These are some elementary steps you can incorporate into your routine to get better with money. Like any new activity, this too will take time for you to master but the important thing is that if you stick to it.
Not all of us are born financially ingenious. Money management is a skill we pick up with experience and experiments. Therefore, it is only natural for most of us to sometimes make mistakes. But in due course, it becomes easier when you grasp the rudiments of proper money management.
If you have had ups and downs in your money matters, it is nothing to be ashamed of. If you wish to inculcate healthy money habits here are some of the steps to go about.
To begin with, if you are aware of your detrimental money habits, that is step one conquered. Now, the most important step is to forgive yourself and believe that you can get back on the right track. It may sound simple, but these are powerful first steps. Once you’ve resolved to take better care of your money, here’s more.
These are habits that are detrimental to your financial health; and here are a few tips to counter them:
Habit # 1 – Not having a budget in place – leaves you clueless about your money
It is very important for everyone to have a budget in place. A budget is akin to a GPS that accurately guides you to your destination. Without a budget, you are bound to feel a little lost about your finances. The good news though is that you can create a budget at any point in your financial journey. It is rather easy. Simply put, list down your income and expenses and understand where your money is being spent and what are the expenses that are draining your account. This way, you will be mindful of your spending.
Budgeting is a seemingly plain practice but the absence of the same can sometimes lead to a financial catastrophe.
Habit # 2 – Letting your debts pile up
We all encounter debt at some point in our lives, and there is absolutely nothing wrong with it. In fact, taking on debt sometimes is also a part of people’s financial planning for bigger expenses. What is not alright is not keeping a track of your debt and letting it build up to a mammoth sum.
If you have taken on debt, be mindful of the interest and the timelines. Make it a priority to clear your dues prior to splurging on non-essentials. This will not only keep your interest under control and get your debt cleared at the earliest but also help build a good practice of prioritizing.
Habit # 3 – Not paying yourself first
It may sound unreasonable when asked if you pay yourself, given your income is yours to have. But one good rule to follow is to pay yourself before you allocate money for various expenditures. If you aren’t in the habit of paying yourself, you may want to start each salary day by stacking aside a certain percentage to put away either as an investment or saving before you undergo any spending.
Small sums saved consistently can lead to a substantial corpus over time. And when you wish to reward or splurge on yourself on special occasions, this will be your well-deserved treat. While this may seem unnecessary, it will ensure you have peace of mind knowing your money has your back.
Habit # 4 – Not having an Emergency Fund
Quite similar to paying yourself, an emergency fund is something you build by allocating small sums regularly; the idea is to have a provisional fund that can cover you for at least 6 months to a year. You may feel like you don’t require such a provision, but it is crucial to have an emergency plan. This will take care of you in case of unexpected expenses or emergencies and keep you from digging into your savings or taking on unplanned debt.
Habit # 5 – Not putting your money to work
If you are not in the habit of investing, you might want to change that. Contrary to popular belief, investing isn’t just for the wealthy, it is for everyone. You don’t require large capital to start investing. You can start with as little as Rs 500 every month. The thing about investing is that it will build wealth for you over time and also teach you a thing or two about being smart with money. You will learn discipline, patience and above all, be rewarded for your efforts.
These are some elementary steps you can incorporate into your routine to get better with money. Like any new activity, this too will take time for you to master but the important thing is that if you stick to it and make small changes daily, you will see the results over time.
by, Nityanand Sharma, Co-Founder and CEO, Simpl