Manage Your Money in Such a Way That Your Money Will Work for You in the Future
Managing your money is a habit which is very important and needs to build day by day. Many people of a young age do not understand this now but until and unless you are from a wealthy family you have to manage your money in such an effective way that you won’t work for money but your money will work for you in future.
Start Saving Now
saving is a basic and most important habit to manage your money. Start saving now, at this moment. No matter how much, just save. The early you start saving, the better. Saving is not hard and can be achieved by very little planning. At the start of every month or week, first, put some money aside as your saving, and then adjust your expenses in the remaining money.
Never spend money first on tour expenses and then put the remaining money in saving. This will not be a long and effective way but saving first and then spending will be more effective.
Do not indulge yourself in liabilities to manage your money
As youth we often crave cars, house of ourselves, but just as a matter of fact cars and houses are liabilities. Liability is something that takes away money from you but gives nothing in return. Suppose if you buy a car, you have to pay buying price as well maintenance price every month then your car will be a liability. Instead of spending on liabilities, you can invest in assets.
Assets are something that gives you a return on your money. Suppose the car you bought, you gave it for Ola or Uber work then you will get paid for your car which no longer will be a liability but is an asset now. It’s not like you never buy a car or house, once you achieve financial freedom and once you have recurring income then you can buy anything you want and that is our ultimate goal.
Invest your money
Saving is a good habit but not a smart one. Saving your money at home or in the bank will not give you profit. But just imagine instead of putting that money in a bank or your locker, suppose you put it in the platform which gives you a good interest on your money, wouldn’t that be a smart move.
There are such kinds of platforms like RD, FD, mutual funds, Stock market, etc. Now RD and FD is the safest way of investing where you just have to open RD or FD on your money. You will get interested accordingly which will be taxable by RD or FD.
Though RD or FD is the safest way it has no significant interest or profit. Mutual funds and shares are subject to market risk which can give you huge profit or loss. Where to invest is completely your choice. But you personally think Mutual funds or shares will be better as there is nothing without risk. With a little study of the market and advice from financiers, you can earn a lot in funds as well as shares. Now how to invest is totally different and huge topic. It needs study, daily market analysis, and practice.
Go for second income
In this time where everything is done expensive, one income will never be sufficient. You can merely survive on one income, but if you want to live then a second income is a must. Now the question is how to earn extra money.
Here’s the key factor: you must be willing to take risks. You must be willing to get out of your comfort zone and start something new. It might be a small business, classes, or anything something different from your job. You have to give some extra time at first but once you build it enough then it will surely make your profit.
Try to build a pipeline to manage your money
From the book parable of the pipeline by burke hedges, I have learned that you must work on building a pipeline and not work to earn money. Because once you are done with building the pipeline then the pipeline will earn money for you and you will not have to do anything. He has told a very interesting story of two friends Pablo and Bruno. The moral of the story is that we tend to trade time for money. We mistakenly focus on money in the present moment but ignore what may happen in the future.
We may get sick, we may lose our energy or some other adversity may occur. When this happens, we are no longer able to work and trade time for money, we immediately need another source of income without us working. This is called passive income. Therefore, while you’re still young or have energy, you must build your pipeline so that one day, it will take care of you when you’re unable to work or decide to leave your job.
Finally, you cannot do this all in one day but you have to do it daily and gradually. It seems hard but it is very easy once you are disciplined in the way you spend and manage your money.