MANAGING MONEY BETTER: 5 SIMPLE STEPS
Learning to manage your money better is actually learning to manage your emotions better.
One of the biggest reasons for having money in your bank account is that you have the power in your hands to take care of yourself and your family in hard times. You don’t have to rely on others for financial help. Remember, most of the people will behave as though they are your best friends and will give you the impression that they will stand with you in hard times. This relationship may only last till the time you reach out to them and ask for financial help during an emergency. Why take the risk? Instead, have enough money in your account to stand up and face life challenges with confidence.
In this blog, we are not going to discuss how to earn more and more money. Instead what we will be focusing on is how we can use simple money management tips and our wisdom to make better use of what we have earned or what we earn as a salary.
The biggest challenge individuals face is that they are skeptical to learn or talk about money.
They believe that managing money is something that comes naturally to them. They need not think before spending the money that they have.
Some people even go to the extent of convincing themselves that - I believe in living in the present. If I can’t spend money right now on what I desire then what is the use of earning money?
Now, I do not want to justify or support anyone's answer because I believe there can’t be one correct answer. It all depends on person to person.
The result of spending money on something may make you feel good in the moment but we usually close our eyes towards what is yet to come.
Ultimately the results of managing or mismanaging money (spending without thinking) will be felt only after three to five years. This happens because slowly and steadily the expenses and bills pile up. Every month we start receiving messages and emails regarding the amount that we owe to the credit card companies or to the bank from whom we have borrowed money.
These things happen in the future which people very conveniently forget by telling themselves - Who has seen the future? Everything will be fine in the future as I will take care of things when it comes around.
So, what do they do?
Unknowingly individuals get into this trap called:
I Can’t Stop Spending Money
The first thing they think when they see money in their hands or in their bank account is - How do I spend this money?
Their mind starts reasoning out why they need a new mobile phone or a new gadget or anything for that matter.
This behavior of the individual leads to earning twenty-five thousand rupees per month and receiving credit card bills for thirty thousand rupees month after month.
Once the bills start to haunt them either at the end of each month or at the beginning of each month and they start panicking is when they start to frantically look for answers to a few of the below questions:
How to pay off my credit card bills?
How to stop overspending?
How to control spending habits?
Unfortunately, these big financial issues don’t go away so easily. The debt that you have accumulated over maybe 5 to 10 years how do you expect it to disappear overnight? There is no magical formula or a technique that will bring all your debts to zero in a jiffy.
It’s never too late to start learning how to control our spending habits and become money-wise so that we can enjoy our wealth for a long, long time without living under the pressure of paying the credit card bills first.
So join me on this journey of understanding how to effectively manage money and become financially strong.
1. Give yourself time, maybe 3 to 4 days, on even a week before you actually go out and buy that expensive thing.
Suppose I already have a good smartphone but a new model has come and I am having this urge to go and buy that latest model.
This is what I do.
I go to the showroom and look at that new model of smartphone. I hold it in my hand and check out its features. I spend about 15 -20 minutes with that smartphone.
But then I don’t buy it then and there. I take that experience of holding the new smartphone with me. In my mind I say - Okay, maybe I will come back after a few days and buy that new mobile.
I then go about my daily routine. In the back of my mind, I am still thinking about buying that new smartphone. In the meanwhile, I am using the smartphone that I already have.
As I give time to myself I start realizing - Hey the smartphone that I have right now is good enough. It is serving my purpose. Do I really want to buy that new smartphone?
You may not believe, after a week or so I start losing my infatuation with that new smartphone. The new model that I thought was necessary for me starts losing its shine in my eyes and I once again start falling in love with my old smartphone.
Finally, a day comes when I convince myself - I don’t think I need that new smartphone. Let me use this old smartphone of mine for at least one more year then I will think of buying a new model.
In this entire scenario what I did was I distanced myself from the product that I wanted to buy.
I did not obsess over the phone day in and day out. I did not visit the showroom every day to influence myself to buy that phone.
When you distance yourself from anything that you think you deeply desire, you actually start to realize whether that thing is actually important or unimportant in your life. It starts to dawn on you if you really require that thing or you can live without it also.
This is a BIG REALIZATION!
Once you realize that you can live without that new gadget you will feel a sense of inner relief and satisfaction. The idea or desire of buying that new smartphone will evaporate and you will have saved a big amount of your salary or credit card amount.
Now the second point that I want to discuss with you may not be digested well by many people.
But this is one way you can have major control of your money and also keep your hard-earned money with yourself.
2. Stop visiting shopping malls every now and then.
Once you visit a mall, whether you believe it or not, a bare minimum of thousand rupees is spent within hours. If you don’t take control you will be back home having spent anywhere between five thousand to ten thousand rupees.
