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Here Are Some Basic Money Skills You Need To Know

22 Nov , 2015  

Nikhil (Nik) Sreedhar
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Nikhil (Nik) Sreedhar

Founder at ProAdviser
Nikhil's dream job is to be an exotic car salesman. His favourite colour is orange and it shows as he is the 23 year old entrepreneur behind ProAdviser. You should follow him, he gets lonely.
Nikhil (Nik) Sreedhar
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Some of us often go through the month without paying much attention to our expenses. Others pay attention to the expenses, but aren’t sure how to create a budget, or manage their money properly. However, there are simple measures you can take to ensure that you are saving money every month and cutting out any debts to create the best possible future for you financially. And these steps don’t even need to eat into all your free time, but should be simple enough that they only require a few minutes at a time.

There are many benefits from using credit cards, such as obtaining points that can be used towards rewards like holidays (some manage to receive free flights and hotel rooms if they use their card consistently enough), and it can also help you establish a good credit score. Some also like to use credit cards to keep track of their spending as opposed to always using cash, as with credit cards each purchase will be shown in your statement, whereas with cash you are responsible for recording your purchases. However, it can be easy to get into the habit of not paying off credit cards, and acting as though you are receiving free money. This can lead to your debt accumulating, making it difficult to pay off when many credit cards have interest rates. So as a way to manage your money each month, make sure you pay off your credit card bill every month. This will not only give you peace of mind, but will help you sustain a better credit score as well.

Tracking your expenses compared to the money you are receiving (in income, investments, etc.) is very helpful when managing your money. If you are familiar with Microsoft Excel, it can be a useful tool to keep all of your expenses and revenue in one file. If you continue to use Excel year after year, you can also keep track of your finances on a year-to-year basis, which is great if you want to measure how long it could take you to save up for certain expenditures, like a deposit on a house. With organisation right at your fingertips, it can be easy to figure out what your bills are for each month, as well as seeing how much of a percentage your expenses are out of your income. Also, feel free to explore any money-tracking or budget apps that are available. Some of these may include Pocketbook or Moneysoft, and they will help breakdown some of the terms if you are less familiar with them. If you are used to having more control over organising your income and spending, then perhaps those apps aren’t the best for you, but if you were to find an app that took personal control into consideration, then also feel free to pursue that.

Keeping track of your paycheck every month is also useful, as you can make sure that the tax being taken out every month is consistent with the previous month. If there are any irregularities you can address them quickly. And if you are self-employed partially or wholly, it may also be a good idea to review your income every month, and ask yourself whether you are taking out enough for tax. Also, keeping track every month will help you keep focused on a financial plan. For example, if you would like to position yourself for a promotion (that includes a raise), put this in your financial plan, and review how much your income would change with a possible promotion.

Tracking your investments and net worth every month is also a good habit to get into. As with tracking expenses, creating a spreadsheet of different accounts is a great way to view the accounts month-by-month. This may also apply to your superfund (if you have one), although keep in mind that monthly fluctuations do not matter so much in the long-term for a superfund.

No matter what age you are, it helps to start managing your money as early as you can. It will help nip spending problems in the bud, and help provide a more secure future for you financially.

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