How to Manage Your Finance Better

Few days ago, one of my friend had gone to hospital and he had no money to pay the bill of doctor which was Rs. 20,000. Before going to hospital, he spent Rs. 5,00,000 on his new bought house. Is it good management of finance. You have spent all the money on your bought house and no money for your emergency. This is not the case of my friend. This is the case of your friends also. There are lots of community in the whole world who do not know better management of finance. That is the reason, today, I have taken this topic and explaining, "How to manage your finance better?" In this content, I will teach you simple and easy steps to manage your finance with better way.

 (A) Smart Budget

1. Create the Budget for Emergency Fund

There are lots of emergency situations which we can not expect. For example, road accident or any default in your vehicle or need emergency money for your friends, family or relative. You are becoming so intelligent in the field of finance. So, every month, you have to make the budget for your emergency fund. This emergency fund should keep in saving account only. So, you can use it when you need it. It must be minimum 5% of your total earning. But, you can not take this money in normal need. When you supply your emergency fund for emergency cases, you feel satisfaction. For example, if you have per month earning of Rs. 100, you must save Rs. 5 for emergency fund. You also make the list which you can say as emergency time.

2. Create the Budget for Saving 

Today, you have the energy in your body. Tomorrow, you will not enough energy in your body. But, your expenses will not stop. So, you need passive income. You can only earn passive income from your investment. For investment, you need big amount of saving. For saving, you need to create the budget for saving. If you have to manage your finance better way, you must save minimum 10% of your month's earning. Second, it will help you to survive in case of inflation.

3. Create the Budget for Donation 

This earth has been made by God. You are the earning because God loves you. You can increase this love if you will create the budget for donation for helpless. Following are main non-profit projects where you can donate.

a) Donation for education for helpless and needy
b) Donation for food and protection for helpless animals
c) Donation for plants

It is better use of finance because

a) You will get the blessing of God. With this, your finance grow fastly.
b) In future, you will also get the support if you have given the support to other.

3.  Create Your Family Budget for Expenses

Make the list of blank paper about your main expenses. It may be food expenses, electricity bill, internet bill, mobile bill, medical expenses, repair expenses and petrol expenses. Now, check your average per month income. If your estimated expenses are more than your monthly average income, you have to cut the amount of your monthly incomes.

 (B) Smart Expenses 

To spend the money on different expenses is science. If you want to learn for better management of your finance, you need to learn better spend money on different expenses.

1. Buy Own or Rent 

We are lots of capital budgeting tools. With this, you know which is better, buy your own asset or get it on rent. For example, banks mostly do its business on rented building. Why? Has bank no money? It is not true. Bank knows the better management of its finance. It has analyzed the cost and profit and it will be more profit if it will do the business on rented building.

2. Spend Own Capital or Money on Loan 

Today, there are lots of way to get cheap loan. You can get loan through your credit card. For one month, there is zero interest on your loan amount. Sometime, return on your capital is very high. At this time, you can use the money on loan as substitute capital. Your own capital can double your return on investment.

  (C) Smart Investment 

1. Invest in Real Estate

It is long term investment. After 10 years, your invested money will increase very fastly. So, buy minimum one property in your life as your investment.

2. Invest in Mutual Funds

It is also called safe stock investment. You can invest in liquid or sip plan of mutual funds.

3. Invest in Stock 

Never become gambler for fast buying and selling in stock market. Invest it in long term.

4. Invest in Business 

Best is to invest in your own business. It will give you surely reward all the time when your brand will grow in the world.

Sources and Citations

1. Tips for Better Management of Money eBook
2. Financial Management Notes eBook

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Accounting Education: How to Manage Your Finance Better
How to Manage Your Finance Better
Accounting Education
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