The Best Way to Manage Money Effectively

financialtreat – will explain about The Best Way to Manage Money Effectively which you will get in the following article. let’s look at this article carefully!

Is the monthly salary always used up at the beginning of the month? Feeling stingy because your pay is always lower? This is not because of your small salary, but because you can’t manage your finances well. Therefore, it is necessary to have the best financial management so that you can manage it. For that, there is The Best Way to Manage Money.

Actually, no matter how much salary you receive, if you are economical, then all your needs can be fulfilled. Then how do you not be extravagant? You need this information so that you can manage your finances properly, so don’t waste it. There are some of the best ways to manage money that you can apply. The following is the full explanation:

The Best Way to Manage Money Effectively

1. Set Financial Goals

Before you start planning your finances, the first step you need to take is to set financial goals. These financial goals are very important financial planning tips because they can change how you manage incoming income.

Everyone’s financial goals are different. For example, for those of you who are still single, you can set financial goals for the cost of getting married. For those of you who are married, you can set goals to buy a house, save for your children’s education costs, and so on. With this financial goal, you will be more economical and not wasteful anymore. You can remember these financial goals or goals when you want to get off track of the planning you have made.

2. Create a shopping list or a budget for your monthly expenses.

In order not to be extravagant, one way to manage the right monthly finances is to make a monthly shopping plan. You can make a monthly shopping list, ranging from household needs to bills that you have to pay. Make a detailed list so that you are clear on what to spend for one month. With this list, you can estimate how much monthly money should be spent.

3. Develop a Priority Scale

It is not enough just to make a list of monthly expenses; you also need to make a priority scale. You can make a list of which needs are urgent and must be met and which ones can be postponed.

From the list of expenses that you have made, you can start making a priority scale. You can create a priority scale table and sort from most important to least important. If the expenses are deemed unimportant, you can delete them.

4. Keep track of all expenses and income.

A simple way to manage finances that is no less important is to record all expenses and income that you get. You can prepare a special book to take notes on. You can start by recording the amount of income or salary you receive. Then record all the expenses you have incurred.

Don’t forget to note the loose expenses. Regularly recording expenses can help control the expenses you incur. This can definitely make you not be extravagant. If you feel that there are a lot of expenses, you can control and assess which needs you can postpone first.

5. Differentiate between needs and desires

To avoid being extravagant, you must be able to differentiate between what are needs and what are desires.Before buying goods or services, you can reflect on whether the goods you are going to buy are a necessity or a desire.

If you just obey your wishes, of course you will be extravagant and your finances will not be healthy. Therefore, you should be aware of which ones are necessities and which ones are just mere desires. This way, you can save more and delay buying goods or services that you just want.

6. Apply the 50-30-20 Rule

So that you are not extravagant, you can also use the formula of setting finances at 50-30-20. This method is very effective for making your finances healthier and more well organized. This formula was first popularized by Elizabeth Warren in Time magazine. Many have shown that this formula is very useful for managing finances, no matter how much salary you get.

This 50–30–20 method indicates the allocation of the salary you received. The allocations are:

  • 50 percent to meet the needs of
  • 30 percent to meet desires, and
  • 20% for savings and investments

With this formula, your needs and desires can be fulfilled. So you can still save and make investments. This method can make you more economical and your finances well organized. You will no longer feel deprived of the salary you receive.

7. Pay your bills on time.

To avoid swollen expenses that have an impact on you being more wasteful, pay your bills on time. Paying bills on time can make you more economical. Why? because you don’t have to pay a fine. This norm of paying on time must have a huge effect on your finances. You only need to pay the bill according to what is stated. If you pay late, then you have to pay more for the fine.

Saving in a Separate Account

For those of you who don’t want to be extravagant, there is a way to manage personal finances that you have to apply, namely saving with a special account. You can access two accounts, one for daily needs and the other for savings.

With this account separation, you will be more economical because you will not spend your savings. You can use the savings money when you really get stuck. Therefore, especially for savings accounts, try not to get ATM cards or mobile banking. This way, you will find it even more difficult to save money. Surely this will be a surefire way for you to be extravagant and not smart to save money.

9. Set up an emergency fund

In order not to be extravagant, you also need to prepare an emergency fund. This emergency fund is very important and you can only use it in an emergency. Actually, this emergency fund is almost the same as savings, but the difference is that you can use this fund when there is an emergency. If these funds are not used, you can put them in savings. You can keep these funds in your account or deposit them in cash.

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10. Don’t Forget to Invest

One of the healthy financial tips is so that you don’t waste it by making investments. This investment is one of the most profitable ways to save in the long term. Millennials who want to be extravagant and have healthy finances are definitely obliged to make investments.

Isn’t it that investment requires a large amount of capital? What if the salary is still mediocre? Who said that the investment had to be large?You can start investing in gold with capital starting from only IDR 10,000.

A gold investment is one of the right types of investment for those of you who want to invest in the long term. Its price, which tends to increase, is one of its advantages. Not only that, but gold is also resistant to inflation, so this investment loss is very small.

Well, that’s an explanation of the best way to manage money. That way, you can apply the methods above in order to manage your finances.

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