With as much as 97 per cent of the world population struggling with the financial realities they face on a day-to-day basis, it’s very important for everyone to know how to manage their money to maintain goals on track and crises at bay.
Simple adjustments in how they earn, save and spend money, and how they invest their savings can change their financial realities over the years. The cumulative effect can kick in if this is consistently done over a long period of time.
Saving and putting aside amounts for contingencies, and planning a long term goal, then breaking it down into smaller SMART milestones that are measurable can be key in not only maintaining one’s goals on track and keeping critical situations at bay, but also can be an effective tool to create growth and build wealth over a period of time.
“Set up a Security Bucket where you can keep aside a fixed amount or proportion of your inflows each month. This is best retained in cash or in a simple Bank account. Target to hit your 6 months living costs here,” said Dhanashree Bhatkal, Founder, A Money Tree, adding, “Use the Compound effect to your advantage. One rupee saved a day and invested to compound can actually gain you much more, than waiting to have a larger amount to invest.”
According to Bhatkal, following steps would help you in managing your money well:
Make investment a part of your discipline
Out of every inflow, keep aside 1 and 2, before you spend. This can look like a big task, until you build a habit around it. It might need you to cut down unnecessary expenses, push your earnings upwards and become a better negotiator.
Generate passive income
Upskill yourself, find additional sources of income to pursue, set up at least one channel of passive income.
Maintain liquidity
Remember Wealth is not in high value assets that bring a liquidity crunch, it is in the expendable money that you have to live a life you desire. Consider financial restructuring to find the right balance between your net worth and your income.