A Simplified Approach to Disciplined Money Management

A Simplified Approach to Disciplined Money Management

Money:  A terrible terrible master but an excellent servant!!

In this ever-changing mysterious world, the one common dream every Amar Akbar Anthony Seeta or Geeta shares is to be successful and have loads of money so that all of the misery will be gone one day.

Therefore, everyone gets into the rat race of strategically planning and meticulously executing every step in their adolescence to fulfill the dream of generating a huge amount of wealth.

But it works only for a few. Among them also only a small number of people can stay Rich for long who enjoy the present, secure the future, and erase past miseries. So, what's wrong with the others, where did they take a bad turn after all?

Let me cut the goose chase here.

The only quality the Richie rich have mastered is the skill of Money management aka Personal financing.

Personal financing is not rocket science, though. It's simply getting to know your money better. Anything you Earn, Spend, Save, and Invest forms your personal finance universe. But sadly, due to the unavailability of formal education on this topic, it seems to be an enigma at first. However, one can study and master their money by simply investing a little of one's time in money management skill learning.

Just like the five fingers of your hand, your circumstances concerning patterns of income, wealth, consumption needs, wants, taxes, etc., are considerably much different than those of others. So financial advice appropriate for one person may not apply to others. Hence, you have to carefully understand your Finance universe and then plan according to your appetite.

There are no fixed thumb rules for Personal finance that will suit everyone, but the sooner you understand your money, the better you can manage it.  Below is a list of certain habits you can inculcate to bolster your Personal Finances.

1. Understand your Wants and Needs!!

Needs: Necessities for a healthy life

Wants: Luxury that's optional or can be substituted according to your financial position.

2. Be Better at Budgeting!!

Divide your earnings into a ratio of Expense:Luxury:Savings. (eg. 50:30:20 or fix according to your financial goals)

Fix this ratio early in your career so you can be more disciplined.

3. Make a list of financial goals (short term/ long term) and manage your money to achieve them.

4. Save a chunk of your income every month. Don't just hoard your savings. Invest meticulously.

a) Emergency fund

b) Retirement plans

c) Insure your Health and Family

d) Other means of investment to compensate for inflation. (Be cautious of frauds and market-related risk)

5. Pay off your credit balance every month in full.

6. Get regular suggestions from a financial advisor. (He/she may be your parent or teacher or a good financial expert friend.)

PS: The best thing money can buy is financial freedom. All one has to do is manage personal finance in a disciplined way.

Key takeaways

  • Money can be a terrible master but an excellent servant, and the key to financial freedom lies in mastering the skill of personal finance.
  • Personal finance involves understanding your income, expenses, savings, and investments, and tailoring a plan that works for your unique circumstances.
  • Habits such as budgeting, saving, investing, setting financial goals, and seeking advice from a financial advisor can help you manage your personal finances effectively.
  • To stay rich in the long term, it's important to enjoy the present, secure the future, and learn from past mistakes, and managing your personal finance is a critical part of achieving this.
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