We're all in the middle of the COVID-19 pandemic, an event that turned the world upside down. The pandemic shattered economies and left millions of people across the world without a job. The people who were the worst affected were the small and medium-sized business owners and daily wage workers. Thousands of small businesses had to shut shop across the world, leaving their owners with absolutely no income. The people who didn't get laid off were asked to take severe pay cuts, which made things that much more difficult. Now, given that your monthly salary isn't that 'stable' anymore, everyone's focus is on managing their monthly finances better and saving up for future emergencies. Suppose you're a young salaried professional who doesn't know how to manage their finances that well; this post is for you. Here are four ways you can manage your finances better:
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1. Maintain Two Separate Bank Accounts
As the great investor and philanthropist Warren Buffet says, "don't save what is left after spending, but spend what is left after saving". This holds for everybody across the world and is one of the most responsible things you can do to set your finances in order. The trouble is that it's not easy because we always assume that we'll save a 'certain amount' of our salary the day we receive it. But a week later, you'll have no idea how much you've already spent. At the end of the month, you'll most probably be struggling to get by while also wondering where your salary went. In such a scenario, saving money is out of the question. That's why it's a good idea to maintain two accounts – one for your salary and monthly expenses and the other for your savings. The day you receive your paycheck, park a specific part of it into your savings account.
2. Track Your Expenses Every Day
A vital part of managing your finances properly is knowing where exactly it's going. The only way you can do that is if you track your expenses every day. Now, this habit is not something that you can pick up in a day, so it's essential to take it one day at a time. From pen & paper to an Excel spreadsheet, figure out what works for you. Then, take out a few minutes to record each expense you have incurred during the day. Once you become consistent with this, it will become a habit. While such a habit may seem 'trivial', it's essential if you want to stay on top of your finances. You'll also get a detailed picture of how your finances look so that you can take steps to prevent a month-end cash crunch well in advance.
3. Manage Your Debt Well
As a salaried professional working in India, chances are you already have some sort of existing debt that you're paying off. It may be an education loan, vehicle loan, or salary-based loan. Regardless of the type of debt, it's essential to manage it well and make timely EMI repayments. It would also help if you adopted a frugal lifestyle for the duration of the loan and cut down on unnecessary/wasteful expenditure. Doing so would ensure that you're making the maximum possible effort to pay off your debt on time. If you have more than one type of debt, it's a good idea to focus on the costlier one first (in terms of interest) while paying the minimum balance due on the other(s). With these tips, you'll be able to manage your dent and overall finances well.
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4. Create Savings Goals
Without a proper plan for your money, you'll find yourself in the middle of a cash crunch in no time. That's why it's crucial to create savings goals so that you stay out of debt. While there's nothing wrong with availing of a personal loan or a salary-based loan for urgent expenses, these options should be your last resort. If you want to purchase something (like a smartphone or laptop) or save up for a trip, make it a savings goal. Start saving up for it in advance, and you'll be able to meet your goals quicker than you expected.
The above points are just four of many tips you can use to manage your finances better. But despite your best efforts, there will always be instances where you will face a cash shortage. In such a scenario, a salary-based loan will give you the extra money you need. But which lender do you approach? KreditBee, of course! Our entire loan application process is quick and completely online on the KreditBee mobile app, from profile creation to disbursal. You just need to download the app from Google Play, complete your profile, and relax. If you wish to learn more about our salary advance loans, please write to us at [email protected].