Whoever said money can’t buy happiness didn’t know how to manage their funds and go for shopping. We all need money, good credit indeed, to fulfil our desires. All the things that bring quantitative satisfaction can be practically owned with money. Managing your funds is an art and those who master this art enjoy good credit throughout their life.

After all, in this age of plastic money, we all own multiple loans such as auto loan, education loan, home loan, credit cards and personal loans. Despite your income status, you need to manage your funds well so that you can manage the challenges of modern lifestyle. Need for credit is constant these days.

When you manage your money well, you manage your future life. With more cash in hand, you can build good history and thus become eligible for loans. Indeed you get choice to compare credit cards and loans. With power of credit your life is not bound by limitations anymore. You have a choice to plan a family vacation, kid’s education, buy a car and clear your loans.

Some tips to manage money and good credit


Roll out a budget

The first step is to build up a budget. Setting up a budget not only gives you peace of mind but also helps you attain clarity about your funds and for your future goals.

To make a budget, you need to clearly define where you want to spend your money. For, your income is constant, you cannot do much about that. So it is better to monitor where your money goes. As you learn to control your expenses, you start to save for future. Savings also mean, you would less frequently need to borrow. If you save more, you can comfortably regulate your monthly bills and balances on time.

Be on time

To manage your finances, you need to be well-organized. Timely repayment is a very good sign to show good credit history. Lenders want to deal with people who pay on time. Following tips will help you:

a) Make a file of bills so that you do not miss any of the bill. Always keep a check of due dates and try to pay out before the due date.

b) It is a good practice if you meet your bills same day every month. In fact you can schedule an online alert for due dates.You can consider automated transactions also.

c) Ensure that your account has sufficient amount to meet your balances. For, failed transaction would do more harm.
Aim for good credit record

Your credit history is all about how you used your funds in the past. By managing your money now you can ensure good credit for future. For example, if you decide that you will save and minimise the expenses you could always have some surplus. Having a surplus also ensures that you would never miss a monthly instalment or bill, due to insufficient funds.

You can continue this positive repayment trend by ensuring that you pay your credit card balance on time. It is good idea to not use credit card unnecessarily and keep the bills low. It will help your score. You can also make it a habit to buy CIBIL report online and analyse CIBIL score calculation.

Chooser better financial products

When it comes to manage your money, it is always good to be educated and take charge yourself. Apart from knowing how to improve your CIBIL score, it is your duty to curb the additional expenses, if any, levied on your accounts.

So study your report to know about extra expenses on bank fees, insurance policies, credit cards, mortgage rates and anything that is being charged in the name of financial service. You can negotiate or look for another bank or service with lesser charges.

Have a goal for saving

Save money for a rainy day. As old adage goes, it is practical to save for emergency. You should keep aside a fixed amount every month in a savings account. Your target should be to have enough money for few months’ expenses. However you can start with smaller targets. Soon, you will find yourself in a better position to manage your loans and bills.

Credit card discipline

As important it is to manage your money, so is to manage your plastic money. Using credit cards mindfully is very important.

Never use more than 30 per cent of available credit limit. Also, keep balances low. Try to pay out your card bills as soon as possible. You can use a rule of thumb wherein you should ensure that your annual card debt limits to 10-20 per cent of your net income.

Thus managing your money is no rocket science. It is a step forward for better life. You just need to put in right steps in the right direction.

‘Written by Arun Ramamurthy, Director, Credit Sudhaar & author of Unlock the Power of Your Credit Score : India’s first book on Credit Scores’

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