Money Management: Top 10 Financial Tips
If you aspire to have a comfortable future, managing your finances is very important. If you’re not good with managing your money, you need to stop right here and define clear goals for financial management to have the future you desire. Here are some useful financial tips which will help to start managing your Wealth better.
1. Know Your Worth and Spend Less Than You Earn
It may seem to be a very simple thing, but quite a lot of people are not paid according to their ability and skill level. This happens because they keep working in an organization for years and get comfortable with the environment. You need to get the know-how of the market and how much people are earning with your comparable level of experience and skills. Constantly keep evaluating your skills, task completion rate, contribution, and productivity. Look for opportunities both inside and outside of the company. Being underpaid even a little can have a huge collective impact over the course of your employment tenure.
You need to spend less than your total income no matter how much you earn for better money management. You need to slightly downgrade your standard of living so that you don’t spend everything you earn. Human beings are creatures of habit, so you won’t even notice the difference caused by these little sacrifices with time. Rather, you’ll thank yourself later for making these small sacrifices when you’ll be enjoying your financial freedom.
2. Stick to a Budget
If you wish to have a prosperous financial future, you need to make a budget and spend within its limits. By doing so, you’ll be able to track your spending habits better and define your clear saving goals. It will also help you to identify your unnecessary expenses and cut them down. Thus, you’ll be able to define clear goals of financial management.
3. Pay off Credit Card Debt
Clear your credit card bills and try not to use them until it’s an essential item you’re purchasing. The problem with using plastic money is that it is very convenient and doesn’t feel like real money. When the things you want are just a swipe away, you end up purchasing more than what you need. Besides, with all your good intentions to pay the bills timely, you may get late and end up paying for more than you have purchased.
4. Contribute to a Retirement Plan
If your employer offers a provident fund or 401(k) plan, you should consider registering for it. In these plans, employers deduct a small amount of your salary and double it and give it back to you at the end of your employment tenure. If your employer doesn’t offer this retirement plan then, go for IRA.
This financial tip can prove to be very helpful and contribute to your overall financial success in the future.
5. Have a Savings Plan
If you spend everything you earn, then you’ve made no progress towards your successful financial future. If you attend to your other financial requirements before putting aside some savings, you seriously need to reconsider your priorities. At least put 10% of your income in a separate saving account before you start spending for other requirements. Better have your bank automatically deduct some percentage of your income and transfer it to your saving account every month.
Following a strict but manageable saving plan is an essential ingredient to the recipe for better wealth management.
6. Look for Potential Investment Opportunities
Saving without a purpose is itself a disaster. As Robert Kiyosaki suggests in his book Rich Dad Poor Dad that “Savers are Losers.” He relates the reasons for this conviction of his with three major stock market crashes since 2000. And in all those crashes, common people who had saved up their money had to bear most of the loss. In addition to this, money is constantly devaluating because of a steady inflation trend in the USD. Besides, you may miss some really good investment opportunities if you’re not looking. A good investment can give you a real boost if you’re looking to get ahead in terms of finance.
7. Maximize Your Employment Benefits
Keep full track of all the benefits your employer is offering so that you can fully avail them in case of a requirement. Benefits like 401(k), Provident fund, Medical, or dental insurance can come in handy in case of requirement or otherwise. Besides, spending on these things out of your pocket can prove to be a very costly affair. Therefore keep full track of these benefits and utilize them to the fullest.
8. Review Your Insurance Coverages
No one thinks of dying or having a serious accident, even the people who die or get in an accident. But an accident may occur with you or a loved one anytime, therefore buying life and disability insurance is important. Because, as a result of such an unfortunate incident, you don’t want your bank account to take a hit out of it or your dependents getting poor as a result.
But it would help if you were careful that you should not end up paying too much for it. Therefore you need to carefully review your insurance coverage plans and make amendments if you feel the need for them.
9. Update Your Will
The latest figures suggest that only 32% of Americans have a will. Whatever’s your worth, If you have any dependents, you need to write a will. If your scenario is not that complex, you can even write a will by yourself through software like WillMaker. To have better wealth management and protect your dependents, you should seriously consider writing a will.
10. Keep Organized Record of Expenses
It is really important to keep an organized record of your expenses. If you are not maintaining a record of your spending, then, most likely, you’re not fully availing of the income tax rebates legally available to you. A convenient way to do this is by using several freely available apps in Andriod and Apple stores for expense management.
Your Check List
If you’re not already following at least 6 of the above-mentioned financial tips, then your need to improve your money management system. If you’re looking for financial success in the future, then you need to make alignments today. Start by picking one area first and then plan for following all 10 tips in time.
Following are the Top 10 financial tips:
- Know Your Worth and Spend Less Than You Earn
- Stick to a Budget
- Pay off Credit Card Debt
- Contribute to a Retirement Plan
- Have a Savings Plan
- Look for Potential Investment Opportunities
- Maximize Your Employment Benefits
- Review Your Insurance Coverages
- Update Your Will
- Keep Organized Record of Expenses
50-20-30 rule is a famous technique for money management. According to which you need to divide your income into three portions which are as follows:
- 50% of your salary goes to essentials like bills, rents, etc.
- You should put 20% of your salary into your savings account
- You can spend 30% of your salary as per your liking
The Three Golden Rules of money management are:
- Spend less than your income.
- Always plan and save for the future.
- Look for opportunities to grow your money.