How to manage your money better.

Financial literacy. Wealth management skills. Retirement planning. There are many ways for one to manage his/her money. Here is a guide on how you can get a better understanding of your financial situation and to find a strategy that works for you.

 

Financial literacy. Wealth management skills. Retirement planning. There are many ways for one to manage his/her money.

Here is a guide on how you can get a better understanding of your financial situation and to find a strategy that works for you.

 

1.      Assessing your needs.

“The more money the better,” and that’s for sure. But managing your money is not just a reckless race towards the distant mountain of money; You need to consider and plan for the financial tools and resources that will get you there every step of the way. Hence, you need to understand when you need money and how much money is needed at each stage of your life (and this includes the needs of your family too!).

 

2.      Every investment is a vehicle.

As mentioned, before approaching an investment, develop a sound financial plan. Have a clear understanding about your current financial status and the key milestone where you will need money (for your first house, car, marriage, etc).

Have an ambitious financial plan to grow your wealth aggressively, but also take a conservative approach so that you have emergency funds to fall back on when crisis approaches.

Expose yourself to as many investment vehicles as possible.

i. From basic long term saving plans to securities trading.

ii.Understanding the risk involved in each vehicle and consider your risk appetite before investing

Iii. Know your own time horizon too for each investment and the objectives of committing to an investment.

 

3.      When in doubt, seek professional advice.

There are many government bodies that do financial consultancy and wealth management pro-bono. These are services meant for helping individuals plan for their finances, Financial Advisors can also provide a basic assessment of your financial situation and provide means for you to build up wealth, ranging from life insurance to investment vehicles. They could provide a more personalized service it deals more into personal aspects.

 

4.       Have a plan for all seasons

“The best investment is the one that pays you the most when needed the most.”

Your needs will change with each business cycle. During crunch-time of a recession, it pays to have a diversified your portfolio that provides a consistent payout. Hence, diversify your portfolio across a large time horizon. The most important aspect is to ensure that your necessities are taken care of all the time during booms or bust.