Smart ways of cutting corners – Manage your finances and your investments properly | Personal Finance Views

Thursday, November 23, 2017

Smart ways of cutting corners – Manage your finances and your investments properly

Though it is true that majority of us spend most of our time earning money, yet it is vital to note that without knowing the art of spending your dollars along with saving judiciously and investing prudently, we might not be able to develop a successful and worthy future for ourselves. Money plays an all-encompassing role in our lives. On one hand, it is itself a tool for creating wealth that you might require in future and on the other hand, it serves as an instrument for transaction for satiating your current needs. While financial planning allows people to achieve their goals in life by exact management of their finances, it can easily be observed that being able to manage your dollars wisely could be the very first step towards attaining a bigger goal.

Manage your finances

Make a budget that suits all financial situations

By making a budget for your family which includes regular expenses and one-time bigger expenses, discretionary and necessary expenses, you can never be out of money and can also save enough to achieve the goals you've set for your life. A person who follows a budget will also have enough control over his finances and will also be in a favorable position to tackle cash flow and make the required provisions for meeting other goals. This can be easily done as budget is something which clearly reflects our aspirations and habits.

Divide your expenses into different categories

The best way to opt for is to divide the expenses into different categories so that you can keep a track of it. Here are the divisions:
  • Non-discretionary and regular expenses: The non-discretionary and regular expenses include laundry, phone, fuel, domestic help, entertainment and eating out expenses. All such expenses are totally unavoidable and it is also possible to exercise a limit on them so that they don’t soar out of control. If you can make purchases on bulk with your relatives and friends, you can even get good discounts.
  • Discretionary and irregular expenses: This category includes expenses like buying furniture, purchasing valuable items like gold, consumer durables and going on a vacation. All such expenses cost a lot and hence they should be planned in an intelligent manner. Before buying furniture, you should do a price-value analysis and also check the quality of the furniture that you buy. Calculate the cost-effectiveness of EMIs and other installments if they offer you one.
  • Try and get the best deal: When it comes to saving money, negotiation plays a vital role and consumers should never hesitate to ask for the best complimentary services. For example, we negotiate the tariff of a hotel room only after asking the complimentary options for the meals. Consumers even enjoy the rights to ask for discount on the MRP which is already printed on the products.
It is only when you can manage your money properly that you can manage your investments in the right way. 

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