“Someone’s sitting in the shade today because someone
planted a tree long time ago.”
These words of wisdom by the “Oracle of Ohama”, the wise investor and business tycoon, Warren Buffet, are one of the basics of financial literacy. It is not just enough to make a buck, it’s more important to use it effectively. Enter, financial literacy, a necessary future skill that will give us the right knowledge and mindset to become money wise. They say money doesn’t grow on trees, but money can grow well if managed smartly.
Money management doesn’t have to be a daunting task, if one takes these 5 easy to follow ways that will stop us from burning holes in our pockets!
1) Budget It
Firstly, let’s understand what a budget is. Simply put, a budget is a plan to manage your source of income and expenditure over a fixed period of time.
A source of income could be your monthly or weekly pocket money which you would be using to spend on stationery, snacks, print outs etc. Divide the source of income, into spending and savings. Make a note of the fixed expenses such as and keep a cover for unforeseen spends. Save the rest.
If you’re creating a budget for the first time, try doing it for a week and track it daily. Once you build a habit, you can build a budget for a month and check back weekly.
This habit of budgeting will make you consistent, make you aware of your where your money is going and ultimately build your savings!
You could use this template to get started.
2) 3S rule of money management
Financial experts have a 3-step plan called the 3S rule to help us not just enjoy that pizza but also save up for that PS5. The 3S plan stands for Spend – Save – Share. These are the three actions that we carry out with our money and if not exercised with control, we’d end up living for today with nothing to cover us on a rainy day!
We can use a percentage wise split to divide our income under these three actions.
Spend 50 % – Save 40 % – Share 10 %
By consistently saving that portion of money, you could save up for those running shoes you’ve been eying since last Christmas and if you’re lucky you could even get a discount a few months later *wink wink*
“If you can’t feed a hundred people, then feed just one.” These words by Mother Teresa remind us of the spirit of sharing. Use the 10% of your allowance or pocket money to share with a cause you can relate to; an animal shelter, an orphanage or an old age home. By sharing, you will receive the joy of giving in return.
You can use these jars to see where your money is going.
3) Set up a home economy system
Just like your parents get paid to do their job at offices and at their businesses, you can set up a system with your family to do jobs at home and earn rewards for it. Household chores are a handful, and it is unfair that all the workload is borne by your parents, A home economy system will help you take responsibility as a family member. As a family, you can draw up a task list with an assigned sum for each chore. Pick the chore, lend a hand and make some money. This experience will truly teach us the value of money and teach us that hard-earned money is spent more wisely.
4) Compare wants and needs to be a smart consumer
Do you want that iPhone12 or do you need it because your One Plus 8T is 6 months old? Well, we leave that for you to answer. Ordering a meal through Swiggy when you’re hungry is a need. Ordering that double cheese burst pizza is a want. It takes practice to differentiate our wants and needs. It’s only human to have wants, but there’s a trick to fulfill that too! If you really want that cool jacket, compare the prices on different platforms, check for discounts and it’s a smart idea to wait it out till the prices drop over time.
5) Make your money grow in banks
What if we told you that you can make more money from your savings that you’ve stored safely in your “save” jars or piggy banks? You can make your savings grow by putting it in bank schemes. Banks offer various schemes such as fixed deposit, recurring deposit which offer a good rate of interest on depositing money with them. This is yet another incentive to save up for the rainy days, right?
Did you know the word Bank comes from the old Italian word Banca, which means benches, which were used as makeshift exchange counters by Florentine bankers?
To know more about banks here’s a fun quiz for you!
These 5 steps are just a foot in the door in the world of financial literacy, which is an interesting one from stock markets to mutual funds to investments. Fortunately, Varsity by Zerodha, has created an extensive resource hub on financial literacy and stock market modules accessible for free.
QShala presents a
Financial Literacy Program
Learn the basics about money as you start out young, stay up to date with market trends with our questions and be money wise now, so that you can reap the benefits later.
If you are above grade 4, register for the Financial Literacy program here