Money management is the most valuable skill that a person must acquire in his/her life. According to me, a person must acquire this skill at least in their teenage. Yes, this post is meant for students and their parents. In this post mainly I am aiming to share 10 awesome money management tips with you. This post will help you to achieve financial freedom earlier. So keep reading…
Create budget
Creating a budget is a simple first step in money management. Budgeting means deciding where to spend and how to reduce money flow in non-useful things. It is the logical alignment of revenue and expenses. It will help you to identify your income and expenses and get time to make an effective plan.
How to Create a budget?
Create a budget NOW 🤫 You want to take a chart (A3) and create a table having 2 columns, the first column contains your income or pocket money, and the next column contains Your expense. Write your income and expenses of the month in the table. Then total your table, which side is high. Most probably your expenses cover your income. Now you want to choose the best money management ratio. My personal preference is to choose a 50:30:20 ratio. According to the ratio you want to divide your income. If you get 100$ in a month, you want to divide it on a 50:30:20 ratio. Accordingly, 50% of your income goes to cover your needs and expenses. 30% - to your entertainment and 20% goes to your savings and investment. You can also create your own ratio of money management. If you want, I will create an income divider tool.
Analyse spending in the previous month
Analyzing the spending of the previous month will help to understand how to reduce spending this month. From this, you can find useless spending and useful spending.
Open a saving account
A saving-bank account is much necessary for all ages. Because If you start savings earlier that will help you to create a saving habit. In my opinion, a student should keep a saving account until he has completed the age of 18. Also, don't withdraw the amount until you are 18 years. This amount will be used for your future needs.
Start investment earlier
Investment is an interesting field in the minds of teenagers. From my viewpoint, investment is the process of investing in something for future benefits. I am not explaining the investment of time or any other stuff. I am saying about long-term investment in the stock market. Investment in the stock market is an awesome investment method. For that, you want to create a Demat account with any stock market brokers. But You want to do research for finding the best stock market brokers according to their brokerage, customer support, etc. If you invest 1000$ in your 18th for at least 6 years in a powerful company's equity shares. Then, there is a chance to increase the capital that you invested. For that, you want to analyze the company's previous year's balance sheet and other documents. Remember, investing in the stock market is always risky. Create a reserve fund Creating and maintaining a reserve fund for unexpected risk is a good money management skill. At least you want to keep 1000$ as reserve money. This money is used for unpredictable financial needs. You want to save 3% of your income as Reserve money. You can save this money in your saving bank account.
Be debt free
Having a lot of debt is an example of poor money management. You should be debt free. Because having debts will reduce interest on working. If you have debts, you will automatically work robotically to pay off the debt. So, you would be forced for sacrificing your entertainment. Try to find a part-time job How part-time job will help in money management? This is a confusing question. If you want to be financially literate, you should have a piece of practical knowledge in that field. A part-time job is a useful tool that will make us financially literate. You can able to know how hard is to make money. So automatically your unneeded spending will go downwards. What is the best part-time job for students? There are several types of part-time jobs available today. We can classify part-time jobs into two: Online and Offline. Both are perfect for students to generate a small amount of income. Vlogging, Blogging, Affiliate marketing, Freelancing, etc are some examples of online jobs. The best part-time job is a wide area. Explaining all the Part time jobs is not possible in this post. If you want a dedicated post on it, comment below.
Always try to evaluate others' spending and saving
I always try to analyze others' spending and conduct research to find out whether it is good or not. Majorly I conducted research on my two brothers. One is a Chartered Accountant and the other is a businessman. According to my research, I have observed that both are working hard in their field. The CA bro is always spending his money on food, clothes, and other utilities. He never cares about money management. On the other hand, the business bro tries to make more out of his capital. He always thinks 10 times before doing an action. So, you want to analyze others spending and saving.
Control over using of credit card
According to my experience, credit card is a trap. Nowadays, there are so many online institutions providing creation of credit card facilities. They did not ask for any supporting documents. So, credit card is the new version of village money lending. The institution mainly aims to take the advance of overspending from you. So use credit cards effectively… Take research for all two months Financial research is an interesting area. In all two months, I analyze my spending and take research to find the financial falls of my past months. This tip helps me to take new financial decisions. You can try this tip to analyze your spending.
Conclusion
Hoping this post will be helpful to you. This post is fully created for beginners and students. I have created this post according to my life experiences. If you have any doubts or suggestions related to this post, don't forget to ask them in the comment box. Anyway, thank you for reading, (A post from fluratech.com by the owners)
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