Boost Your Financial Well Being

As individuals, we all have many financial goals like owning a house, going for a vacation, having a lavish marriage and creating retirement corpus. All such goals are achievable if we have a proper financial plan in place. Personal finance assists us in tracking our cash inflows and outflows, saving and investing our surplus money wisely, and in turn fulfilling our individual desires. Without a plan it wouldn’t be easy to fulfill our needs within the financial constraints. Although the sooner you start, the better it is, but, it’s never too late to create a financial plan for yourself and your family’s financial security.

We hereby provide some financial tips for your financial well being:

Create a budget 

If you want to live within your means and achieve your goals, you should create a budget for your finances. You must have heard of 50/30/20 budgeting method which is very effective in managing your money. It goes like:

•      Fifty percent of your net income should be spent on your essential utilities like rent, groceries, transportation, etc.

•      Thirty percent should be allocated towards your discretionary expenses like entertainment, restaurants, shopping.

•      Twenty percent should be used for paying your debts or saving for future. It includes creating emergency funds, saving for retirement, etc.

Create an emergency fund

You must keep some money aside for emergency and unexpected expenses like hospital bills, emergency asset repairs, etc. It is ideal to keep between three and six months’ worth of living expenses for safety purpose. 

Limit your debts 

In order to stay away from debts, one should never spend more than what one earns. Although, sometimes getting into debt can be advantageous especially when it leads to acquiring an asset, but in such cases you need to carefully weigh the pros and cons and manage your debts.

Monitor your credit score

Credit cards help in maintaining and building your credit scores. You should watch your credit spending while monitoring your credit scores because if you ever want to obtain a lease or a mortgage, you will need a solid credit report.

Consider your family 

You must look into various insurance plans for you and your family and buy the most suitable ones. For example, you must take a life insurance to ensure that your dependents are able to meet their needs post your death. Similarly, a health insurance policy should be taken to meet the hospital expenses in case any of your family members get ill. Once the policy has been bought, it must also be reviewed periodically. Another important element of personal finance is estate planning. You must make a will in order to pass on your estate to your family members.

Plan and save for retirement

Retirement may seem like a lifetime away but it arrives sooner than you think. The earlier you start the better returns you would get in future due to the benefits of compounding interests. So, the twenty percent of your income that you set aside can be invested somewhere for your retirement.

It is important that you master Personal finance in order to fulfill your dreams and live the life you always wished for. Personal finance is a broad term which includes, but is not restricted to, management of our money, savings, investments, insurance, estate planning and retirement planning. Although it can’t be mastered in one day, but you must start today by taking small steps and following these financial tips. Make the most of your investments and savings! Have a prosperous life!

 

Sources:

1. https://www.moneyunder30.com/how-to-invest
2. https://www.moneyunder30.com/money-skills-to-carry-forward-from-the-pandemic-era
3. https://www.investopedia.com/terms/p/personalfinance.asp