What are the golden rules for handling your money?

Banking & FinanceInsurance & InvestmentEconomics

There are many interesting descriptions of money - "like water", "slippery", "fuel" and lot more. It has been defined on the basis of perceptions by different individuals in different situations. For some it has viscosity like water, and therefore needs to be held in place; in other words, it needs to be saved and managed securely.

Managing May Also Be Investing

When we talk about managing money, it usually refers to the proper utilization of money which includes expenditures, investments, and incomes. It depends on the individual how he sees his expenditures because, in many situations, they tend to become investments, e.g. if you purchase good quality edible oil instead of the lower quality variety you have been buying till recently, you're actually investing in good health and lower medical expenses.

Impulse Buying

There are some golden rules with respect to money management. The first is, you must never spend more than you earn. We realize this golden rule whenever we spend a lot more on something which is usually the result of impulse buying. For instance, you may argue with your friends on some matter of common knowledge and then you place a bet to prove your point. The bet is, whoever loses, will treat the others to a lavish dinner at an upscale restaurant. If you happen to lose the bet and end up spending your hard earned money in treating your friends to this lavish dinner, you would have surely blown a huge hole in your monthly budget for which you will be under severe financial strain for the rest of the month.

Saving Is Also Earning

The next golden rule is to set aside a certain amount of money every month as savings and do it religiously even if you have difficulties, short of a crisis. It pays you handsomely in times of need. The other golden rule is that you should keep a close eye on your bad debts and never allow them to spiral out of control, e.g. your credit card bills. You can do that by using your credit card wisely. Debt is part and parcel of life and it's quite difficult to stay completely free of any debt although some folks manage to do it. One final golden rule is to invest your money smartly so that your savings earn you good returns.

raja
Published on 04-Jan-2019 15:24:19
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