How to master money management skills for financial sanity?

By Charlie Brown

Earning enough money is essential to lead a comfortable life. However, it is possible that at times expenses may outdo income and therefore one has to keep a tab on their expenditure. Insufficient income, shortage of disposable money and cash flow mismatch lead to enormous stress in an individual’s life.

Everyone wants a healthy financial condition. The point, however, is to recognize money as a tool. Money means different thing to different people. Some may see them as freedom, for others, it may be a cause of despair. For some, it can mean power or significance or high social standing in the society as well.

Life can be more straightforward if one has good money management skills. Some of these skills can be best mastered from taking the help of a financial planner.

Budget your expense

This is a basic requirement when keeping track of your income and expenses. While this may be boring for a lot of people, it is crucial if one is terrible in handling money. It only takes a few hours to list out all the expenses by using a spreadsheet or an app.

Budgeting makes sure that one lives within one’s means. It also helps one to understand their spending pattern and how it helps in the decision-making process in rationalizing certain avoidable expenses.

Track your spending

Small unbudgeted spending adds up to quite a sizable amount, and by the time one realizes it, the monthly budget has already gone haywire. Making only the budget and not adhering to it would make the entire exercise useless. One needs to update regularly as one pays bills and spends on other expenses.

By doing this one can understand which spending category one has overspent- for example, monthly entertainment expense. If one has already consumed the entire budgeted amount for the month quite early, it makes sense to abstain from spending more in that category, thus keeping the overall budget intact. Regular tracking helps to keep the tab on the cash flow and allows an individual to plan accordingly.

Analyze your spending

Recording your transactions under common heads each month helps in analyzing the spending trends over a period of time. One can see how much one is spending in different areas and this will help in deciding which Areas to spend more and where to cut back. In case one is not saving enough or not saving at all, this exercise will help in taking out some money from each category and putting it under forced savings.

Plan in advance

While making one;s monthly budget, it is natural to think only about those expenses which is immediate. While certain daily or monthly expenses are fixed in nature, there are some other expenses which come quarterly or half yearly or annually. Different types of insurance and taxes can fall into these categories. Saving a small amount every month towards these items may help in addressing them when it shows up for payment without causing stress on your balance or forcing to take debt to service them.

In conclusion, no matter how much money one has unless there is fiscal discipline, he or she may not achieve their goals.