Personal finance management is not as complicated as it sounds. If you maintain good financial habits, you will not face sudden financial constraints. Today we list some of the financial practices that you must follow to maintain a healthy monetary flow throughout your life:
- Budgeting your expenses. Have you ever tracked what your significant expenses are? Where is your money going and where are you wasting money? Many people are unable to save money as they are not able to budget appropriately. When you ration, you can see where the money is going and on what all can your money be saved.
- Paying your bills on time. Whether it is your utility bills or Credit Card dues or Loan EMIs, etc. – you must make payments on time every month. The habit will not only save you on the penalty amount, but it will also help you keep a healthy and steady flow of income and expenses.
- Do not overspend. Try and save some amount of your salary and income. As a rule try and save around 30% of your salary after deducting the tax.
- Work for goals: If you have short-term and long-term goals, then work towards achieving them. Children marriage and education, buying a luxury car, etc everything needs funds and therefore you must work towards your goals. Have a separate fund for your short and long term goals.
- Keep an emergency fund ready. An emergency fund should ideally be 3 to 6 months monthly expenses, which would come in handy in case you lose your job or face sudden financial loss.
Also Read: How to prepare for a financial emergency?
- Plan for your retirement. Look into various programs and invest the appropriate amount that will help you maintain your current lifestyle in your golden years.
Also Read: How to secure your retirement?
- Finish off that loan. Get relieved of your debts as soon as possible. If you get an annual bonus, then try and make a part payment of the loan.
- Investing in multiple avenues: There are numerous options from which you can choose from Mutual Funds, bonds to Fixed Deposits to bullion/real estate. You should diversify your portfolio.
Also Read: Investing for beginners
- Do not rush into any investment just because some has recommended it. Research on all investment tools and if you need to get the help of a financial advisor. Also, you should review your investments at regular intervals to see how your finances are doing. You can see what is working the best for you.
- If your family members are dependent on you, you must not forget to buy adequate insurance covers. You must buy term insurance, critical illness insurance, life cover, and adequate Health Insurance cover.
- Do not take loans to fulfill your desires, see what is absolutely essential, and take loans only if you must. People who take too many loans fall in the debt trap and eventually go bankrupt as they are unable to manage so many EMIs.
- Use your credit card wisely, have multiple credit cards, and try and use discounts cashback and rewards to your advantage. Also, try and restrict the credit utilization limit to 30%.
- Know about the latest tax policies of India; this would help you invest wisely and save money on tax.Always declare and file your taxes on time, to avoid penalty and embarrassment.
- Refrain from impulse buying. Before you head out for shopping, make a shopping list, and stick to it. Look for discounts and offers before making any final decision.
- Don’t buy anything on your card if you are unable to pay back. Paying only the minimum bill due on your Credit Card will only add to your debt. In the end, you will have to shell a lot of money on the interest amount.
Do you think that we have covered all the points? You could also add to our list. Write your points in the comments section below.