How to handle money effectively

It is really cool and fantastic to handle money especially when you have become financially independent. However, most of the youngsters run into debt and an empty pocket only because they are unaware of how to handle money effectively - be it income, expenditure or savings.

Let me tell you a small example. Consider two distinct individuals A and B. Both of them are financially independent and earn the same income. A and B have different habits. A drinks her daily coffee from a coffee shop every morning and evening. B makes her coffee at home. At the rate of 2 cups of coffee per day, A definitely has incurred more expenditure whereas B has saved much at the end of the month.

This method of diligent spending on only necessary things is one of the keys to financial success and efficient money handling. This not only saves money but also improves our independence in daily life.

Creating a daily budget on how to spend money is important in case of students who live off pocket money. Classify your daily expenditure into three categories - inevitable, necessary and unnecessary. This will help you save for an emergency and improve your tolerance levels to temptation.

Certainly, I'm not asking you to lead a life of austerity. According to a previous study, most of the Americans had saved less than 12% of what they should have saved at the end of their careers. It is paramount that one has enough savings. Some experts even say that one should be able to live off solely his savings for 6 months in case of an emergency. With being financially independent comes the onus of spending wisely. It is with wise spending that you save for the generations to come!