some basic ideas to earn money with proper exertion of life time benefits from advanced investment methods. Let’s get started.
IN THIS ARTICLE
List of Skills to Manage Money
1. Create a monthly budget and follow it
Always try to maintain a fixed budget for each month depending upon your income and expenditure. Creating a fixed plan for your money can help you to maintain a balance lifestyle with proper money management. You can follow the 50/30/20 rule to manage your monthly plan. It suggests you should expense 50% of your income for your needs, like food, house rent, medical expenses, school or college fees etc. While other 30% of your income should be utilized for your desirable wants, such as shopping, trips, casual parties and other such occasions. And the last 20% of your income must be saved for your future use by depositing it into banks or in any other investment options you prefer.
2. Set your own financial goal
Don’t follow other’s dream. Just create your own goal to achieve according to your budget. Social Media influencers can distract your mind and try to divert your mind from the fixed plan and budget, but you must avoid seeing such content in internet.
3. Create an emergency fund
As a human being, we can’t ignore emergency situations. So, you should build an emergency fund by extracting some of your extra income. Ideally, you should have a minimum amount stored in emergency fund that is sufficient for living at least 5 months without income. For example, if your monthly income is currently 30,000 rupees, then you must have 1,50,000 rupees in your emergency fund, so that you can easily overcome from any emergency situation even if your income source stopped working for 5 or 6 months.
You don’t need to keep this money in savings account so that your emotions and lifestyle can’t dominate your mind and boost your mind to use it in other expenses. You have the options to invest in FD with higher interest rate without taking any risk. Remember, this fund is only to be used during any problem.
4. Avoid giving expensive gifts to your lover or friend at early age
When you are at the peak point of your career progression, or you don’t have any income source, you should not expense higher price for gifts. Just to impress a person, you should not forget your financial condition. Try to convince your lover or friend with a gift that is suitable according to your budget. Rather you can use the extra expenses on yourself in learning skills and increase your income; then you can provide them a better gift in next year as birthday gift or something else. If your lover or friend is intelligent enough, then he/she also supports your understanding.
5. Avoid high interest debt
During early period of career progression, you should stay away from taking loans as far possible. One of the primary drawbacks of loans is the imposition of greater interest, significantly increasing the overall cost. Loan repayments often consume a significant portion of monthly budgets, limiting financial flexibility. The dependency on credit can create a perpetual cycle of debt one after another. So, we recommend you not to take any loan other than in unavoidable circumstances.
Also keep this in your mind that you should not get trapped by some shady loan providing companies in order to get instant loan approval.
6. Avoid depreciating assets
Depreciating assets are those assets whose value decreases just after it’s purchase such as vehicles, electronic gadgets, furniture etc. You need not buy any depreciating asset until it becomes necessary to buy for you. For example, many people buy I phones by considering a price of minimum 50-60 thousand rupees, just to show off their fancy lifestyle. Even many of them prefers to buy such assets on EMIs, which are not clever decisions at all.
7. Avoid lifestyle inflation
Lifestyle inflation is the phenomenon characterized by a gradual rise in an individual’s expenditures with an increase in income. When individuals encounter salary hikes, bonuses, or other financial gains, there is a common tendency to adapt spending patterns to match the elevated income. This often results in an uptick in various lifestyle-related expenses. If you are intelligent enough, then you must try to balance this kind of inflation.
Let me assume that your salary was 50,000 rupees per month and you were consistently saving 10,000 rupees from it every month. After getting promotion, your salary is now 80,000 rupees and accordingly your savings will be 16,000 rupees as per 50/30/20 rule. But you change your lifestyle like that of a celebrity, so that you could not save as much as the previous amount. In that case you might be in trouble in future.
8. Try to negotiate during buying
Do you feel uneasy while asking for discounts in shops? Don’t be shy or seems like a billionaire. Always try to convince the shopkeepers to sell them their products at lower price that they can offer. You can save a lot money by following this idea during your life span.
9. Invest in your health
I think you don’t need any explanation to invest in your health. Just keep in your mind that ‘health is wealth’ and eat healthy foods and always focus in maintaining hygiene. Investing money for your health is not a waste but a credit of energy for future life. Investing in health is a crucial step towards building a robust and prosperous life. Allocating money to health facilities enhances our lifeline. By prioritizing health, you can foster a more productive and fit body that benefits you till your life is active. It would be a more clever decision for you rather than wasting your money in modern lifestyle.
10. Invest in your hobby
There is no age limit to master a skill and fulfilling a hobby. Now a days people don’t have time to accomplish their hobbies as they are becoming confused within the boundary of internet. Don’t hesitate to invest money for your hobby, as it can be helpful for personal satisfaction, mental health, creativity boost etc.
11. Protect your family by buying term insurance
Term insurance is a fundamental component of family financial planning, offering a cost-effective means to guarantee the financial security of loved ones in unforeseen circumstances. This type of insurance serves as a practical solution for multiple aspects, including income replacement, debt management, and overall financial stability for the family. Its importance lies in providing a safety net that ensures the family’s well-being and helps them navigate the challenges associated with unexpected events. This proactive approach to financial protection underscores the significance of term insurance in securing the financial future of the family.
12. Protect your assets legally
Clear your property documents at the time of purchasing. Without valid and legal papers, you should not buy any assets by taking future risk. Many people prefer to buy properties when they get it at minimum price without considering the legal procedures of buying properties. If by chance in future, any risk factor appears, then you have to lose all of your investment by making such mistakes. So, be aware while buying any type of assets from anywhere.
Related: 5 Good Assets To Invest In 2024: Secret Ways To Become Rich With Asset Investment
13. Stay informed about economic trends
We normally don’t bother about the economic situation of our country as a general citizen. But you should keep this in mind that overall economic scenario of a country also impacts the financial condition of each and every person of the nation. You don’t need to mastery over finance, but you have the faith to gather basic information about economic situation of the country. Try to read news and articles about economy in leisure time and consider it one of the most crucial skills to manage money.
14. Set up your retirement plan at earlier
No doubt, one day you have to retire. Focus on retirement plan from today so that don’t need to be a dependent upon your children. It should be clear in your mind that the cost of living is always growing upward and at the time of your retirement you may expect a world that is too much busy and people won’t have even an hour for friends and family. So be practical and set up your retirement plan by investing a fixed percentage of your income.
15. Learn from financial mistakes
You are young and energetic, thus financial mistakes are common to you. The most important lesson is to learn something from your own mistakes and avoid such mistakes in next time. Experiencing financial misstep can make you financially valiant.
Financial lessons are crucial for empowering individuals to make informed decisions. Understanding investment basics, retirement planning, and credit management are vital for long-term financial masterstroke. Financial education fosters consumer awareness, risk management, and economic understanding. Ultimately, these lessons lay the foundation for building wealth and achieving financial independence, contributing to individual empowerment and stability. Therefore, we displayed these important money management lessons with simple and easy analysis for better understanding of personal finance.
