Personal finance management! Still, thinking about it?

If you take care of your finance today, your finance will take care of you tomorrow!

But the question arises, How to do it exactly?

Let’s go through it.

Remember, personal finance is about 2 aspects

  1. Understand your current finance.
  2. Aim to achieve what you want.

Understanding your current status is important as circumstances may be different for different people. For instance,

  1. Some may be earning well but have to borrow from friends after 20 days of salary receipt.
  2. Some may need to actually focus on earning rather than controlling expenses.
  3. Some might be doing well but still, feel some problems.

So, it’s important to understand where the actual problem is,

If it’s like your expenses are more and you’ve been unable to control, this article is for you. Let’s discuss how to control expenses and ensure efficient personal finance.

1-Always make a budget – (it’s an intelligent move)

The sole purpose of the budget is to segregate,

Discretionary expense & non-discretionary expense,

Confused? Let’s clear it up,

Take it simple, the expense is discretionary when it’s for your entertainment, and you can avoid it. For instance,

  1. Going out in a restaurant. (if you don’t go, it’s not a big deal)
  2. Organizing beach party.               
  3. Picnic in a luxury yacht.

Please note it’s not about eliminating but limiting these discretionary expenses. So, if you make a proper budget and keep some scale for discretionary activities, that’s fine. However, always try to maintain limits set for these expenses.

On the other hand, non-discretionary expenses are ones that need to be incurred at all and you’ve little or no control over them. For instance,

  1. Grocery.
  2. Utility bills.
  3. Medical bills.

So, a good budget contains decent segregation between discretionary and non-discretionary items.

2-Save before expense – (it’s a move to build a saving attitude)

Yeah, that’s not easy and you might end up thinking about how it’s going to work. Believe me, that’s pretty fine if you could not achieve success in a few starting months, but it’s going to build a saving attitude in your existence. It’s a great help in controlling discretionary expenses and ensuring you don’t have to borrow from someone 10 days before salary credits.

3-First, pay your obligations – (it’s a move to satisfy your soul)

Once you have a salary in hand, it’s a wise move to pay obligations. That’s because liability might be leading to interest charges and disaster to your personal peace. So, isn’t it wise to get rid of liability in the first place? It’s just not a rule written in the books but a fact that humanity experienced for a long.

4-Remain within your limits- (it’s a move to avoid foreseeable pain)

It means always keeping your expenses in line with your budget. Specially, you need to focus on the non-discretionary expenses. Otherwise, you might end up in a big compromise on your financial health.

Further, it’s highly expected that if you remain within expense limits, you’ll end up with savings in hand. It’s a time to invest and,

5-Invest wisely – (Don’t forget to consider your risk appetite – otherwise, it will move you)

The investment needs to be in the line with your risk appetite. For instance, if you are young and planning for retirement, it’s a good idea to opt for an investment with higher return and higher risk. On the other hand, if you are near retirement, it’s good to opt for an investment with lower risk.

You may also like, why debt is cheaper than equity?


Managing personal finance is not rocket science. However, it’s a matter of attitude and your commitment to the process.

To start personal finance management, it’s important to take the following steps.

  1. Understand your current finance structure.
  2. Set the goals and budget accordingly.
  3. Track and monitor your expenses to ensure savings.
  4. Invest wisely in line with your risk appetite.

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