Do you know of the ways to manage your money and avoid falling in debt ? Do you know the best ways to manage money successfully so that you don’t end up being bankrupt? It is only by earning huge chunks of salary or staying debt free throughout your life? Is it in the magical formula of investing successfully and hitting it big eventually on stock market? For the first timers, it is so difficult to get to the right answer, but when they will, it will be a bit of surprise for all of them!
Ways To Manage Your Money And Avoid Falling In Debt
Managing money in a successful manner is a primary factor if you want to be successful financially. Try thinking it this way. There are times to come across mid-level job oriented people, who saved a valid amount of money from their income, contributed dutifully to retirement and can retire well as millionaires. Then you have another group of people working high paid jobs with amazing bonuses, end up saving nil and have no way to enjoy a retired life. What’s the main difference? It is right in the money management business. The key towards successful result is not how much you earn but how you save it.
Try Managing Income From The Start
Successful money management always starts with income. Yes, it sounds rather simple but the success key is to spend less than what you earn. It becomes quite tempting to visit a shop or parlor just after the salary has been credited to your salary account, but that’s when you have to hold down your temptation a bit. If you can work this way, you can easily begin saving and investing money successfully. Here, a budget works more like lists of amounts and categories for money. It is more like your monthly guide and plan to help reach your goals.
- You need to set a particular amount you want to spend in any area. You have to prioritize spending and saving, depending on circumstances and goals and then you have to track spending.
- This categorization helps you to know the right time when you have to stop spending for that particular category. It will also help you to find that extra room of extra money to be allotted somewhere else, based on requirements of course.
- Once you have gained complete control over your budget, you can start managing money successfully. If you have taken any kind of loan and are in debt crisis now, you can head to check out debt consolidation reviews to get some help in this regard, as well.
You may like to read: How to Earn More Money in Career or Business
Time For Managing Debt
The easiest way to manage debt is by eliminating as much of it as you can. The first step for that is to stop using credit cards and then work to pay them off. Some debts are quite hard to avoid like buying car or student loan. For example, sometimes you might have to buy a car even when you can’t actually afford it. During such instances, it will be a beneficial deal to shop around multiple dealers to get the best deals on affordable cars with promising interest rates. It helps you to pay off the debt rather quickly.
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The same rule is applicable for student loans as well. You can always head start with refinancing goals for better interest rates. Or, if you want, you can try to pay some more towards loan every month to cover the principle balance and not just the interest only.
There is another unavoidable area of debt available, which is purchasing a house. Well, that does not mean it is a bad form of investment. Always try to catch up with a place you can readily afford and which is located in a good neighborhood. It will help you appreciate its value more, and you might end up getting more when you plan to resale it. You should not go for a mortgage payment, which is over 30% of your income.
Start Managing Your Investments And Savings
It is always stated that you must pay yourself first before applying to building investment and savings portfolio. Primarily, there are two forms of savings. One is termed as liquid savings, and another term is investments.
- Let’s hit it off with investment first. Investing is a great way to save some bucks as it helps you to earn some money later and increase wealth. If you have very little knowledge about investing ad stock market, always head towards a financial adviser to help you with your investments and management.
- Well, mutual funds can help you diversify portfolio naturally. However, you need to focus on those with reasonable fees and a good form of return rate.
- Always remember to diversify portfolio. It means you should never have a maximum investment under one stock only.
- Furthermore, it is mandatory to invest in various forms of investment types. You should not want all investments to be in any particular area like tech because that section might degrade anytime if the market drops.
- Investments will prove to be a challenge during emergency and you might have to force out some cash if market is down when you need it. During that time, liquid saving accounts come to the rescue.
- The savings account under your name should have emergency fund and needs to be accessible easily during emergency. You need to access savings in a fair manner, but you might have to earn a possible interest rate too.
There are some people with the tendency to store it in financial institution’s saving accounts. Then you have another bunch of people using money market fund, CS or savings bond. This form of money cannot be stated as an investment, but it is more like protection money during emergencies. It is more like an insurance policy.
Follow The Norms Now
The money management services will vary, once you get married. Then you have a spouse and a family to look for as well. So, here you need to be extra careful with money management plans. If the points prove to be difficult, experts are down to offer some help.
Article contributed by: Isabella Rossellini
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