Top 5 Money Management Tips for Young People

The first and best of all money management tips ideally would be how to make lots of money. Not necessarily ridiculous amounts, but if someone could tell me the secret of getting my hands on a good crore rupees a year to keep me in my desired lifestyle, that would be great. Unfortunately we don’t yet have that secret to give to you.

We can however give some good tips for how to manage your money once you have some steadily coming in, to stop it equally steadily going back out again.

  1. Close out your debt

I’m sorry but I can’t say ‘The first thing you need to do is join a Champagne of the Month club’. You need to look at any debts you have before you can focus on any other money management tips. To start with, it would be good to not get into debt at all, but in this day and age that might be a little difficult. Once you have debt you need to put as much as you possibly can into paying it off as fast as you can. This includes definitely paying more than the monthly ‘minimum’ amount, which, if followed, is more likely to cripple you down the track. Paying it off as fast as you can (some experts recommend getting a second job just for this purpose) will free you up sooner from interest and fees. Then your money will be yours to do what you want with. Ah, the freedom!

  1. Revisit Your Budget

You should review your budget annually or whenever there are major changes to income or outgoings (like a promotion or buying a home). Document all your spends in a month; everything that comes in and goes out. Don’t just guesstimate while doing this; print out your bank statements and look at all receipts, as there will be lots of tiny expenses you forgot about. Doing this gives you a more accurate idea of what you can afford and where you can tighten your belt.

  1. Have a Measurable Savings Goal.

Decide exactly what you are saving for, and keep this goal in mind, such as an international holiday, a new car or an engagement ring. Have a specific account where your savings will go. There are many online savings options that have no fees attached that will attach to your existing salary account. NEFT a fixed amount into this account from your salary account or set up a direct debit for every payday which goes into your savings account. Don’t touch this until the time has come to make your goal a reality.

  1. Be realistic

Don’t set yourself goals for budgeting or saving or repaying debt that are impossible for you to achieve. Setting goals that are outside your reach will usually not be successful, and will give your morale a big kick in the meantime.

  1. Educate yourself

As boring as it all may be, the best way to manage your money is to understand your finances. Learn about your superannuation fund, how it makes money, if there is a better alternative, and if you should be making voluntary payments. Learn about tax, know when and how to lodge a tax return, make sure you’re getting taxed the right amount and learn about all the possible deductions you can claim. Learn about insurance, learn what it does and what you might need, get the best value for your money, make sure you’re insured for what you need and only what you need.

It’s not a sexy topic, but money well managed can make your life a whole lot easier and your mind a whole lot more peaceful, so it’s one topic you need to know. Good luck, and you’ll be joining the Champagne of the Month club in no time with these money management tips.

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