The major cause of financial crisis in one’s life is poor money management; the misjudgement we have made in past lead may lead to present time financial crisis. The failure to manage money can be because of any reason like non-payment of your loan, credit card debt and so on. The reason of these missed and late payments is lack of proper money management usually referred as inefficient money management. So, efficient money management is very important to avoid financial crisis. Here, are some tips to help you become efficient with your money management in order to avoid financial crisis:
Keep track of your spending with the help of a debit or credit card:
If you find it difficult to keep track of each and every expense and maintaining a track report then you can use a debit or credit card to track your spending. When you make use of your credit card you have to make full payment at the end of month and can have a complete record of spending. But make sure that you don’t overspend because of the higher limit, as it can put you in debt and if you are too tempted to spend then make use of a debit card instead of a credit card.
Find out your net worth:
Calculating net worth is one of the best approaches for money management. Net worth is the amount you have left after paying off all your debts. It is a method to determine your true wealth and financial freedom. To calculate your net worth you can use money management software like Quicken or Microsoft Money.
Make an investment:
Try to start investing as soon as possible. Opt for the best investment business appropriate for you based on your needs and status.
Go through your personal finances:
Look through your personal financial situation and make a list of your spending, income sources and expenses. Try to find the loopholes and flaws in your spending which are stopping you from achieving your desired goals.
Differentiate necessity from luxury:
To aid better money management you have to do some saving each month, but that will be very difficult if you keep spending on unnecessary things. Make a list of things you really need and as well as the list of things you can easily let go of for now.
Maintain an emergency fund:
Generally, you need to take on debt because of an emergency situation, so try to set some amount as your emergency fund which you can only use in the event of an emergency. It may be possible that your emergency fund isn’t sufficient to deal completely with your emergency situation; in that case opt for short term debt such as payday loans which you have to repay on your next pay day instead of being burdened with the traditional long term debt.
My name is Alicia. I am a tech writer from UK. I am into Finance. Catch me @financeportSuscribe to the podcast