Simple Money Management Hacks

By krishnarakesh | April 15, 2016

Simple Money Management Hacks

Design Credits: Rakesh Mohan

Does your salary vanish into thin air in no time? Can’t tell an SIP from a Recurring Deposit? Are you one of those people who doesn’t understand money management and leaves things to the professionals? Don’t fret – here are a few money management hacks to help you become a pro!

Planning

Don’t let your finances manage you; it should be the other way around. Take charge of the situation by concocting the perfect plan to manage your money. Most times, a personal finance plan can be like a New Year resolution – it becomes hard to conform to the rules as time goes by. Be practical when you create a short-term or long-term plan. Give leeway for your personal interests – food, clothes, travel, etc. Just take care not to be too extravagant!

Tip: All of us have smartphones these days. So, download a budget manager or money management Mobile App to track your expenses.

Savings

Yes, Savings. Saving for the future is a mammoth task since unwanted surprises pop up to drain your wallet, time and again. However, it is very important to have your own little ‘reserve’ to fall back on during hard times or even to just sit back and while away your retirement years in peace.

Tip: Place a tight rein on your expenses. If you don’t really want that prancing-cat knickknack atop your mantelpiece, don’t buy it. Money you save on extravagant impulse buys and sales can amount to quite a bit. Think about depositing this money in a secure investment plan such as a Fixed Deposit scheme, Savings Scheme, Recurring Deposit etc.

Tax Monitoring

If you aren’t careful, you could lose a lot of hard-earned income on income tax deductions. Invest wisely in tax-saving schemes such as ULIPs, Public Provident Fund, Equity Saving Schemes, Fixed Deposits and so on. You can get an exemption from income tax and also benefit from other features offered by these schemes.

Tip: Provide accurate income-tax proofs. Credit is not a villain – A Home Loan taken in your name can give you a good percentage of tax exemption. Tuition fees, rent etc. are other expenses based on which you can save the money deducted from your income as tax. This money can then be reinvested to help you build your finances over time.

Adopting a Diversification Strategy

Don’t put all your eggs in one basket. Invest the funds available to you in various schemes rather than all in one place. This helps to reduce any risk involved and increases the probability for success. For example, if you invest in gold, you face the risk of gold rates falling in the future. If you invest only in a low-risk option like a Fixed Deposit, the interest rate is lower compared to a Mutual Fund investment.

Tip: Don’t fall for that shady money-multiplier plan; research well before you invest in any scheme. Adopt a fool-proof investment strategy and watch out for loopholes in the terms and conditions offered in an investment scheme. The low-risk investment options are Fixed Deposits, Savings Schemes, Recurring Deposits, gold investment, etc. High-risk investment options include shares and bonds, company Fixed Deposits and so on. Always keep in mind that the higher the risk, the higher is the profit earned on the investment, and the lower the risk, the lower is the profit earned on the investment. Strive for a balance between these factors when you invest.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.

Leave a Reply

Your email address will not be published.