Lets talk about money

April 8, 2013

One of the groups of people that have benefited the most from Bangladeshi banker, economist and Nobel Peace Prize recipient Muhammad Yunus’s idea of microfinance is women. If you visit one of these microfinance programs all across Nepal or any other part of the world, you will realize that secret to their success doesn’t lie only on the fact that they are empowering women by giving them access to money, but most importantly giving them tools to manage their money and training them to become financially responsible.

We can draw some lessons for our own lives from these programs – financial success is not only about having money but also knowing how to manage and account for it. Think about it, when was the last time you actually accounted for every penny you earned and spent?

Here we share with you a few basic money-managing tips that have worked for us. We would love to also hear your money managing ideas, please do share them in comment box below.

Be aware of where your money goes

We have all heard it, if you want to save money, set a goal, make a budget and stick to it. But, if your budget is unrealistic, either too low or too high, you can easily get frustrated and fall off the bandwagon, and never achieve your financial goal. So, a good way to avoid that pitfall is to track your monthly income and expenses for three months, average them and come with a budget that meets your needs and lifestyle. Also, in process, you will be surprised to discover where you spend your money and how much of it goes for things that are really not important to you. This way you can cut unnecessary expenses and be more mindful of money choices you make.

There are many websites, apps and spreadsheet templates available to track your expenses. Following are few apps that work well for managing your finances.

Cashbook – Expense Tracker (Android)

Hello Expense

Expenditure (iOS)

Most of the apps come with a lot of bells and whistles. These extra features can be useful to some of us but for others, it may be more than what you need. If you are looking for something simple that gives you a quick snapshot of your expenses then we think our monthly expense tracker also works pretty well. Click Expense tracker-didibahini.com to download didibahini’s template. You can customize the template per your need.

Automate your savings

Once you set your budget, allocate how much of your income will go towards your savings. Like, your other fixed expenses, rent or mortgage money, etc., it will be off limits for spending. Best, set up an auto deposit where a certain amount is taken out of your checking account and put into your savings account every month, without you seeing it at all – out of sight out of mind. It works like a charm.
If your employer offers you 401k plan, Sanjay Kosh savings, or any other retirement savings plans, take advantage of it. Take time to look over the plan in detail and if possible set your contributions to maximum percentage your employer matches. Think of the portion your employer matches as free money. If you are not taking advantage of it, you are literally throwing away free money!

Practice delayed gratification

It is great to live in the moment… by all means please do, but if it costs you a good chunk of your income to do so, think twice. Weigh pros and cons of your having the “it” bag before you blindly swipe that credit card for five minutes of retail therapy high. Do you really want it over reaching your financial goal for the month and for financial security down the line? Practice delayed gratification, most importantly live within your means, earn your “it” bag or whatever it is you need or desire – save for it. We guarantee you will be much happier for it.

Be a savvy shopper

Will power aside, be a savvy shopper. Compare prices, look for coupons, and join cash back programs. “Who has time?” you may say, but give it a try and you will be surprised how much you can save by doing a little homework. Look around for price comparison. There are many price comparison sites and apps. Try sites like coupons.com, retailmenot.com, couponcabin.com for coupons, and ebates.com for cash back. Most retailers including Target have their own coupons you can print in seconds. And also be on the mailing list of retailers you regularly frequent for coupons and deals.

Some apps that have worked for us for price comparisons are:

ShopSavvy

PriceGrabber

Wait… don’t forget to live though

It is good to have a good cushion of money, but what good is a pile of money if in pursuit of a big savings account, you deprive yourself and your family from doing or having things they love? Save wisely, live a little.

Should you live with-in your means? Without a doubt, yes. But this doesn’t mean you can’t have a little fun or have nice stuff. This is where art of priority should be practiced. Prioritize what is important to you and your family. If buying organic food is important to you, do so, but that might mean cutting expenses in other areas of your lives. If at this point in your life, you want to travel and see the world, do so, but save for it, have nest egg for it, don’t get in debt doing it.

Have a monthly budget for things you like to do, whether it is eating out, going to movies or buying books, whatever it is. Also, give yourself a monthly pocket money to spend however you want to. You will be glad for it and will also be more likely to stick to a budget.

Disclaimer: Neither didi nor bahini of didibahini.com is financial expert, the tips above are derived from their personal experiences.

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