Do you spend too much on shopping? Do you usually have an empty purse even before the end of the month? Do you find it difficult to save money? If you have answered ‘yes’ to any of these questions, then you are probably having problems managing your money. In this article, we discuss how you could best manage your money.

Make a budget

The mantra for managing your money effectively is to have a budget. This is the best way for you to plan your finances. Make a list of all the money you earn from various sources – salary, commission, interest, etc. Then make a complete list of your expenses. Utility bills, grocery, mortgage/rent, loan repayment, insurance, fuel expenses, and taxes. Make sure your list is comprehensive.

After you deduct expenses from income, the money left over should be divided into two categories ‘Spending on wants’ and ‘Savings’. You can divide it 60:40. The money on wants can be for movies, vacations, eating out and other such non-essential expenses. The remaining money needs to be saved for the future.

Ideally, you should be left with 30-50% of your income after deducting all your expenses. If it is much lesser, then you need to work out how you can increase your income or reduce expenses.

Stick to the budget

Once you make a budget stick to it. Ensure that every month you review how much you have actually earned and how much you have actually spent. If you find you are deviating from your budget, you need to cut down on non-essential expenses.

Track your spending

Make use of an app or just a sheet of paper to track your spending. Do this daily and you will find you are more effective when it comes to sticking to your budget. This also makes you conscious when you spend money. It is a good way to stop spending too much.

Save for the future

Make sure you save enough money for the future. You need money for your children’s education. You may need money for a new car, a home and of course for your retirement. Make sure the money you save is enough for your future expenses. Also ensure that you save money in different investment options – pension plans, mutual funds, bonds, and savings deposits. Track your savings frequently so you know if you are really making money for the future or not.

Debt management

If you have outstanding debts, your top priority should be to clear all your debts. The sooner you clear your debts, the easier it is for you to save more for the future. Being debt-free helps you get a good credit score, which would be handy if you need a loan in the future. Also, make sure you use your credit cards wisely. Avoid the temptation of swiping your card frequently. Make sure you stick to your budget at all times.

Involve the family

Managing money is not an individual effort it involves the entire family. Make sure your budget is for your whole family and everyone should do their bit. Involving the family helps in tracking expenses easily. Family members can also pool together ideas to increase income and reduce expenses.

Discipline is the key

Be disciplined. Stick to your budget and don’t get tempted to spend money on things you don’t need. This is the secret of being able to manage your money effectively.