Money plays a very important role in our day to day life. But, today the prime fear with every common man is how to save money and fix personal finance mistakes. Some people earn well but don’t know how to save, how much to save and where to save? They all lack in one thing and that is a good future-plan to secure their finances. We all need a strong foundation for our strong financial future, and for that, we need to know the dealings to fix our finances and avoid mistakes. So, we are to guide you for a better future. Just follow the low-down to know how you can avoid and fix your finance mistakes:
1. Craft a budget and set a goal:
- Whether it's financial planning for the country or home-for proper execution and planning of income/expense we all need a proper budget
- Make a list of all your expenses every month and then decide a budget
- Note down all your expenses and make do to list
- At least 20% of your income to savings is a must on a regular monthly basis
- Track on what is coming in, going out, where it is going and what is left after you are done with all expenses
- Always set a goal (related to education, child, property, health, retirement etc…) to make a clear vision of your financial need in future
- Monitor your cash flow regularly
2. Spend less, save more:
- For salaried as well as for businessmen, expense and savings plays an important role to note for
- Start saving as early as possible after starting a job or a business
- Never increase your expenses in the same proportion as income increases
- If you are doing a job then start financial planning at the beginning of your job
- Salaried people should invest and save a part of their salary every month for better future
- Save at least 20-30 per cent of your salary every month. As your salary increases, raise the amount of your saving as well
- Spend according to your expense and savings
- For businessmen, incomes are not fixed. All depends on good returns from the business. So, it is advisable to spend less and save more
- Businessmen should always try to keep some alternative for regular income
- Make a good financial balance between expense and savings
- Do not buy useless kinds of stuff. Never spend on something which is not worth to use for
- Never invest in a financial product which you do not understand
- Understand the power of compounding while making investments
3. Emergency fund:
- The emergency fund plays a role of a bonus to those struggling with the financial crisis
- Always keep a part of your income in your savings account
- At least 20-30 per cent of your income should be saved without any monthly break
- As your income increases, then increase the part of your savings as well
- Understand the power of compounding before saving money
- Apart from 20 per cent savings, you must save some separate amount as emergency fund every month
- An emergency fund will always help when you in a crisis of job, business and health
4. Pay all your dues and debt on time:
- Pay all your debt before you start to save
- Don’t avoid paying credit card bills on time
- Never delay in paying the minimum amount of your credit card, else you have to pay high-interest rate along with due money
- Avoid taking any type of loan if you don’t need
- Pay your loan EMIs on time
- Try to avoid the use of your credit card for any small use or short term debt
- Never pay insurance premium from your credit card
- Do not involve yourself into a high rate of interest debts as these will swap away all your capability to save money from income
5. Make proper retirement plans:
- Start saving early from your income to lead a better future
- Not saving early for your old age will drain all your income with useless expenses instead of happy life during old age
- If you are married then the couples should divide their income equally and save for future
- Keep a mindset to save for your better future and spend less
- Take proper insurance plans and health plans
- To relax later ‘spend early, save early’ should be the formula
- Avoid financial burden for your old age. Spend on some good value products with good long term returns
- Spend on tax saving plans and long term returns
6. Spend on Insurance:
- Remember that problems and emergencies in life never knock your door before coming, so do insure yourself
- Be it a healthy, life or term insurance one must take insurance plan for a safe future
- To avoid rainy days of your life, insurance plays a vital role in life
- Health is wealth so for better health you need better wealth plans as well
- For the excess flow of cash during a health, emergency take a good health plan
- Inadequate or no health insurance will cost your plans. So, insure them first
7. Track your expenses
Last but not the least; one should always be regimented when it comes to money. Also, be realistic about the delay and consequences of repaying the due amount. As soon as you start earning, track your expenses and note down them for better financial planning. Remember, monitoring your income and expenses will always help you to control your unwanted expenses to a large extent and fix your financial mistakes.
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