Personal Finance: Determine Your Financial Priorities

Divya Rajan  

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Personal Finance 

As intimidating as it may sound, Personal Finance management is all about planning and following some rules you set for yourself. It has become simpler largely due to the varied mobile apps that help you keep track of your income, expenses, receipts, bills, payments, etc. making everything available to you at the click of a button.

Make a decision

The first step towards planning your finances is to decide a course of action that you are willing to take and eventually stick with. Some things may be hard to follow through, your desire to splurge on retail therapy may overpower your need to manage your finances. Don't let an occasional deviation from the plan or even starting trouble let you move away from your goals.

Organize your data

Organizing all your financial data takes some time and effort but this forms the basis of everything that you do to manage your finances. Make a note of your income and your recurring expenses such as house mortgage payment or rent, car mortgage or insurance payment, house and automobile taxes, utilities such as electricity, cooking gas, water, maintenance fees.

To track your other expenses such as food, groceries, retail or similar expenses, gather the receipts for the past 3 to 6 months, tracking these physically may be difficult which is why there are apps like Receipt tracker app which helps you keep track of all your receipts, bills, etc. It also acts as an expense tracker making it easy to identify your average monthly expenses.


The most important step towards managing your expenses is to create and stick to a budget plan. After you have gathered all the relevant data you now have an idea about how and where you spend your money the most. A very simplistic budget simply includes your income and expected expenses for the month based on your earlier few months’ expenses.

You may also set aside a portion for an expense you anticipate for the month. This could be anything from new furniture to the latest Television set you desired to buy. The idea is to plan how much you intend to spend for the month and stick to it as much as possible.

The most important rule to follow is that your expenses should never exceed your earnings.This is also one reason why budgeting is such an important part of expense management. With a budget, it becomes clearer if you have broken the golden rule.There are mobile apps that help you with the budgeting process as well.

Credit and Debt

One of the most important aspects of managing your finances is understanding the difference between debit and credit. While debt is how much you owe, credit is how much you can borrow. It is essential to eliminate debt as quickly as possible. Follow a steady plan to pay back your debt.

Building up your credit score is important for getting loans for getting your desired car or your dream home. The most common way to build up a credit score is by using credits or by obtaining a loan using credit and paying them back systematically. The better your credit rating, the better your chances of getting the desired loan amount.

Some easy tips to manage your credit card usage

Do not own too many credit cards no matter how advantageous they seem to you. You'll end up paying more in annual membership fees or interests.

Always pay back your credit card bills on or before the due date to avoid paying interests that increase exponentially the more you delay payment.

Always ensure you can pay back the amount you split into installments in the unfortunate scenario you lose your source of income. Else, you'll be paying a huge amount only in interests.

Keep track of how much you spend on your credit card everyone and make sure it is not more than your income.


Put aside a specific amount from your paycheck every month for the future, it can be for an emergency fund, for your children's education or the down payment on your dream house. Save Save Save! There is only one rule to saving, just do it!


Employers offer 401(k) that goes directly from your paycheck before taxes into an investment account. The advantage is that employers also match how much you contribute up to a certain point. This is one of the best long-term investment options.

Other investment options include shares, stocks, bonds, mutual funds, etc. need more careful planning and understanding of the market or the products. Your best bet would be to get in touch with a financial expert for these.

Retirement planning

Though 401(k) is often considered an investment for retirement, it would not be enough for a comfortable retirement. Setting aside some money towards your retirement every month while investing it judiciously can help you have the retired life you look forward to.

General tips

Keeping track of your bills and paying them off on time can avoid any late payment fees. Make it a habit to compare the rates and offers before signing up for general or auto insurance this can save you a lot of money. Avoid using your emergency fund for anything but genuine emergencies. As tempting as it might be to withdraw from it to replace later, you never know when a real emergency comes knocking. Liquid cash is always an asset. At least six months’ worth of living expenses must be in the bank so that even in the case of loss of income or other unforeseen circumstances, you are not caught unaware.

The main purpose of personal finance management is to set you on the path towards a debt-free future where your earnings exceed your expenses while you are suitably insured in case of emergencies, it also guides you towards fulfilling your personal goals such as early retirement or a house or a car. Don't be a penny pincher, the idea is to plan in such a way that an occasional indulgence does not get in the way of your long-term goals.

About Author : Divya Rajan is an Engineer turned Finance professional turned writer. She explores her interests in technology, finance and business besides lifestyle and travel while writing her articles. She intends to complete her debut novel which she writes when not running behind her three year old.


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