The Top most important Tips on "How I manage money effectively"?

What is managing finance or money management?, It is how you plan to spend your money effectively. This includes how much your earn, spend, and save or invest for your future. Money management is easy if your understand the basics of it, else it will scare or intimidate many people.

Most people discuss about earning money but only very less think about effectively managing it. 

Let's talk about the most important Tips that will help you manage your finances well and avoid you getting into the risk of debts. 

Create a Budget: Preparing a budget it the first and most important thing in money management. it is an easy process which is normally used around the world for many decades. first you need to calculate the total amount your require for a month based on your needs and wants, compare that with your monthly earning and it will show you if you are saving or over spending. With better control, your can avoid over spending on unnecessary or impulsive buying.      

• Think if you are over continuously spending? 
• Whether you have enough saved up to face an unexpected expense? 

Once you answer these questions, you will know if you have managed it right or not. Easiest way to prepare a budget is to use 50/30/20 rule which is allocated as 50% for your income needs, 30% for your wants and 20% for savings, investments, debt repayments, or emergency funds.

There are many other ways to do the budgeting, but all the techniques or ways measure the same metrics which is how much the income, how much you are spending and how much is saved for future. 

Save first and Spend later:  Its always better if you take the saving or investment amount out first from the income or earnings, and then divide the balance among your other expenses like rent, utilities bills, essential items, lease, insurance or loan payments, in this way you will always have backup funds for any emergencies.

Make compulsory Savings and Secured Investments: Savings and investment will bring in extra money by means of interest, profits or dividends. It a generally accepted norm that you should have a fund for 06 months of living without any income or if any unforeseen happens, sometimes it seems big, but try to start small with an affordable amount and then gradually increase it according to your income increment.

Invest some money on secured investments options like treasury bonds, mutual funds etc which will generate an income. Before considering investing, try to pay off high interest debts, credit card payments etc since interest accumulation on debt is always higher than the secured investment returns.

Be Persistent: Sometimes even-though you have the intention to follow according to the budget, there are times you may fall off the planning, following a budget is not alway hard if you have planned it well, over restricting may make you feel its tough to follow, therefore dont get discouraged. Revisit your budget and make the changes without affecting the overall objective.

Set financial goals: setting up short and long term financial goals will keep you focused and will stop you from over spending. This helps you fulfil your short term and long term goals, and train you to spend your money effectively.

Avoid taking debts or increasing your commitments: Always try to avoid debt as much as possible, since having debt is the main cause of financial collapse. Debt like Leases, Credit Cards, Loans etc will be dangerous if your dont have a good financial discipline. These debts charge high interest rates and if its not managed properly it can drive you to bankruptcy.

Summary: Money Management or budgeting cannot be done over night, it takes some time to implement, but you should plan it and then implement it slowly but effectively. Once you have professed it, then you will be able to manage it without any issues. Always be persistent and monitor your finances. Track all your expenses during intervals to see if you are over spending or spending on unnecessary things. The more you invest / save, the money you will have for spending on important things in life.