One needs to continually remind himself or herself the financial goals one has set for themselves in the medium to long term. This can only happen if one exercise the discipline to stick to one’s budget regularly. This is an attribute that does not happen overnight and requires patience and self-discipline to stick to it.
It is important to pay attention to the budget and stick to it no matter how hard it is to resist certain desires. Reminding oneself of the larger goal helps in curbing impulsive buying.
A Budget that works
One needs to spend a certain amount on themselves no matter how small it is. Making an unrealistic budget with no allocation for one’s personal need will collapse in the long run. Not able to spend on oneself will leave a feeling of frustration and the budget will be discontinued in no time. Even if there is debt or little income, one needs to set aside something for oneself otherwise the budgetary structure instead of supporting the emotional wellbeing will, on the contrary, go against it.
Avoid Debts
Nowadays there is broad dissemination of customer information among Banks and Finance companies. Individuals are offered loans and credit cards based on their credit score. A person should only take loans if they are necessary. Even if one qualifies for loans based on their income and credit score, one should be confident of paying them on time. The equated monthly installments become a fixed monthly obligation for a certain number of years. One needs to decide whether it is worth taking an additional exposure especially when other monthly commitments are more important.
Using credit cards prudently is also an essential aspect of money management. It is important to understand that revolving credit involves a very high credit cost, and therefore it is best used only for purchases within the budget and just for using the free credit period.
Withdrawing cash on a credit card is suicidal as the interest starts calculating from day one till the time ones pay. If you can control your spending urge on credit cards and avoid carrying forward the overdue balance, then you have mastered a significant area in money management.
Beating inflation
Apart from savings and avoiding debt traps, one needs to invest in those instruments that provide the best returns. Over a period of time, it has been seen that investing in stocks and mutual funds gives the best returns and often beats inflation. All said and done there is no right answer as to which are the best stocks or mutual funds to invest in. Identifying and selecting the best stocks would entail taking the help of a financial advisor to ensure the right entry and exit strategies in select stocks and mutual funds.
In conclusion, one can always take the help of financial advisors who can be specialists in specific sectors but they can always help you invest your money to reach your financial goals. They could be retirement, savings for higher education, minimizing your tax burden, budgeting, debt reduction, or generating income.
