Saving money and spending money smartly is the strongest way to control your financial position and making your future safe. Its not about deprivation. It’s the way to incur your own money gently and understanding spending money according to your values and goals.
1.
Budgeting & Management of Expenditure.
·
Evaluate
your income and expenditure (You can take help from Mint, YNAB or even more Excel).
·
You should
apply rule of 50/30.
·
50 % household needs like housing,
food and bills etc).
·
30 % Needs (Like Entertainment,
Lifestyle).
·
20% Savings and debt payment.
·
You should review recurring
expenditure. Cancel unnecessary subscriptions etc for better results.
2.
Management of Debts.
- First of all pay unavoidable
high interests like Credit Cards and Payday loans).
- Think about snowball method (Pay small debts at first.
- Avoid taking new debts unless it is inevitable like
education, home and business).
3.
Saving & Building an Emergency Fund
- You must build an emergency fund for meeting at least 6
months essential and unavoidable expenses).
- Automatic Savings. Keep some direct deposits into a
Saving account.
- Keep emergency funds in a high return saving account in which you have a quick access.
-
4.
Investment
- Start investment early, in this connection compound
growth is powerful and quick.
- You should diversify with stocks, bonds, mutual
funds, ETFs, or real estate business.
- Use retirement accounts according to your country
economic conditions.
- Try to follow long term investment. Do not give time to
the market.
- Try to keep costs low. Avoid high-fee funds.
5.
Smart Lifestyle Choices
·
Live within your available
resources. Upgrade your lifestyle slower than your income grows.
·
Avoid to purchase low quality nondurable
goods. Purchase cheap and durable goods.
·
Try to avoid impulse purchases, in
this connection use 24 hours before buying anything.
6.
Risk Management and Protection.
·
If depends rely on you, if possible
get right insurance like health, disability, home/renter.
·
Keep your important documents
organized and protected.
·
Think about Estate planning (will,
power of attorney).
7.
Building Long Term Wealth.
·
Increase you income like side
hustles, enhance your training skills or career growth.
·
Try to reinvest your profits rather
than spending.
·
Concentrate on assets generating
income like real estate, dividend stocks businesses).
8. Regular Review
- Review finances monthly—budget, savings, debt,
investments.
- Set short-term (1 year), medium-term (5 years), and
long-term (10+ years) goals.
- Adjust strategies as life changes (marriage, kids, job
change, retirement).
8. Regular Review Your monthly
Finance.
- Review your finances monthly like budget, savings,
debt, investments.
