How can I improve my financial skills?
Finance can be complicated sometimes, especially when you are not a numbers person.
It might take a lot of your time and patience to understand what’s going on in your finances and how you can manage your finances better. So, we have written a guide to help you improve your financial skills.
Financial skills are important to have, as they will help you manage your finances better. However, these skills are taught neither in school nor in college.
So, when we grow up and start working, we get confused about how to save our money and how to file our taxes. We turned to the internet for help but we all know that the internet is flooded with so much information.
Sometimes, that can be a good thing but many other times, it can be very time consuming to sort out the information that you need. This makes it important for us to learn at least the basics of personal finances.
But where do you start? We are here to help you with that. This will be a detailed guide to help you understand where you should start and how you can improve your financial skills.
Finance Ain’t Scary
The first thing you should do is to overcome your fears of finance. It is time to avoid finance because you are afraid of numbers. You might feel that you would make a mistake while budgeting or tracking your expenses.
Don’t worry about the mistakes because, at the end of the day, you are just measuring your financial progress and not writing the entrance exam for IIT.
Also, it is not complicated mathematics but just addition and subtraction. Sometimes, you might have to do multiplication and division. That’s all! So, the first step in improving your finance skills is to get over the mindset that finances are scary and complicated.
Learn The Basics
There is a lot of jargon in the world of finance. It is important to learn a few basic terminologies. Try reading blogs written by Koshex to get an idea about the most important concepts.
You can also read books about personal finance, listen to podcasts and read financial letters. Learn about simple concepts such as budgeting, financial planning, saving, investing, and income taxes.
This will give you confidence in managing your own finances.
Understand Your Cashflow
Do you know what your monthly cash flow is? If not, that is the next thing you should know about. You need to understand how much money you make and how much you spend every month.
There are tools available online, including Koshex’s Expenses Tracker, which can help you understand where you are spending your money.
Only when you track your money, you will be able to see whether you are a spender or a saver. When you don’t track your spending, you will not be able to identify any negative money habits you have.
A lot of times, people are spending more money than they would like to admit. So, understand your cash flow properly.
Build A Budget
Setting a budget will help you spend within your means and save more money.
When you start earning money and no one is there to hold you accountable, you tend to spend over the limit, because no one is there to question you anyway.
You are not alone, we all tend to make impulsive purchases sometimes. It could range from splurging on a night out, to buying expensive gadgets and luxurious skincare products.
The ‘End of year sale’, ‘End of reason sale’, and ‘Black Friday sale’ all sound very tempting but if you have a strict budget, and if it is constantly reminding you and holding you accountable for your money, you will think twice before buying unnecessary things.
Pro Tip: Does tracking and budgeting sound hard? Try Koshex today. 20% of Koshex customers who tracked their expenses through the platform were able to save more money and make investments in financial products, which helped them achieve their financial goals, easily and efficiently.
Wants & Needs
We live in the age of social media. Most of the time, we are pressured into buying things that we don’t need.
It’s alright to indulge in expensive or frivolous purchases once in a while. However, you should have a clear understanding between your wants and needs.
For example, eating food every day is a need while eating food from a fancy 5-star restaurant is a want. Take a moment every now and then to differentiate between the two. You will be amazed at how much money you can save when you do that.
Create & Maintain An Emergency Fund
You need to have a safety net in case you are met with unexpected circumstances such as job loss, critical illness, home repairs, etc.
Also, what other reason do you need to build an emergency fund other than the pandemic itself? An April 2021 Forbes survey conducted by YouGov found that the pandemic pushed nearly 40% of people who had emergency funds to access them, with 73.3% using half or more of the fund and 29% all of it.
With more variants popping up and different global emergencies coming up, it has become more important now than ever to create an emergency fund.
But how can you save for a safety net? Trust us, you do not have to allocate a lot of money to build an emergency fund.
You can build one slowly over a certain period of time. Usually, people are advised to save three to six months of their salary in their emergency fund.
So, if you are earning ₹45,000 per month, your emergency fund should be ₹1,35,000-₹2,70,000. It might look like a lot of money but if you save ₹15,000 every month, you can save ₹2,70,000 in 18 months (1.5 years). Doesn’t sound so scary now, does it?
In The End…
Finance skills are crucial to achieving financial success. The good news is that you don’t require a fancy degree to manage your finances effectively.
By reading our blogs, which are written in easy-to-understand terms, you will be able to learn how to manage your finances.
You should always consider the big picture and develop habits that can help you make better financial decisions, leading to better financial health.
Interested in improving your financial life and enhancing your wealth management strategy? Then, head over to Koshex and create an account today.
You can get started in your financial journey in less than just 2 minutes and you don’t have to do any paperwork.
One Koshex account can help you track your expenses, build a proper monthly budget, save on good financial instruments and invest in excellent instruments. Sign up with us today.