Financial Struggles? Here’s How to
Take Control

Studies have demonstrated that most individuals from low- to middle-class groups who win a large lottery or jackpot eventually return to their previous financial situation after a certain period. The reason is that most people don’t know how to manage their finances to increase their income and aren’t prepared to handle large sums of money that they have never had. They think that what has proven effective at lower levels will continue to be effective at greater ones. But that’s not always the case.

Don’t become too comfortable if your finances are improving and you have a good net worth. You still require self-control to keep up good money management. Don’t panic if your name appears on those with a negative net worth list. Although things may appear difficult, they are only as they are for the time being and can be altered.

Together, we will determine the best way to handle your money so that over time, you may get wealthier and earn more money. We go over a few helpful hints below.

Identify your actual financial situation as it stands now:

Before making any significant decisions, start by evaluating your present financial condition. This involves being very definite about how much money you receive in and spend each month. Budgeting is a fantastic method to achieve this, and it can be made better by keeping track of monthly income and costs, putting spending caps on it, outlining necessary and optional areas, and making an effort to stick to the plan. Alternatively, you might utilize one of the many free personal financial tracking applications available.

After you have an in-depth knowledge of your costs, you can search for ways to raise your income.

You might, for instance, remove all of the pointless costs from your list of expenditures. However, you can only reduce costs up to a certain point. Seeking methods to increase income is a more sensible strategy. If you have any abilities that can be sold, think about switching to a job that pays more or trying to make some extra money with side gigs.
If you don’t get it right the first time, don’t stress. People generally need many months to get used to their new budgets, so patience is the key.

Start investing early:

Mistake number one: Several individuals put off investing because they believe it takes a lot of money. Nevertheless, you don’t need a lot of money to begin investing. SIPs in mutual funds can be started in India as low as Rs 100/month.

The important thing is to start as soon as possible. Don’t wait for the perfect day. The sooner you invest, the longer your money will have the time to grow. And, thanks to the power of compounding, your early investments will have a greater impact on your overall portfolio than investments made later on.

Try to find out strategies to create Passive Income:

Who said you have to make do with a single source of income and one job? Don’t misinterpret. I’m not asking that you begin working two jobs, which is frequently not allowed. You might still give side gigs that occasionally pay well some thought.

As an alternative, you may invest whatever excess cash you already have (from bonuses, incentives, for example) so that it starts to generate a consistent flow of passive income for you.

For instance, the interest on a Rs 50 lakhs fixed deposit is equivalent to Rs 29,000 per month in interest income (assuming 7% p.a. interest rate)! Even a straightforward FD might bring in money for you if you don’t want to take any chances with your money. However, you may also take into consideration equities mutual funds if you’re willing to invest in alternatives with higher prospective returns.

Understand your Financial Psychology:

Even if it’s easier said than done, this is however essential. Financial psychology is the study of the feelings and mental states that influence an investor’s success or lacking thereof. This covers several facets of an individual’s conduct and character that impact their actions. An important determinant of financial success is psychology. Although expertise, knowledge, and experience are all important resources, you cannot succeed in the financial industry without having the right mentality.

What does this signify? A few certain feelings and actions are frequently linked to financial psychology and have the ability to trigger changes in the market. The main emotions driving this conduct are remorse, fear, or greed. Make an effort to manage your emotional state since you can’t improve your income without a strong mental foundation.

Importance of 80/20 Rule:

Unexpectedly, this 80/20 rule applies to practically every aspect of life, including investing and money management. According to the Pareto principle, a small fraction of factors accounts for the majority of the consequences for many outcomes.

According to the 80/20 rule, 20% of a portfolio’s assets might provide 80% of its growth or returns. But on the other hand, the same amount i.e. 20% can also result in losses of up to 80%.

To Sum up:

To Sum up, Increasing your income is influenced by several things. It involves more than simply looking for new sources of income; it also involves carefully monitoring your spending and making the most of the money you already have.

With any luck, these pointers will come in handy as you strive to boost your earnings and strengthen your financial position.

We’ll just sum up by saying that the most important thing to remember while making plans to boost your income is to just start, go outside of your comfort zone, take a little risk, and be determined. Also, don’t put off investing until you have a sizable sum of money. Just get going.