Financial stability is an essential part of our hopes and dreams – it can be in the form of short or long-term savings, deposit for rent, buying a car or home or accessing credit and much more. It is important to build financial resilience and strong capabilities. However, access to information regarding financial matters still remains a challenge.
This year, the Reserve Bank of India observed Financial Literacy Week in February to propagate financial education across the country. It is key to understand how one should borrow responsibly from formal institutions and ensure timely payments are made. The Week’s theme in 2021 is ‘Credit Discipline and Credit from Formal Institutions’.
To take the first step towards becoming ‘financially literate’, digital platform CRED has put together a 9-step guide on how one can ace money management.
Create a budget
The first step of creating a budget might sound very boring but is actually the most critical task that must be done regularly. This helps us in provisioning for anticipated expenses and helps us plan our lifestyle better. This first step can help you pay off debts at the right time and additionally save for future expenses. Budgeting is basically synonymous to bringing balance in your life.
Keep a track of your expenses
Many people usually tend to miss out on keeping a track of their regular expenses on any given month. To combat that, one must try to begin with tracking all types of expenses be it by cash or by credit cards. This will help you to see a better picture and help you manage and compare expenses going forward.
Social pressure and money management
We have all been in a dilemma of pleasing our friends and peers or being responsible with money. More often than not, we give in to social pressure and spend our hard-earned money on things that are not budgeted for. A simple way of handling this is to review your expenses every day and IF there is surplus – then reward yourself with a day out with friends or buy something from your wishlist.
Save! Save! Save!
One of things that the pandemic taught us is to expect the unexpected and people who planned their finance better were able to manage the sudden disruption smoothly. For a healthy personal finance plan, it is very important to save for the ‘rainy day’. You will always thank yourself for this!
Understand your credit score
A credit score is an important asset that determines how creditworthy you are thus increasing your chances of borrowing financial benefits in the future. A good score would be about 700-750. This can be obtained by keeping the credit card balances low, paying off your debt on time and regularly paying off your bills. A good credit score also allows you access to platforms like CRED that offer perks and rewards to its members based on their financial habits.
Educate yourself with money matters
Staying well-informed comes really handy in terms of financial matters. In today’s world, it is really important to trust nobody but yourself as this is your money. Being able to effectively manage your own money just makes life easier.
Prioritize your debt repayment
In the process of gaining positive financial success, debt repayment should become one’s priority. Any kind of debt be it credit card loans, student loans, home loan, or even repaying your friend who helped you when you needed some money needs to be eased off in order to reduce the financial stress and approach towards a proper management of money.
Use coupons and cashbacks
To save every cent possible, try to avail discount coupons and cashbacks while shopping online or making any kind of purchase. This might feel burdensome to hunt for coupons available but this practice over time will pay off with good rewards, savings and maybe another purchase.
Reviewing your financial goals now and again
Start off with setting financial goals be it big enough as buying a house or as basic as purchasing clothes. Now that you have your goals in place, keep updating and reviewing them now and again and make required changes in your financial proceedings.
These basic recommendations are never too late to be picked on to live a financially comfortable life now and in later stages of your life. If functioned smartly money management is not difficult and can be achieved with a constant awareness towards obtaining a healthy financial status.