The importance of managing your finances

Financial management refers to strategic planning, organising, directing and controlling of finance. It involves activities such as :

  • Maintaining enough supply of funds
  • Ensuring you have good return on investment
  • Optimum and efficient utilization of funds
  • Creating real and safe investment opportunities to invest in

Financial management plays a very important part in our lives. It helps with :

  • Financial planning and acquiring funds
  • Effective utilization and allocation of your finances
  • Making critical financial decisions
  • Improve profitability
  • Encourages you to save money

Financial management of an individual or family’s resources is known as personal finance. This comprises of how you manage your money through expenditure, investments and savings while considering various life events and risks. It also includes banking, budgeting, retirement planning, insurance, estate planning and more! It focuses mainly on meeting an individual’s long and short term goals.

Managing personal finance is essential due to the reasons mentioned below.

  • Financial issues have a very broad perspective. What do you do after earning money? Do you just spend it? That shouldn’t be the case. Your current financial situation will define how you will do in future, so you will have to take smart financial decisions.
  • With a proper financial plan, you will be able to manage your income better. You will spend where necessary and invest better.
  • It helps you grow your cashflow by being prudent in your spends, tax planning and careful budgeting.
  • It also enhances your financial knowledge and helps plan better for not just you but also your family.
  • Having debts is not a problem as long as it is just a few and it is manageable with what you earn. However being overly in debt will prove to be dangerous to your financial stability. Through personal financial education, you will be able to avoid such circumstances by taking better financial decisions.

Using data analysis and predictive data analysis can aid in managing your finances at a greater level of detail. Analyzing patterns in your data can help you find ways to grow your finances. Irrespective of what stage in life you are at, managing finances on your own is a tough task. Getting help from any external source for this purpose is definitely a smart decision. Finin provides expert, hyper-personalized services based on your money habits in order to help you manage your finances better.

Managing your finances includes more than just looking at your account balance. The features in our app and the need for it is mentioned below.

  • Define your financial goals : Take some time to write down your specific long term goals. For example, a travel trip to a different country, buying a new car or a house, starting a family or even shifting careers. Once you’ve set your long term goals, set short term goals such as following a budget, decreasing your spending or not using a credit card. Prioritize your goals and make a financial plan. The Finin app provides you a place where you can set your goals and work towards achieving those financial goals.
  • Create a plan : A financial plan is vital in order to achieve your financial goals, for example, it can be as simple as creating a monthly budget, a spending plan and getting out of debt. Once you achieve these, you will find that you have extra cash and the money free from your now cleared debts can be utilized to achieve your other goals. You need to remember that your budget will give you the most control over your financial future. Finin provides a place where you can set budgets and contribute to your long term goals and also build an emergency reservoir. Planning your expenses in advance can help in staying within the limits of your budget.
  • Pay your bills and debts : Debt and bills are huge obstacles when it comes to reaching financial goals. An easy way to pay off your debts is when you make a minimum payment towards you debt, pay a little extra for one of your debts, this way it will reduce due to the snow ball effect. Having emergency funds for this purpose helps. Sell unused items in order to clear your debts. Paying bills on time will help you analyze the exact money you will have left in order to spend or invest. Finin will give you timely notifications prior to the due date so that you can keep funds ready to pay your bills or cancel trial subscriptions without forgetting about it.
  • Block specific services of your card : Keeping a tab on how you use your card can help you get over your bad spending habits. Finin gives you an option in the app to freeze your card for some time, freeze online transactions, ATM withdrawals and international transactions. This will help you control your spending.

Managing your finances has multiple benefits. You have complete control over your money allowing you to save enough for a sizeable down payment reducing your monthly payments. Managing your finances plays a vital role just as physical and mental health as working out in the gym in order to reduce stress. When you have control over your finances, you can rest assured that you have enough money for any uncertainties. For millennials, retirement plans sound like they are very far off goal. However, if you manage your finances well, you could be sipping margaritas on a tropical island while also saving enough to plan out an early retirement after reaching financial independence.

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