🔶 Introduction
Most people work hard to earn money, but very few know how to manage money wisely. That’s why, even after earning a good salary, many people live paycheck to paycheck.
This blog will give you basic financial knowledge, in simple English, with examples — perfect for someone who has zero understanding of finance.
Table of Contents
🔹 What is Finance?
Finance means managing your money.
It includes 4 main things:
- Earning – How much money you make (salary, business, freelance, etc.)
- Spending – Where your money goes (rent, food, bills, shopping)
- Saving – Keeping money aside for future use
- Investing – Using money to earn more money
💡 Example:
If you earn ₹20,000/month:
- ₹10,000 goes to rent and food (spending)
- ₹5,000 is saved (saving)
- ₹5,000 goes into a mutual fund (investing)
Managing these four wisely = basic financial success.
🔹 Why is Basic Financial Knowledge Important?
Because if you don’t control your money, your money will control you.
Without basic finance knowledge, people:
- Fall into debt easily
- Live paycheck to paycheck
- Have no savings during emergencies
- Never grow their wealth
But with basic financial knowledge, even a small salary can become big over time.
💡 True fact:
A person who saves ₹3,000 per month from age 25 can become a crorepati (millionaire) by 50, thanks to compounding.
🔹 How to Start Managing Money (Step-by-Step)
✅ Step 1: Track Your Expenses
Write down every rupee you spend for 30 days. Use a notebook or app like Wallet or Money Manager.
🔸 Example:
- ₹40 tea
- ₹300 Swiggy
- ₹2,000 shopping
This helps you see where money leaks.
✅ Step 2: Make a Budget (50/30/20 Rule)
This is the easiest way to plan your money.
- 50% Needs – Rent, food, bills
- 30% Wants – Movies, gadgets, dining out
- 20% Savings – Emergency fund, investments
💡 Example (Earning ₹30,000/month):
- ₹15,000 → Needs
- ₹9,000 → Wants
- ₹6,000 → Savings & Investing
✅ Step 3: Build an Emergency Fund
Life is unpredictable — medical issue, job loss, car repair.
Start by saving ₹500–₹1000/month in a separate bank account.
Goal: 3 to 6 months of expenses (ex: ₹60,000–₹1,00,000).
✅ Step 4: Avoid Debt Traps
Don’t use credit cards for shopping unless you pay full bill on time. Avoid EMI on mobiles, clothes, or luxury items.
❌ Example of wrong use:
Buying iPhone on EMI with 20% interest. That phone ends up costing ₹1.5 lakh instead of ₹1 lakh.
Investment Basics for Beginners: How to Start Growing Your Money Smartly – READ NOW
🔹 What is the Difference Between Saving and Investing?
🔸 Saving = Keeping money safe
Ex: Bank account, FD
Safe, but low returns (~3-6%)
🔸 Investing = Making money grow
Ex: Mutual funds, stocks, gold
More return (10–12%) but some risk
💡 Example:
₹1 lakh in savings account after 5 years = ₹1.16 lakh
₹1 lakh in mutual funds after 5 years = ₹1.6 to ₹1.8 lakh
(Approximate, but real-world figures)
🔹 Smart Money Habits to Follow
- Spend less than you earn
- Never delay bill payments
- Set short & long-term financial goals
- Read 1 finance blog or YouTube video every week
- Avoid “get rich quick” schemes
- Use UPI & digital tools to track and save better
🔚 Conclusion
You don’t need to be rich to start managing money — you need to start managing to become rich.
With this basic financial knowledge, you now understand:
- What finance is
- How to control expenses
- How to save & invest
- What habits create long-term success
📌 Next Step: Pick one action today — like tracking your expenses or starting an emergency fund.
How To Invest For Beginners 2025- READ NOW
RELEATED SEARCH – basic financial knowledge, basic financial knowledge for beginners, basic financial knowledge in simple words, basic financial knowledge step by step, basic financial knowledge for students, basic financial knowledge for young adults, basic financial knowledge to manage money
