Money is the key aspect in everyone's life and it plays vital role for thousands of years. But Human's fear and greed emotions make them for money all their life. Fear of losing money, fear of losing job, fear of pending monthly bills, greed / desire for more joy, more pleasure, more comfort and more security, makes them work for money. Here i am not expert to give you an advice to not do a job. But i am just asking you to think over the options you have to make the money works for you.
So lets start our discussion / plan to achieve our goal. To achieve your goals and reach your financial independence it is important that money work for you and you not for money. There are a lot of ways you can make your money work for you. With the right systems, you can save and invest for your future. Doing so will build a solid foundation for your personal finances.
Read: Tax on Investments in Stocks
Read: Tax on Investments in Stocks
No matter what your financial situation looks like, the first thing you should do is identify people who have done well with their finances and spend some time asking questions. You can learn a lot by talking with someone in your network who has done well for themselves and is willing to break down what they did to get there. They can help you identify realistic financial goals and put strategies in place to achieve them. But before you meet them, you have to do budgeting your present financial position.
Budgeting is the process of creating a plan to spend your money. This spending plan is called a budget.
Budgeting is not just about saving money. It's about taking control of your spending and determining exactly where your money is going. A budget is a financial plan that compiles and compares a person’s income against all of his/her expenses in order to analyze spending and meet personal goals.
Budgeting is simply balancing your expenses with your income. If they don't balance and you spend more than you make, you will have a problem. Many people don't realize that they spend more than they earn and slowly sink deeper into debt every year.
People might not earn more money if they budget well, but they will be able to use the money they do have wisely. Someone who manages their finances responsibly has peace of mind and knows how to:
• Pay their living expenses
• Keep debts to a manageable level
• Save for the extras that make life enjoyable
• Avoid constant money anxiety
No one is born with money management skills. Therefore, many people experience the usual emotions that occur when they don’t know how to do something well. So that frustration, guilt, anger develops.
The first thing you need to do is figure out how much income you have. When evaluating your expenses, determine needs vs. wants. Most financial advisors recommend that you save 10% of your monthly income because of unexpected expenses.
Learn to Get Out of Debt:
Debt often becomes a burden and limits the choices that you can make. Getting out of debt involves more than just paying off a few credit cards. It means changing spending habits; learning to how to budget; knowing who and how much you owe; prioritizing debts; creating emergency and retirement funds; and knowing where to find help when you get off track. Its important to make smart decisions to get out of debt.
Read: Get out of Debt Trap
Read: Get out of Debt Trap
Paying off debt can be frustrating and confusing if you don't have the right plan. Therefore, many people experience the usual emotions that occur when they don’t know how to do something well.
There are many ways to pay off your debt faster consolidate or try to get a better deal. However not every option is going to work for you.
Take some time to evaluate your options and then figure out which ones will help you achieve your goals while fitting your budget. Find out how much debt you really have.
Using a credit card might not feel like putting your money to work, but choosing a card with rewards appropriate for your lifestyle. Actually i am talking about get out of debt, so we don't like debt, but if you have the cash flow and predictability in your budget and you can pay off your bill every month, there are great credit cards out there with great rewards.
If you have credit card debt, this strategy isn't for you. The key to making your money work with your cards is being able to pay off your bill in full every month.
Learn to Save money:
Sometimes the hardest thing about saving money is just getting started. Saving money can help you to develop a simple and realistic strategy, so you can save for all your short- and long-term savings goals. One of the best ways to save money is to set a goal. Start by thinking of what you might want to save for—perhaps you’re getting married, planning a vacation or saving for retirement. Then figure out how much money you’ll need and how long it might take you to save it.
Read: Guide to invest
Read: Guide to invest
After your expenses and income, your goals are likely to have the biggest impact on how you allocate your savings. Be sure to remember long-term goals—it’s important that planning for retirement doesn’t take a back seat to shorter-term needs.
- An emergency fund is a must.
- Record your expenses
- Budget for savings
- Set saving goals
- Don't just save money, save for your future.
- Start saving for your retirement
- Decide on your priorities
- Calculate purchases by hours worked instead of cost.
- Pay your bills on auto-pay which avoid late charges.
Learn to Invest in Assets:
Increasing income is another way to reduce financial problems and plan to invest. Investment comes in the form of stocks, bonds, mutual funds, real estate, insurance, commodities, precious metals etc. the reason people choose is distinct as each is designed to satisfy a particular need. Investment is a personal plan where an individual has to decide what his goals are and how he can go from one level of comfort to another.
Investment should be made in assets not in liabilities. Investment in immovable property by taking loan is not an asset creating. Because it takes money out of your pocket monthly to pay EMI. But an asset means it should inflow some money in your pocket monthly. So asset creation by taking loan reflects liability in your life. Here banks are creating assets for them and liability for you. For instance, if you purchase a house by availing loan, the EMI you are paying monthly is less than rent received on such house then this house is an asset for you or else it’s a liability for you. So create an asset where money works for you.
Passive income is the term colloquially used to define any money earned with little to no effort expended in financial terms. Read Passive income ideas
Once you've set it up, passive income streams earn you money while you sleep. it sounds too good to be true. But fear not, it's not a get-rich-quick scheme. Creating any streams of passive income requires an investment upfront, whether of your time or money, but can lead to huge payoffs later.
Common forms of passive income include real estate investments or silent partnerships in businesses, but it can also be generated by anything from making YouTube videos to using affiliate marketing on your blog.
With these little implements and change in your way of thinking, you can make your money work for you. Think with your head not with your emotions. Decision with emotion results bad experiences.
Ignorance in self knowledge / information and illusion of money, make man work for money. So Be careful with ignorance and illusion.
Please post your experiences here and share the same with your friends / family.
Hello, welcome to my blog, Smart Investor. I'm Satyanarayana, a banker & blogger, Investor from Visakha -patnam, India. You can read more about SML here.