Financial Management in Real Life

Money is an important part of life and the more we have it gives us more power to plan a better future. The first requirement for earning money is life survival and when we earn more than this then future planning starts. We need to pay the price for everything we need in life and this includes food, house, and clothes. Being a homemaker I understand the importance of money management. Believe it or not but money management is part of everyone's life. Some people do it more and some less but for sure everyone does it. Our earning capacity plays an important role in our lifestyle.

I have been managing my finances for the last 4 years and I plan everything in the first few days for the entire month. This planning helps to have an estimate of the expense and I keep the money with me accordingly. I use a savings account that offers me an auto sweep facility and there is no reason to keep so much cash at home because it's not required. I manage all household expenses and get a sum every month on the first day. Some bigger expenses like EMI for the home loan and car loan are managed by him. He is busy in his office and because of this, I support him so that he gets some free time. I am good at managing all this so trying to utilize my skills.

Monthly Financial Planning

There are some fixed expenses that include groceries, milk, cooking gas, water, electricity, apartment maintenance, some stationary, etc. These are some basic and fixed expenses and can not be avoided in any circumstances Even during the covid this was my fixed expense so I keep some cash but mostly try to pay through my wallet because it's easy and convenient. I also try to keep a buffer of 10% on my estimate and it's for inflation. This might sound tough in the beginning but once we start doing it then it's easy and I find it funny now. Sometimes there are some sudden expenses and for that, I keep the provision. At the end of the month, I know how much I have spent and where so this helps me to have better control.

Better control of Expenses means more Saving

This is needed and if we have control over the expenses then we can also save a good amount. It's very important to save money every month. I first take out the saving amount and then the remaining amount is used to manage the expenses. Life was difficult during the covid time because we had to deal with salary cuts but now there is no such issue. EMI is our part of life because we can not buy a home without a loan and even for the car there is an EMI but we ensure not to go buying 35% of our income for EMI repayment.

Loan Pre-payment

I save a minimum of 25% of my income every month and some part of it is used to pre-pay the home loan. Usually, home loans are for the long term between 20-30 years, and I selected the 20-year term. This way the EMI is not too high and even the period is good. It's recommended to choose the EMI amount which is not so high and if you have extra money then better start pre-payment. With this formula I make some part payment in the home loan account every month this helps to reduce the tenure of the home loan. No such option is provided with a car loan but even that amount is not so big so it's okay. My goal is to finish the home loan liability in less than 10 years and for this reason, I pay EMI as usual and also pay some extra money every month.

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Loan Pre-payment or Saving

There are two options including saving or loan pre-payment. Some people suggest that it's best to focus more on loan prepayment and stop saving money unless it's not closed. But some also suggest that we need to save while paying EMI as usual. I have chosen the mixed option that I save and pre-pay some amount so that I can have a balance. I invest in crypto through DCA and use a certain part of my savings but I also keep some amount for any emergency while doing the repayment of my home loan.

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I am not in a full-time job instead I do freelance work from home. This gives me the freedom to have the flexibility of working hours. This is good but this also means I don't get a fixed monthly income. It varies and I don't know how much I am going to get after the month's end. It's completely dependent on the work and I earn sometimes more and sometimes less but I am happy that I am earning while giving more time to my family and even to my hive family.

@Leofinance is my part of life and this family has helped me a lot to learn the tips and tricks of investment in crypto. I still consider myself a newbie because I get something new to learn here almost every day. Crypto gives us freedom and leofinance and hive is like another home for me. I work here to build something for the long term and I am sure that through crypto I can achieve financial freedom in the next few years. This is how I am trying to manage my finances. We all do some financial management at our levels and it's surely a part of our life

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