While most people spend their lives toiling away to earn more, there are few who know how to use the money in their hands. Well, properly anyways. There is a distinct lack of understanding as to how one needs to utilize their finances, with most people wandering clueless till a problem hits them like a sledgehammer. Personal finances is not taught in schools, after all, which is perhaps one of the many shortcomings of our education system. It is hence important to understand where money comes from, where it should go, where to save and where to invest. The following points will help you gain some basic ideas about how to go about managing your personal finances.

manage finances


  1. Set your accounts up.

You need to first lay down a basic foundation to get an idea of where your finances lie before you actually start managing them. Get a basic idea of how much you keep in savings account, your credit card limits, your bank statements, etc. Also, learn to save your bills and write up your expenses.


  1. Create a budget.

Simply put, budgets are the lifeline of finance management. List down your monthly expenses as said before, along with your credit expenses, and see how they stack up against what you are earning monthly. At the start of a month, you can keep a ‘projected’ spending (or how much you intend to spend) and then tally it with actual spending at the end of the month. Keep a bit of savings to be considered while projecting that budget. Be honest about your spending and capability to save while listing them out.

  1. Reduce your splurging.

Saved money is for emergencies or for plans in future, not for binge shopping. A lot of people do not keep savings aside as they end up spending it on things which are actually not necessary. While your money is there to buy you comfort, you need to be practical with it.


  1. Borrow/ rent if you can.

With increasing number of libraries and renting shops for other commodities, you can borrow things which might be utterly useless afterwards if purchased at a lower cost. If, however, you need the item for a long term purpose, it is always better to buy it.


  1. Treat credit card as you will treat cash.

Basically, instead of treating your card as a Solomon’s treasure and spending more than you can ever repay for it, limit your card usage practically. Look at it like you see the cash in your wallet, limited.


  1. Start looking at investment and insurance.

Investments, if done correctly, can help you generate decent amount by itself. However, do not invest blindly; do a good analyses of the market, keep an eye on trends while investing in stocks. Any investor worth decent money will tell you to diversify your portfolio; do not put all your money in risky or too safe stocks exclusively. Investing in mutual funds is a good idea to start with. Also, putting money in insurance is always a good idea. A life insurance and a health insurance always comes in handy. However, do remember to compare various options according to premium, maturity, returns and the various benefits before you make that decision.


  1. Emergency fund and retirement plan.

Keep some money aside for unforeseen circumstances, locked away unless you desperately need it. Also start looking at retirement plan. If your employer provides you with one, try to gather more information on it, else start planning ahead.

It is important that the money is practically allocated for present and future. We should save and invest wisely as per our risk appetite, looking out for future, while for present, one should be well budgeted in cognizance of all spending.

Vineeta Sinha, the owner and president of Vineeta Constructions Co. is a writer and blogger at heart. An economics graduate, the talented writer has been in the writing industry for years. When asked about how she manages the two very different professions, she says, “Construction business is what me and my husband who is a civil engineer dreamt of together and I am glad we succeeded but writing is something I have been doing years before I stepped into the construction world. I was very young when I realized that there was a hidden passion for writing in me and I unveiled it through my school magazine for the very first time and there has been no looking back since then. Though construction contributes more in running my world, writing is something that completes me.”