It is integral to learn how to use your time as well as energy to earn more money. Another thing that is as important is to spend money well. Money plays a dual role – it is a financial instrument to create wealth for your future as well as a tool to use to satisfy your present needs.
Financial planning ensures that you meet your important life goals by way of money management. Learn to manage your expenses by ensuring you receive the right value for every rupee that you will spend. This also entails choosing the correct payment method such as cash, cheques, credit card or easy monthly instalments.
Also, when you have expensive choices in mind, it is inevitable that planning and budgeting ahead of time creates a significant difference to the decisions that need to be made.
Budget
Create a budget for your family. This will include money that you spend on regular needs along with some discretionary spending. A well-prepared budget always leaves you with more control of your finances. Budgets form a huge section of personal finance and by that very virtue, there’s no blanket guideline – everyone needs a unique budget. Focus on your habits and goals to create a personalized budget. Experience and distinct financial goals (short and long-term) should dictate your budget.
Expense Division
Your regular expenses should include grocery expenses; bills for electricity, telephone, domestic help, and rent; occasionally eating in restaurants and watching movies. Most of these expenses are unavoidable for all kinds of people. Consider making bulk purchases of essentials with friends and family as this will bring the costs down of non-discretionary expenses. You must use cash and debit card for these expenses.
Discretionary expenses would be buying expensive buys like furniture, gold, or taking a long holiday. These things take a considerable amount of money, so they need good planning. Look at the right time to buy these things, as some months in the year are cheaper. Look for zero-interest EMIs for these purchases.
Use credit card only to make payments and not to make money. Please pay back your credit card bill before the due date unless you want to deal with high interest rates. Do not make any impulsive decisions just because there is heavy sale or discount for something you do not need.
Best Deals
Negotiation is key to saving money. Never stop yourself from requesting a complimentary service on your purchase. An example would be to ask for complimentary breakfast when you book a hotel room or an airport pickup. Even online shopping can help you in finding best deals. Save on brokerage costs by looking for rental houses on online forums.
Luxuries
Everyone spends on luxuries. However, do not make the mistake of buying an ultra-luxury car on EMIs. When you cannot afford such a heavy expense, do not chain yourself to years of paying loans just for the thrill of driving a Mercedes. Spend instead on education because it is an investment in yourself.
People do buy art and antiques. These qualify as alternative investments. They are high-risk investments with a probability of high returns.
You can buy yourself a Louis Vuitton bag or a Jimmy Choo shoe, if you ensure you spend wisely most of the time. Allow yourself such treats so that it boosts your ego and helps you to diligently continue your financial management game. Also, a Louis Vuitton bag or a Jimmy Choo shoe would usually be once-in-a-lifetime kind of thing; so indulge in them without batting an eyelid but only if you had planned for the same and it really means a lot to you. If you save, invest and spend well, there is no one stopping you from buying the best that you want. After all, that is why you earn and invest, right?
