Managing finances is a great skill to have. Many financial firms run literacy campaigns to make people possess the financial literacy.
However, it is not so complex. A few things if taken care of will make you a great money manager. Financial literacy is no rocket science, it is about being aware. Just follow some rules, try to keep up with some current events related to the finance and you are good to go. Here are some things that will come in handy:
- Income and Expenses – In financial parlance this is known as budgeting. It is very simple to keep track of your income. Keep an excel sheet with two sheets for every month. One for income which includes regular paycheck, interest earned, dividend that you get from shares and payment from seasonal job or freelancing. In the expense sheet keep daily record of your expenses. Record every penny. It only requires fifteen minute daily to keep track of your expenses. At the end of the month total expenses. You just need to use a simple formula in Excel. If your income exceeds your expenses, put aside the balance as saving. If expenses are more than income observe the expenses which are not so essential and cut down on them. This is the first step towards financial literacy.
- Debt Management – You might have loans on you. Paying the debts on the right time frame will keep your credit record good. Good credit scores are essential if you want to live happily without any hassles. Never collect debt, it will hamper you financial health. Pay off the debts as soon as possible and use credit cards judiciously. The secret to being financially good is to manage debts and never let it accrue.
- Get an insurance policy and be safe – Nowadays, the insurance is essential. It keeps your mind clutter free and hedges you against financial risk. You should get at least one life, one health and one disability insurance. If you own a car, be sure to regularly renew the insurance. Insurance is an investment that keeps you safe.
- Instill the saving habit and invest – Get out of the habit of spending all. Save at least 15 percent of your earnings for the rainy days. Set aside some savings for regular investment. It will help you fight inflation.
- Subscribe and read financial newsletter – In the age of the internet it is very easy to learn basic finance. Just subscribe to free newsletters and you will be financially savvy in no time.
The key to financial literacy is to manage your finances well. Keeping these basics and learning new things will help you keep abreast with the movement.
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