How to take control of your money?

By Shineson

Deputy Manager, SBI How to take control of your money?

(This essay is only for people who live on salary income. Also, if you could save over 25% of your monthly income, then you are better off not reading this article)

July 2020 is a month of transition and transformation for me, both on personal and professional levels. I had cut down my emotional dependence and so far I have been faring well. I had an unexpected role change. I had intensified reading again. I had jotted notes that could become stories, novels, etc.

But the most important thing that I had done is I just found out where my money is going month after month. I had been in this job for nearly five years. However, my net worth is negative, with liabilities overtaking the assets. I am single, with no family commitments. Some of my colleagues have already saved a few lakhs. Here I am, nearing my thirties, with no considerable savings to speak of.

So, I did some detective work, to find out where all the money is going. There are some apps available for tracking expenses, which I had used before, but they couldn’t distinguish expenditure in a nuanced, customised way.

Further, there were multiple channels of spending for me. Also, I am using Amazon Pay, Paytm, Ola Money, Ola Money Postpaid, Simpl, Lazy Pay, Two credit cards and a debit card, which makes app tracking more difficult.

I started using the humble spreadsheet to track my expenses. Sometimes I recorded the expenses by the end of the day and sometimes once in three, four days. It worked. By the end of the month, I had a comprehensive picture of my spends.

To my shock and dismay, I had realised that the interest I pay on my credit cards is Rs.7500/- pm, which is a considerable amount compared to my monthly salary. It shouldn’t really be a surprise to me if I had been prudent as I have utilized both my credit cards to the brim. After all spends, less than 10% of my salary was with me, which I had to use to pay for credit card, if I had any hope of reducing the interest outgo.

The first step in identifying the flow of money is over and now I know where my ship is leaking. Without this simple technique, I might not have been aware of the flow of money from my wallet and would have drowned myself in considerable unsustainable debt.

In the forthcoming series, we may dwell upon how to take control of various heads of expenses.

SOURCE: https://medium.com/@Shineson_tweets/buckle-up-1-19883bddcffa

What Is Personal Finance?

Is it day to day management of your money or something more?

Personal finance is the management of one’s finances to cater to your immediate needs and provide for your future needs. It is an answer to important questions, the impact of which has far reaching consequences in the future.

It is an answer to key questions like -

• How much to spend?

• How much to invest?

• Where to spend?

• Where to invest?

• How much risk should you take?

• Are you doing the right things to meet your financial goals?

Personal finance has nothing to do with anything outside your own finances. It has got nothing to do with the economy or your friends. It has got everything to do with how you save, invest, earn, spend, allocate and insure.

In personal finance and in life, I believe that you must align your present self with your future self. If you aspire to be wealthy in the future, you must align your actions today to ensure that you do end up wealthy.

It cannot be reiterated enough that planning your finances is not just a one-time procedure which will then take care of itself. You need to constantly assess your finances and modify the plan based on the circumstances. It’s about not being rigid. It’s about being mindful.

Source: contrarian Living

Earn, Save, Spend and Repeat!

PANDEMIC has taught us a great lesson. Especially the way we have been dealing our personal finance.

You would be wondering why should we worry about earnings, personal finance and investing when we haven't started earning yet.

I'll tell you why!

Few of your parents or your support system for all these years who have been helping you to reach your dreams would have lost their income partially or fully. Now you're in need of money for buying essential items for your competitive exams. That's where emergency fund and recurrent savings habit will lend you a hand.

Difference between savings and Investments

The biggest difference between saving andinvesting is the level of risk taken. Saving typically allows you to earn a lower return but with virtually no risk. In contrast, investing allows you to earn a higher return, but you take on the risk of loss in order to do so.

Savings or investment starts with setting up the goals. Short term to long term goals. Ex. For your small purchases, emergency medical expenses etc..