The Basics Of Managing Finance For Beginners

For any young adult, embarking on their professional venture is no less than an accomplishment in itself. But with responsibilities ahead, the excitement soon leads to anxiety, especially when it comes to the effective management of the money earned. Unfortunately, there is no formal education available on how to manage money while facing the real world for the first time. Here is a basic guideline, which is to be followed till the end of time.

Create a budget

The excitement of getting your first paycheck may lead you to go on an impulsive spending spree, but it is better to create a budget first and set your priorities straight. It is a well-known fact that everyone’s budget reflects their spending habits and aspirations. Creating a budget and sticking to it can therefore significantly help in managing cash flow, knowing where your money goes and making provisions for other goals. Therefore, helping you to keep a track of all the recurring as well as infrequent expenses.

Start an emergency fund

One of the most important aspects of managing personal finances is building an emergency fund. Planning for unexpected expenses beforehand is crucial, as it may have important and unavoidable financial implications otherwise. Having money for emergencies can keep you out of trouble and let you have some mental peace even in times of predicaments like sudden illnesses, accidents, family issues, and loss of a job being a few.

Learn about your taxes

Paying your income tax for the first time is no less than a milestone in one’s life. However, the process may seem too tedious and daunting initially. But for any professional, knowing how income taxes work is extremely important. If you fall within the taxable bracket, then even before getting your first paycheck, it is of utmost importance to calculate whether your financial obligations and goals after taxes can be met. Such practices will give you a better idea about everything related to the taxes and help you manage your finances better.

Negotiate as much as possible

When managing finances, negotiation plays a very important role in getting the best deals and saving money. Negotiating before any purchase helps reduce expenses to a great extent. With the rise of e-commerce and the emergence of several online players, comparing the prices of various products and services and securing the best deal has become easier and hassle-free. For instance, before making a major purchase, surf through the internet and research well to get the best deal instead of going for the very first option that you come across. Moreover, never hesitate to avail discounts, cashbacks, redemption points, complimentary products and services, or any such reward that you may find with any purchase.

Exercise self-control

The skill of self-control comes in handy once you start living off your own money. While essential expenses are undoubtedly non-negotiable, the discretionary ones need not necessarily be. You need to prioritise better and exercise self-control, especially over impulsive indulgences to avoid going through ‘broke’ days, or worse, payments to make for years to come.

In case you happen to exhaust your pay for the month before it ends, you may avail an instant loan from digital lending platforms that allow you the flexibility and convenience of repayment along with attractive cashback options. But that should be a rare case and not a regular occurrence.

Tha author is the Founder and CEO, mPokket.