4 tips to simplify your money management
Many people struggle with keeping a track of their incomes and expenses. Though there are technology-enabled platforms that may make the task easy, people still find it difficult to manage money in an efficient way.
1. Consolidate accounts
One of the crucial steps to do is to consolidate your accounts. Many people have more than two brokers for different stuff like they have one or two broker account(s) for buying and selling stocks, one for buying bonds or NCDs, etc. It becomes cumbersome to keep track of all the accounts and its activities. So, it is always better to tone down from more than two accounts to one account or at max two broker accounts. This will make tracking easy. Also, CDSL and NSDL provide consolidated account statements which list all the transactions together, then may it be stocks or mutual funds or bonds.
2. Keep a check on your debt
Today money is easily available with the help of credit cards and personal loans, but then you are exposed to higher debt in no time. It is better not to delay repayment of such loans. This doesn’t apply to home loans as the interest rates are the least in the market and also you have tax benefits attached to it. However, if you are having consumer debts, it's better to repay it as soon as possible as it may eat a lot of your income if you carry them longer. Consumer debts must be used only in case of emergencies.
3. Having a financial plan
Having a financial plan in place and setting the right kind of financial goals is very important. While managing your money you should have a clear idea as to where it is coming from and where it is going and how much you are left with. This will help you understand whether you are splurging or spending on things that you really need. This will help you achieve maximum investible surplus which you can invest in various asset classes based on your risk profile and goal tenure. This will help you to achieve various financial goals and hopefully, you won’t rely on loans.
4. Automate your payments and investments
Automating your payments and investments would help you to minimize human intervention and help you to manage money even better as here you can reduce human error such as error of negligence. So, automate your maximum payments such as utility bills, EMIs, etc. and also automate your investments with the help of SIPs and STPs as this will make sure that you are not just spending but saving as well. It is always better to make auto payments and investments in the first week of the month when you are probably getting your salary. This will help you to understand how much you are left with after making fixed payments and investments to manage your other expenses.