Take Better Control of Your Finances with Smart Money Management

The need to effectively manage your money is crucial at all life stages. Many people often believe that you only need financial management when you have a certain level of income, but that's not the case. Your money needs to rightly be allocated to savings, investments and spendings so that you can ensure long-term stability and liquidity. The only way to do this is by money management. And the best time is to start now.

1. Know your priorities

Depending on your situation, it is important to list down your priorities. You may have debts, which you want to prioritise first. Or you need to pay for your child's education. This will differ from person to person. So, assess your current financial standing before you create a budget.

2. Calculate your monthly income

Whether you are a salaried employee, freelancer or businessperson, having a consistent monthly income is crucial. This is because it dictates how you save, invest and spend. It eliminates guesswork and helps you build a foundation upon which you make informed financial decisions.

3. Set aside a certain sum as savings

It is rightly said that the quickest way to double your money is to fold it in half and put it in your back pocket. This means saving is the best way to earn and grow your money. It's a great way to keep your money safe and be mindful of your expenses. You can start with a small sum and eventually increase it based on other factors, such as income, expenses and investments.

4. Calculate and track your spendings

To get a clear picture of your spending habits, it is important to note down your expenses. Pull out your credit card details, bank statement or other cash transactions. You can do this either in a spreadsheet or the traditional way with pen and paper. Once you have listed them down, categorise them into different buckets, such as entertainment, utility, food, travel, etc. If you total the amount of every category, you can calculate the percentage of spendings for each. This way, you can cut down on unnecessary costs and use your money wisely.

5. Build an investment strategy

Small contributions can also make a difference. It is recommended that you start as early as you can. Use your savings account to look for investment vehicles to help you grow your wealth and get higher returns in the long run. To avoid higher risks, diversify your portfolio. Choose between equity, balance and debt funds. You can switch between these funds at any point in time, based on your risk appetite and financial goals. So, don't keep the funds in your bank account idle and plan an investment strategy for yourself.

6. Have a debt management strategy

Think of times when it's ideal to consider loans. Consider borrowing only when it's truly necessary. This is because interest on loans can eat your savings. Also, taking multiple loans can impact your credit score significantly. And if you are considering a loan, then take into account different factors, such as interest rates, associated fees and the lending institution. Always choose what aligns with your needs. For credit cards, you should make timely payments to avoid fees. You can set up reminders or use auto-pay to avoid delays, which can cause harm to your credit score.

7. Save for emergencies

Life is full of uncertainties and the only thing that can help you combat those difficult situations is a safety net. To build that, you can either build a separate savings fund or get protection against them with an insurance plan. You would need at least three to six months of expenses in order to build an emergency fund.

Choose a reliable savings account for your money management

A reliable savings account is a prerequisite when it comes to money management. This is because banks offer attractive interest rates to grow your money steadily. It also guarantees access to quality customer service, allowing you to address any concerns promptly.

A Digital Savings Accounts can help you build a solid financial foundation and offer the peace of mind of knowing your money is in safe and trusted hands. With a digital banking experience, you can ensure effective money management at all times. Furthermore, the reliable customer support offered by Indian banks will assist you with any banking queries or issues, ensuring you have help whenever needed. So, open an account today and manage your finances like an expert.

This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.