How to Manage Your Money

How to Manage your Money?

Master your money with smart tips on saving, spending, investing, and planning. Financial freedom starts with the basics!

Written by : Knowledge Centre Team

2025-07-02

4919 Views

10 minutes read

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Without proper budgets and controls, spending happens on impulse, and this can lead to financial problems in future. To avoid problems arising out of indiscriminate spending, it is important to have a conscious approach toward your money. 

Money is an essential aspect of our lives, and hence, knowing how to manage your money is a skill that you should learn to plan your finances for the rainy days. By taking simple, consistent steps, you can reduce financial stress, stay prepared for emergencies, and work towards your life goals with confidence.

Key Takeaways

  • Save first, spend later. Follow the rule: Expenses = Income – Savings.
  • Align your savings with short, mid and long-term financial goals.
  • Build an emergency fund covering at least 3- 6 months of essential expenses.
  • Postpone impulse buys to grow savings and earn returns in the meantime.
  • Invest in growth-focused tools like NPS or ULIPs for long-term wealth.

Why Mindful Money Habits Matter More Than Ever?

Today, managing money is so much more than saving. With rising living costs, unpredictable economic shifts, and increasing financial responsibilities, it is easy to feel overwhelmed. But a few steady habits can help you stay anchored, no matter the situation.

Mindful financial planning allows you to stay in control without making drastic lifestyle changes. It encourages balance between spending and saving, planning and living. More importantly, it gives you the confidence to handle unexpected expenses, plan for future goals, and avoid the burden of debt. As financial products and digital platforms evolve, being mindful helps you choose what truly aligns with your needs.

Essential Tips to Master Personal Finance

The importance of money is often the most-talked-about financial skill that everyone should learn as soon as they start earning. Here are a few ways you can manage your money:

  1. Plan for your Money: Make your money work harder than you. Invest in appropriate asset classes depending on your financial goals, life milestones and monetary needs. Divide your goals into short-term, medium-term and long-term. This way, your money will continue to grow, and you will also have access to liquid funds at appropriate life stages.
    • Park some money in an emergency fund to cover expenses related to unexpected exigencies and emergencies.
    • Set clear 1, 3, 5 and 10-year goals for your money.
    • Spend some time figuring out important things you will need a few years down the line.
    • Start saving in flexible investments like provident funds and Unit Linked Insurance Plans (ULIPs). These plans offer partial withdrawal after just five years, which will be especially useful during mid-term financial milestones.
  2. Always Invest for the Ultimate Goal: Your ultimate goal is the retirement fund that will hold you in good stead when you do not have a sustainable income or great health to fall back on. Invest a specific percentage of your income in pension funds and allocate a sizeable proportion to equities when you have time on hand.
    • Retirement is replicating your income from your employment years.
    • Your expenses will be low, but you will need to sustain them for 20-25 years.
    • 10 – 15% of your annual income should go to retirement savings.

     Investment options for retirement are:

    • Public Provident Fund (PPF): These plans offer guaranteed returns and tax benefits under Section 80C.
    • National Pension Scheme (NPS): These are market-linked portfolios, and you can choose your asset allocation between equity, debt, and government securities. NPS offers tax benefits under Sections 80CCD(1) and 80CCD(1B).
    • Unit Linked Insurance Plans (ULIPs): These are market-linked investment-cum-insurance products that offer automatic asset allocation along with the flexibility to invest up to the age of 99. ULIPs from Canara HSBC Life Insurance also reward long-term investors with loyalty additions and wealth boosters, helping you grow your corpus steadily over time.
  3. Buy Life Insurance: Buy insurance when you don’t need it, because you may not get it when you want it the most. Healthcare is expensive and continues to become costlier by the day. Having health insurance in place will ensure your hospitalisation expenses are taken care of, should the need arise.

    Life insurance term plans are affordable and are used to replace income in case of your unfortunate demise. The sum assured from life insurance will help your dependents sustain and meet living and education expenses. When signing up for life insurance, the sum assured should be at least 10 times your annual income.

    • Early subscription to term life insurance allows you low-cost life cover for a lifetime.
    • Health insurance can help you with regular health check-ups as well as wellness programs.
    • Your life cover needs will increase as you acquire a family. So, check if your plan increases your life cover, or you will need to buy a new plan to cover the gap.
tips to save money from your salary
  1. Get a Bank Account: You are spoilt for choice when it comes to banking options. There are a plethora of choices to pick from. Look at your needs and open an account that best suits your needs. Look at banks that charge low fees and offer benefits (such as cashback, waivers, and on using their card).

