BlogsMoney management tips and tricks that’ll change your life, and your bank balance too!

Money management tips and tricks that’ll change your life, and your bank balance too!

September 1, 2022

While earning money is a big task, what nobody tells you is that managing your finances is an even bigger task. Especially for people like you and me who earn  to enhance our lifestyle, it is very easy to get carried away with the trend of buying things off the rack or in our case, off the cart at one tap of the finger.

While technology has brought our material dream closer, it has managed to take a toll on our self-control. If you’re a Gen Z or millennial, you might be overwhelmed about what to do with your money. It’s not uncommon for people in our age range to live from one pay cheque to another with no real plan as to where that money should go.

After all, it’s perfectly normal when you’re just starting out in your career or trying to make ends meet while paying off student loans. We are aware of that feeling when you seem “broke’ in the middle of the month, so we’ve got you covered; let’s dive right into it!

Key areas to focus on that will give a significant balance to your money management:

We do not want to overpromise and under commit by revealing some life altering tricks that’ll double your money in 25 days because let’s be honest, that’s not possible 😵‍💫

Picture this: You are fresh out of college, landing your not-so-dream job with big visions in your eyes and a 5-year plan. Initially, you want to pay off your student loans, then make a career jump and maybe a few years down own your first car and/or travel internationally. How about we make this possible with a concrete plan?

  1. Learn how to segregate your priorities:

Our writers are not economics teachers, but they sure have learnt that rent is a need, and that fine dining reservation is a want. It’s time you learnt to segregate those and put money down for needs before splurging on the salary for your impulsive wants.

A simple yet crazy hack that worked for us is the 50/30/20 rule. The day you get your salary, segregate it in the following manner:

50% Needs -Rent, Groceries, Electricity, Transportation, etc.

30% Wants - Eating out, Trips, OTT & other digital subscriptions,  etc.

20% Investment - Emergency fund, Short term & Long term financial goals (Start small by investing in SIP)

Pro tip- Pay off loan EMIs and credit card bills timely to keep a good credit score.

  1. Save early as a habit. - Overspending is a habit we all unknowingly suffer from. Two techniques that could help are:

a. Keeping a chunk of money in cash helps if you mostly make online payments, which helps keep track of your expenses.

b. Banks have an option of autosave that deducts a certain amount at the beginning of the month keep your money out of your reach until necessary.

  1. Build an emergency fund- It is suggested to keep an emergency fund worth 3- 6 months of your daily in-out expenses for a rainy day. But since you are just starting out, it is suggested to focus primarily on the budget and see where you can start saving more money. Most banks give bank account bonuses to jumpstart your savings, check with yours. If not, you can set up a direct deposit.

Pro tip- Set up an auto-save for funds by opening a recurring FD or liquid mutual funds.

  1. Be disciplined in your SMART financial goals. - Set SMART* financial goals. Keep your risk profile, earnings and expenses in mind, while setting the goals. You can use a Vision Board for goal setting. Prioritize the goals based on urgency, importance and the investment you can make for each goal. Give yourself adequate time to accomplish your goals.

Pro tip- (*S- Specific, M- Measurable A- Achievable, R- Relevant, T- Time bound)

  1. Not making a budget, making impulsive purchases. - Record your expenses using a budgeting app or a budget sheet, assess your spending every Sunday and take corrective action wherever required.

    Make a copy of free monthly budgeting template here
  1. Revolving Credit- It is very easy to pass on this month’s liability to next month, but it is a habit you should avoid. Not paying the full credit card bill every month leaves you prone to various financial setbacks like a bad credit score. It can give you a financial cushion for emergencies and help you manage your money but know where to stop.

💡 As Nithin Kamath, the founder of Zerodha very recently highlighted in his tweet, “The worst times in my life have been when I owed money for spending it on things I didn't really need. In a world where everyone is trying to lend, the first lesson of personal finance is to borrow only when you are sure that it can earn a return more than the cost of money.”

To conclude, 90% of success can be boiled down to consistently doing the obvious thing for an uncommonly long period of time without convincing yourself that you’re smarter than you are. -Brainfood Newsletter

This means good habits are repeated daily hence managing money wisely is a skill that takes practice. If you’re a Gen Z or a millennial and you feel lost about what to do with your money, try some of these tips. You’ll feel more empowered as a money manager, and you’ll be less stressed about your finances. Keep in mind that everyone makes mistakes when learning how to manage their money. If you make a money mistake, don’t beat yourself up over it. Simply learn from it and move on.

Keywords: finance advice, money saved, money saving, Financial decisions, money management skill

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