Financial Trouble? Make your life simple with these 10 steps

Are you an extravagant spender or a minimalist? Either way, most people find it hard to manage finances these days considering the number of avenues we have to take care of such as bank accounts, online accounts, credit cards, loans, and such.

If you’re a hard-working busybody roaming around in the bustling world, you probably have your finances in a knot. We sometimes feel like we’re in the middle of utter mayhem. Between work, money, bills, and household chores, we have no time to organise our lives. But taking time to change now, will save you valuable time and money in the future. While there are those who are financially prudent, others pay an accountant to deal with it. You can do your finances without an accountant if you just research and learn about finance. 

Step 1: Take a break

If you find that your financial world is cluttered, take that much need break. Clear your mind and breathe. This world has become so money-driven that we just can’t afford our lifestyles no matter how much we earn. Man’s wants are unlimited and never-ending. We’ve entered a vicious cycle of working to hard to earn money and then spending that money to treat ourselves for all the medical bills that pop up because we worked so hard.

Step 2: Get everything together

Make a list of your finances. Consolidate bills and revenue so that you have a clear picture. This might take time, but it will be rewarding. If you have access to internet banking, your monthly statement will work well for a budget analysis. 

Step 3: Make a list of your debts

Organise your debt so that you can see the total amount you owe. If you don’t have debt, that’s great. But being in debt is not a favourable position. Did you know that debt can lead to depression? But there’s no need to worry. Get your debt in order and make a commitment to clear it. This will require sacrifices on your part to cut out some luxuries that you can do without. 

Step 4: Work towards paying off all your debt. 

Every time you get a chunk of money, a bonus, an extra payment, use it to pay off your debt rather than invest it. If you put the money into a fixed deposit, you will earn much lesser interest than what you pay on your debt. It’s important to be balanced between your debt and investments. But take into consideration the interest you pay on your loans and credit card. If it makes sense to clear the loan first, do it. Then you can start focussing on investments.

Step 5: Organise your bills.

There are a ton of apps available on smartphones to organise bills. You can also use an excel sheet on your computer or resort to the old-fashioned notepad. Find a system that’s easy to use and takes up the least of your time. You can set reminders for when bills need to be paid. Banks provided automated payment facilities where they will deduct the amount due from your bank account and pay your bills for you. This way you never miss a payment. 

Step 6: Maintain an emergency fund

Always keep an emergency fund. Save a substantial amount and put it away as back up money. Also remember to forget about that money unless it is absolutely necessary. It’s hard to resist, but it will come in handy some day when you really need.

Step 7: Start Saving

When you’ve cleared your debt, start a recurring deposit. It’s the easiest way to save money in small instalments. You can start a small recurring deposit even when you’re paying off debt. It’s always better to be paying EMIs towards savings rather than debt. You can also start a post office savings account or a PPF. Find a savings option that’s suitable to you.

 

Step 8: Make investments 

Invest your money, it’s the best thing you can do. But invest wisely, it’s easy to get fooled. If you choose to invest your money in property, do your research well. Make sure the property has no disputes, find out about the area and development. Above all, don’t be in a rush to invest. Take your time and make a smart decision. If you have money to take a risk, you can venture into the stock market. The stock market isn’t for everyone, and if you don’t know how to play the game, you can lose your money in no time. 

 

Step 9: Pay your taxes

Pay your taxes on time! If you’ve saved money, you can declare your savings and reduce the tax you pay to the Government. But always make a tax declaration. It’s mandatory by the Government and will be required when you want to go abroad. File your IT returns and make sure all the relevant forms are in order. These documents come in handy in various situations like you want to apply for home loan or car loan.

Step 10: Don’t go back

Keep yourself organized and ahead financially. Don’t go back to the clutter. Don’t slip into debt again. Once you’ve come out of debt, you’ll realize how much more peace and money you have. Try not to be tempted to buy all that’s glittering on the ads. Buy what you need. Remember less is more. Minimalism will help you in the long run. If you think you need a personal loan, opt for one only when it is absolutely necessary.