The shopping malls are designed to seduce you to buy more. You can never do enough shopping at a mall.
Now, I am not against mall culture. I also visit malls once in a while. I love the energy of the people visiting the mall. You get to see lots of new things that hit the market. But I make sure that when I am in the mall it’s me who decides whether I have to buy something or not. The products on display cannot instigate me to buy them.
That is why I keep on saying if you want your money to stay with you manage your emotional desire to own things. Just because it’s on sale doesn’t mean that you have to buy it.
3. Don’t manage your expenses instead manage your investments.
Many financial advisors give suggestions to manage your expenses. Now, I am not a financial advisor. I am also learning the ropes of becoming wise when it comes to managing money.
I am sharing with you what works for me. For me oftentimes it becomes difficult to manage the expenses. Sometimes emergency or festive occasions come when you have to spend more. That time you may not be able to manage your expenses or you may not be able to put a limit to your expenses. It is all about sharing happiness with your family or helping them out.
Instead what I do is that I invest. I invest in Mutual Funds. These investments are made on autopilot. I don’t have to every month sit and cut cheques for my investment. It happens automatically using a Systematic Investment Plan or SIP as it is popularly known.
I am in love with investing money. I don’t invest the money I can afford or that I save. I deliberately take out money to spend. Even if I can push out 500 or 1000 rupees per month in any form of investment I just get started.
Automatically my money gets deducted from my bank account on a particular day of the month.
Once the cycle starts I get along with my work and let the SIP start working for me. After two or three years when I randomly check my investment, I am pleasantly surprised that over the years my investments have grown into a substantial amount.
Of course, I don’t gamble and only invest in selected Mutual Funds under the guidance of a Financial Advisor and my own research. I pick up investments that I know are doing well in the market and in the long run, give good returns. This way I don’t have to be worried about whether my money is safe or not.
In conclusion on this point, I would like to say is that be conscious of your expenses every month and at the same time keep on increasing your investment how so ever small amount it is. The one thing you can focus on is that it should be a monthly investment and not a one-time lump-some investment.
4. Pay rise doesn’t mean you have got the license to spend more
When most of the people get a raise in their salary they go out and buy more expensive products. They somehow believe that just because they have got a raise they can afford to take up more debt. As a result, their financial status remains the same as it was before the raise.
If we start thinking of raise in salary as a means to start investing more and making our money work for us, it will totally transform our personal financial health.
5. Don’t get seduced by easy money that get-rich-quick schemes offer. Nobody became rich overnight.
Nothing can beat working hard and long to become successful. Go ahead and dream big but never believe that your dreams will become reality through some shortcut method that people are raving about. Instead, focus on developing new skills that are in demand in the market and that are in sync with the domain you work in.
Fall in love with working hard and doing what needs to be done to improve your capability to earn more. Becoming financially strong is like farming. It takes time and care.
If you really want to manage your money and have surplus cash in the long term be willing to start small. Most people are not willing to start small because they think that a small amount cannot make any difference to their current financial status. It is not right. Even five hundred rupees invested systematically every month can become a big amount if you give it enough years to grow.
So, these were some of the ways of handling your money and making sure you keep a major part of what you earn.
Even if you are a beginner or a young adult I trust that the simple money management tips that I have discussed above will give you some insights to start becoming smart at managing your money for your betterment.
HOPE WITH ENOUGH PRACTICE YOU WILL GET GOOD WITH MONEY
In Conclusion
If we want to live a hassle-free life when it comes to money matters then we as individuals must understand the difference between living a life and living a lifestyle.
People who spend most of their money buying expensive stuff without thinking whether they need it or not are actually trying hard to live a high-flyer super-rich social media lifestyle. They want to show off their expensive toys on social media just to capture more likes and get more followers.
Knowingly or unknowingly these people get caught in a web of the millionaire lifestyle. This web is so strong that it doesn’t allow them to come out of it. They keep on spending more and more money without ever thinking about the logical aftermath of spending all their money on such expensive articles.
So, instead of living an internet lifestyle that doesn’t match our finances, we need to focus on living a good life. Living a good decent life minus all those hi-tech gadgets is not about sacrificing or suppressing your desires. It’s a choice that we all can make.
Becoming financially strong and stable means letting go of the urge to make that expensive purchase today so that you can use that money for something bigger tomorrow. Even if you don’t get the opportunity to do something bigger at least you will have the money if something big comes in the future. Thinking that if something big comes in the future I will somehow arrange for the money, for now, let me just spend the money is not a piece of good advice you should give yourself.
In the end, I would like to conclude by saying let go of the urge of instant gratification and fall in love with delayed gratification. Delayed gratification is much more satisfying than instant gratification.
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