Managing your future as well as your finance needs certain techniques and orderliness. Managing your money properly will lead to a safer tomorrow for you and your family. There are certain money management principles which we need to be aware of. In this article we will discuss about the same.
Principles and techniques related to money management are timeless and tested by many. Hence we can aptly say that such basic techniques can be applied by anyone- from a working individual to a house wife. But for anyone a time-bound and good-start is needed, which means one should invest first in ones own education. It will help you to be organized and will make avenues for you to earn more. For educating yourself at the start of your career you can always take student loans which are far better and manageable than credit cards.
The first principle for money management is to set a goal for yourself and your family. A goal will give you all possible reasons why you should start saving and investing for your future. These goals will then help you to make action plans with targets. Each target set by you should be specific, measurable, realistic and should be based on the real time. Second principle is to understand the importance of time, especially if you are young. If you start investing at a young age, you will save more whenever you plan to retire. The concept of compound interest will work in your favor.
Third principle is to spend less when ever you can to save more. For this you can start maintaining a monthly income and expense plan and try to keep yourself within the expense limits. Fourth principle is to open a contingency or emergency account or fund for meeting any sudden needs. Make sure this account is insured (for example FDIC). You can go for 401k plans with employer contributions. In short use your own salary to pay for your account first. Fifth principle is to take insurance to cover any losses of heavy magnitude which under normal circumstances you would not be able to pay. Sixth and the final principle is to avoid taking debts whenever possible (pay cash), and if you have to take one, repay it on top priority.