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Personal Finance : Are you paying enough attention to this?

What is personal finance and why should you be careful with it?

Personal finance is the money you spend on yourself and how you spend it matters. Each person has a different benchmark amount that they spend on themselves each month. Usually people take extensive care on spending their family finances, however, they fail to do the same to their own personal ones. This is the money that you have set aside for your entertainment, meals, travel and etc. Isn't it important that you stay within budget and don't have to dip into your personal savings or the family's finances?

How to pay attention to your personal finance?

It is in every little thing. Ever since digital payments came, we barely account the money we spend. Your digital payments accounts doesn't show your balance when you make the payment and takes two extra clicks to check the balance separately. Back when digital payments weren't there, we used to have cash on us at all times and that was the way to spend. When we opened our wallets and saw the 100 rupees or 500 rupees, we would be hesitant to spend it as we would take a second to think about the uses of that money we had initially planned. This was our simple control system and that has been overridden by digital payments. Nowadays, we scan, we pay and we check the balance only once in a while. We make impulsive purchase decisions. We no longer save money to buy a phone or a ring. We use credit cards and EMIs for that now. What is the control system you could employ in this digital age?

  1. Budgeting Apps: Having payment apps and no budgeted spending could be your problem. You could use a budgeting app to help you set a limited budget for the month or year and try to abide by it. The app would send you updates and give you warnings regarding your spending. It would also give you an updated sped summary that could highlight where you are exceeding your budget.

  2. Try to control splurging: Splurging is when you make impulsive decisions to spend more on some products. For example, drinking coffee at a small shop costs around Rs.15. However, if you have it at a big franchise shop, it costs around Rs.30. You will be spending double the normal rate for the same coffee. If you are spending Rs.15 extra per day, you will be wasting around Rs.450 per month and around Rs.5400 per year. Think about what you could do with this kind of cash.

  3. What are your Monthly payments: Ask yourself if you need the amenities that you pay monthly for. Do you need the cable when you are rarely home? What about your monthly entertainment subscriptions? Are you using those regularly to watch content? Are you using your gym atleast 4 times a week? Is the mobile recharge pack worth your usage? Think about what you use and keep those on. Don't spend on unnecessary items.

  4. Limit your Credit Cards: How many credit cards do you use and what kind of purchases do you make on that? Living off borrowed money is never the way to go. Use it for emergencies. If we have enough limit with the card we would wish to spend on unnecessary items. Use 1 card for emergencies and that should be more than enough. Also, some people tend to forget making payments when they have more than 1 card, which will increase their debt more.

  5. Save from your salary: Most people tend to live off their whole salary, i.e, their expenses are as much as their salary. This would cause an issue in case of emergencies, any sudden expenses. It is best if you save 20% of your salary each month separately. It would ensure that you can make ends meet during tough times.

Try these methods to curb your overspending and to manage your finances easily. Spend time to think about your budget. If you wish to watch Oppenheimer and Barbie in the same month, you should have already budgeted for it.

One penny saved is one penny earned.


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