When the salary comes to the bank account, it is perfect to see it. The feeling of your hard-earned money in your bank account is something special. However, many people, especially those whose first job has recently been engaged, do not know how to manage their salary. You can plan your retirement if you save your money on time and invest it in good means, and achieve your financial goals. This article has some smart tips that can help you manage your salary better...
1. First savings, later expenses: You have to completely change the idea of spending your money. Instead of saving what is left after spending, you should aim to save first and then spend what is left. This may seem a little absurd because most people don't understand the concept of saving in advance. However, it is very simple. All you have to do is track your monthly expenses and then plan your expenses according to the next month. Once you get an idea of your essential expenses, you can already save the remaining amount whenever your salary comes in.
2. Emergency Fund Savings: When you are saving money, you need to divide it into two parts. A part of your savings will go towards the emergency fund, while the other should be for financial goals. Life is unpredictable, and you never know how much money you need immediately. So, at that time, the emergency fund will be your job. To build your emergency fund, calculate your monthly expenses, including utility bills, house rentals, groceries, phone bills, and other expenses. Now, multiply this number with 6 as your emergency fund should have an amount that is sufficient to take care of your personal expenses for at least six months.
3. Keep an eye on your expenses: One can argue that they want to save but how to save if the expenditure is too high. This is where a proper spending plan comes in. Payment of your debts, rent of the house, etc., should be at the top of the list. Sometimes people reduce their earnings, and that is why they spend more than they should spend. It's a vicious circle that doesn't stop until you make smart financial decisions. Make a list of your fixed expenses such as rent, electricity charges, loan EMIs, etc. that you pay every month. This enables you to maintain adequate balance in your bank account so that the said expenditure is automatically debited from the bank account every month.
4. Bonuses, allowances: Sometimes, you get bonuses or special allowances. Whenever such a situation arises, where you get monetary bonuses or benefits, it is essential for you not to be careless and spend on unnecessary goods. While you don't have to completely stop yourself from spending that money, you have to make sure to put yourself back a bit and understand that everything is happening with your agreeable, and you are not aware of it.
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Image credit: economictimes