Money management 101

By BankBazaar | December 18, 2015

Money Management 101

You’re fresh out of college and landed your first job. You’ve officially entered the world of personal finance where you earn the money you spend. Exciting as it all is, managing your money is the most important thing you must begin practising when you get your first paycheck.

Even if you’re one of those people who’s had Daddy pay all your bills and Mommy buy all your stuff for you, you can still get ahead. Here are a few simple tips to putting your best financial foot forward.

Record all your income and expenses and calculate how much money you will have left after paying off all your bills. The expenses may include household bills, rent and living costs, financial products like loans or Credit Cards, travel and for leisure.

Keep a spending diary. It will help you have a closer look on your expenses and will tell you what expenses you can cut down on. Look for online deals or retail deals on groceries and toiletries. Make use of coupons and use the rewards points accumulated on your cards as much as you can for necessary items.

Pay off your Credit Cards and loans, especially the ones that feature high rates of interest. The sooner you get debt out of your life the better it will be. Always pay your debts on time so that your Credit Score is not compromised. If you have missed on any of the debt payments, talk to your lenders and sort out a way to deal with them better so that you do not miss paying your debts on time.

Set a saving goal for yourself. The first step is to have emergency money that you will require to fall back on. It could be that you lose your job or your car breaks  down or you fall sick often. It is important to stash emergency cash that is easily accessible. Try to keep aside at least three months’ worth of your expenses. Once you have done this, start having saving goals such as saving for a holiday without having to worry about the bills to take care of when you are back from the holiday. Start saving for a car without having to take a loan out for it or save for a house on which you can afford the downpayment without worrying about rent.

Save regularly. The easiest way to do that is to put away a certain amount into your savings account every month. It is best if you give a standing order so that even if you forget to transfer the money, the bank will do it for you. If you get a pay rise, start saving more. Make sure you are getting a good rate of interest on your savings. Slowly start investing in stocks and property.

Review and understand your credit report. It is important to know your credit rating. A good credit rating gets you higher interest on your savings and lower rates of interest on loans you take. It will also give you a heads up if you have a low rating and can take necessary steps to improve your score.

Enrol for medical and health cards. These cards will ease the burden of doctor fees and other day-to-day procedures. Some cards will also give you certain discounts if you buy medicines at outlets mentioned by them.

Utilise retirement plans offered to you by your company. Under these plans, a portion of your salary will be transferred to your pension account. It is never too early to start saving for retirement and the earlier you start, the easier it is to build sizeable savings. This also helps in case you transition to a new career or lose your job unexpectedly.

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