    Evaluate the convenience of banking, such as the network of branches & ATMs, digital banking, phone banking, etc. Keep money for your day-to-day expenses in your savings account and park money that you may need in the short-term, in fixed deposits.

    Here’s how a bank account benefits you:

    • Keep a track of your income and expenses
    • Earn interest on your surplus money
    • Invest money in short and medium-term deposits
    • Access many other investment possibilities through your bank account, such as Atal Pension Yojana, NPS, PPF, insurance, etc.
  2. Control Impulsive Purchases: Before you spend, classify those purchases into needs and wants. Needs are essentials like food, rent, and utilities, whereas wants are aspirational or discretionary in nature. Defer purchases that can wait if you cannot cancel them altogether. You will earn some interest/returns for the deferred period.

    Postponing impulsive buying gives you more control over outflows. Simultaneously, it builds a corpus for you, and always be prepared for important matters.

  3. Analyse your Bank Statements: Identify your outflows and classify them under specific categories. In which category are you seeing the most expenses? Drill down into details and check if you can curtail any spending. Keep a tab each month to check any unauthorised transactions or unrecognised charges and bring them to the bank’s notice within the timeframe specified by the bank in its terms and conditions.
    • Keep a tab on your spending habits.
    • Check for unnecessary subscriptions and cancel them.
    • Check whether interest is being credited on time and in line with the assured rates.
    • Reinvest the interest earned to maximise returns.
    • In fixed deposits, opt for reinvestment of interest so that you gain from the power of compounding.
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Did You Know?

Life insurance payouts are tax-free u/s 10(10D) if premiums are within 10% of the sum assured and meet specific limits for ULIPs and other policies.

Source: BS

 

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  1. Learn About Investments: Spend some time learning about different options to invest your money. For example, asset classes such as equities have higher risks but can generate solid returns if you invest in fundamentally strong stocks and sustain that investment for a long time. Use the classic thumb rule to save money.

    Expenses = Income – Savings

    Save first, spend later. Prioritise putting money aside each month, even before your discretionary expenses. Keep short-term funds in debt instruments. As you approach retirement, start moving your money from equity to debt to preserve capital.

    • Look for a risk-return relationship.
    • Understand the ways to mitigate investment risks.
    • Learn about covering emergencies with insurance.
    • Know how to check for investment risk of portfolio investments.
  2. Learn to Cook: Cooking at home and eating are not only healthy but also financially prudent. When you eat out, you pay more for the service than the actual food or ingredients. The restaurant's cost includes service charges, ambience, staff salaries, and other overheads, often leading to a markup of nearly 300% on actual food value.

    Imagine paying ₹12,000 per month for something you could have for only ₹4000. Over time, this simple habit can free up a substantial amount of money for savings, investments, or even small indulgences- guilt-free.

  3. Contribute to a Social Cause: Philanthropy not only uplifts society but also has tax benefits as well. Invest in a cause that you believe in and deduct the amount, under section 80G, from your taxable income. Educate others whenever and wherever possible because education is the single most effective, proven method to break out of the vicious cycle of poverty.
    • Plus, staying connected to the ground has its benefits:
    • Helps stay connected with the right people
    • Builds a good social presence
    • Upgrade your resume

Conclusion

When you develop the right mindset, managing money becomes much easier. The earlier you begin, the more time your money has to grow, and the more prepared you are for unexpected challenges. 

Financial success is rarely about big leaps; it is built on small, consistent habits like budgeting, saving, investing wisely, and spending mindfully. When you start planning and setting goals, you will realise that many expenses are unnecessary. You will not only save money but also see it grow over time. 

To support your journey toward long-term financial wellness, Canara HSBC Life Insurance offer a wide range of products from ULIPs and retirement plans to term, life and savings insurance, designed to help you plan, protect, and grow your wealth with confidence.

The only secret mantra is to start early and sustain the discipline.

Glossary

  1. Laddering Insurance: Purchasing multiple insurance policies with different terms and coverage amounts for optimal protection.
  2. Critical Illness Cover: A policy that provides a lump sum payout if diagnosed with a severe illness like cancer or heart disease.
  3. Term Insurance: A term life insurance plan providing coverage for a fixed period with affordable premiums and no maturity benefits.
  4. Whole Life Insurance: A policy offering lifetime coverage with cash value benefits, useful for estate planning and wealth transfer.
  5. Financial Calculators: Online tools that help calculate insurance premiums, returns, and tax savings for informed decision-making.
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Uncertain About Insurance

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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