Managing Finance is an art. The ‘Growth’ of an individual / family / institution will mainly depend on ‘How you manage your finances?’
Some Useful Tips: Here I would like to share with you some excellent quotes by the most famous Management expert, Mr. Warren Buffet, which will help your to realise your dreams. According to him,
- On Earning: ‘Never depend on single income. Make investment to create a second source.’
- On Spending: ‘If you buy things you do not need, soon you will have to sell things you need.’
- On Saving: ‘Do not save what is left after spending, but spend what is left after saving.’
- On Taking Risk: ‘Never test the depth of a river with both the feet.’
- On Investment: ‘Do not put all your eggs in one basket.’
- On Expectations: ‘Honesty is very expensive gift, do not expect it from cheap people.’
To understand them better and how they can be adopted into your personal life, here are some check points which would help you in managing your personal or finance of your family..
Principles of Cash Flow
You must apply the principles of ‘Cash Flow’ in your financial life. Cash Flow is not just about the cash in hand. It is about the details of your income against your expenditure. You must be able to compare your income with your expenditure and plan your budget. Always keep a reserve amount in a separate account which will become very handy in an emergency.
You must be clearly able to identify your source of income, whether one time/ steady income/ varying income, especially if it is from business, possibility of growth over a period etc.
Identify your monthly regular/ recurring expenses like food, water, electricity, telephone bills, house rent if any, children’s education, medicine, EMIs if any, recreation/ travels, life insurance, health insurance, building/ land tax, for clothing, expenses towards your Retirement Plan and other unforeseen expenses,insurance and road tax for your vehicles etc.
Balance your monthly income and expenditure. If your monthly expenses are more than your monthly income, then you need to prioritize your requirements and spend accordingly. You need to think of saving for your future also, especially for your Retirement Plan.
Live within Your Means
How can you manage to live within your means? At times, balancing one’s budget can be a challenge. You will find it very difficult to make both ends meet. By following some simple steps, you should be able to balance your budget. They are:
- Create a list of essentials to include- groceries, utilities, clothing etc.
- Estimate your income,
- Compare your income to your expenses,
- Evaluate your expenditure,
- Check where the bulk money goes, evaluate these expenses and slice them down so that the essential things fit into your budget.
If you find it difficult manage your income v/s expenditure, then perhaps you may have to find ways for some additional source of income or you may have to limit / control your expenditure.
Additional Source of Income
How can you do this? Well, your knowledge can help you a lot.
- You can offer advice for others or brainstorm ideas on how to generate more income.
- Look for relevant works / some part time jobs that you can do on your weekends.
- You can look for some jobs which will permit you to work from your home at your convenience.
- Invest a little amount in stocks or mutual funds or in gold.
- Have some savings,
- Reduce your expenses.
Find another source of income other than your job. If you have some good hobbies like Painting, Photography etc, you will be able to generate some additional income by developing your hobbies also.
It is quite possible, you may the only bread winner of your family or may be your spouse also may be working. Still you may not find it enough to run the show. Gradually your growing children after their education find a suitable profession and start earning and support the family.
It always good to educate your family members make them realize the value of money. You must also get them involved in planning and preparing your family budget.
All are not born with a silver spoon in their mouth. Most of the people have come up in their life through hard work and by well managing their finances. So, there is nothing to get upset about. One day you will also be in a well-off situation.