Money management can sometimes be a very tricky business. We have future goals as well as the present commitments to deal with. The lifestyle expenses plus planning for a sustainable future can take a toll on one’s budgeting. 

How to manage everything? When is the right time to start and ideal ways to proceed in the financial journey? All these questions pose a dilemma to every individual. 

So, here’s a list of the most crucial money management questions that you need to know during your financial expedition to manage it all like a boss and achieve the life you dream about!

Money Management Questions & Answers to Look for

  1. When to Initiate Your Financial Planning?

The primary and very underestimated question is where should financial planning begin? Look around, you’ll find a bulk of businesses trying to promote and sell their products or services. May it be different types of stock brokers offering equity trading accounts, agents providing insurance deals, or other financial services, etc. However, the first block in the financial pyramid should be an emergency fund. 

An emergency fund should be worth 6-9 months of your living expenses. This has become all the more important and a lesson well-learned in the ongoing COVID-19 pandemic. 

An emergency fund is essential because, in the absence of such a fund, your other long-term plans could be disturbed in case of any unforeseen mishappening. This fund also comes to the rescue at the time of any unforeseen expenses. You could turn your inherited money into this fund as well. 

This just-in-case fund is the building block of your secure financial health because even if something goes wrong, none of your goal planning shall be disturbed. Creating such a large sum can be a little difficult at once and thus requires proper budgeting in the initial stages of earning. While things can be luring, it is important to understand what you want and what you need.

  1. How to Deal with Debt? 

The second crucial issue one faces is debt. We face debt before really understanding its meaning. How to deal with debt? A question that scares us all. But how all this actually starts? Due to our lifestyle, our wants and requirements may be. When we are looking for a large investment such as buying a house or starting a business, we look for big loans. 

People often mistake liabilities for assets. You may think a car is a liability, not an asset. But, do you realize? It requires regular maintenance, daily fuel costs, and reduces in value over time. However, in today’s world a car is not a luxury, but a necessity, so one is even ready to take a car loan for buying it. And if due to unforeseen events, there is a gap in earnings, paying off the loan becomes difficult. Here begins the debt cycle. You should include debt in your financial books only when you’re financially ready for it.

So how to find out if you are prepared to avail of an automotive loan? According to one of the investment, rules is that the monthly interest on a car loan plus its daily operating expenses should not be more than 20% of your income. If the amount exceeds it, your budgeting will be disturbing your financial well-being.

  1. How to Manage Your Credit Cards?

Furthermore, a credit card is one troubling issue. How to put your credit cards to best use without diving into the debt trap? You get numerous calls from agents trying to sell more and more credit. You should always know your credit amount. For starters, create a list of expenses you pay with cash and what you pay by credit card. The credit card payments should be only such that you can easily pay off. 

Another factor that matters for a good credit score is timely payments. Clear off your credit card dues regularly. If you have difficulty remembering, set up automatic payments. There are multiple AI reminder applications for the same as well. 

When you think to maintain a good credit score, a crucial element to consider is balance. You can avail the advantage of credit and not fall into the debt trap with a little planning and smartness. The rule here is to take only what you can pay with your monthly earning. 

  1. How to Balance Investment? Retirement vs. Child Education

After crossing these stages, you can find yourself in this confusion: How to balance child education with retirement funds? Very few understand that you need to start with your own retirement fund first and put in some part into child college funds, whenever you can. This is so because there are many ways of paying for college such as student loans, scholarships, etc. when the time comes. 

However, nobody is going to pay for your retirement. There are no loans and no real extra funding for your golden days except the corpus you build. As much as the kin’s future is important, the “pay yourself first” rule applies to one and all. 

  1. How to Make Your Kids Learn about Money?

However, it is important to teach your kids about money so that they do their financial planning on their own when the time comes. How to teach your kids about money? We all are likely to face this question at some point in life. You want to start at the earliest which is, the day your child is born. You can take the initial steps by opening a savings account in your child’s name.

As he/she grows, start playing games which include the exchange of money (of course not-real). Your child will understand the concept of monetary value from this activity. Take them to the grocery store when you go and let them witness how you pay for stuff before taking it. 

Further, in their growing years, you can start an allowance for them. It helps to develop a habit of saving. Teach your teenager the importance of money management, simple calculations, making payments, online banking, and debit cards. Finally, as your child grows up, talk to them about investing, stock markets, and future planning. As a parent, it’s your duty to guide your child in becoming financially independent. 

Conclusion 

Money management decisions can be overwhelming sometimes. However, with the right planning and adequate knowledge, everything can be dealt with. You can also ask for guidance whenever needed from industry experts like financial advisors, brokers, or through reliable online consultations. 

Remember, it all starts with a specific goal in mind. Be it short term like buying a car or long term like early retirement. You simply have to target your financial objectives and you’ll keep finding answers to your money management questions easily.