Cracking the code to personal finance may not seem easy at first. But if you have the right tips guiding you, you’ll find that managing your money becomes so much more effortless. Mastering personal finance can help you answer all those questions you may have had over the years, like how you can go about saving money and making the right investment decisions.
So, let’s take a look at 5 personal finance tips that will help you get better at personal finance.
Budget. Budget. Budget.
Budgeting is the first step to getting better at personal finance. Creating a budget is crucial because it gives you a complete idea of the money that is coming in, and the money that is being spent. This information is fundamental to creating any kind of financial plan. Because only when you know how much you’re earning and what you’re spending can you get better at saving money.
Take Care of Debt
If you’re not careful about it, debt can eat into your savings. And before you know it, you could be looking at years of using your income just to repay your debts. So, it’s always a smart idea to take care of debt early on. Don’t borrow more than you can repay. Ensure you make your repayments on time, and redirect any extra funds to closing any debts you can.
If you are looking for ways to repay your debts without straining your finances too much, you could consider consolidating your debts and negotiating a lower interest rate, or repaying high-interest debt first. Make paying off the debt with the highest interest rate your first priority, so you can become debt-free sooner.
Saving Money – Make a Savings Plan
A savings plan, of course, is crucial to saving money for the future. But most beginners are not sure of how much to save. If you’re having some trouble with that too, the 50-30-20 rule can be of great help. Here, you use 50% of your income for your needs, 30% for your wants, and the other 20% – you save that. So, you can consistently save a good bit of your income over the years.
This is merely a benchmark though. You can always make use of any other savings plan that works best for your specific situation. And if your life goals, your financial liabilities, or your income levels change, you can alter your savings plan accordingly.
Pay Yourself First
‘Paying yourself first’ doesn’t mean spending money on discretionary expenses, beyond your means. It is all about investing, so that your money can grow. In other words, it is about truly paying yourself by investing in your future.
There are many different investment options available to select from. And you can create a customised investment plan that helps you meet your specific life goals. There are investment options for investors with different levels of risk appetites and options for both long-term and short-term horizons. That’s not all. There are investments that offer a variety of other benefits like tax savings too. Choose from this mix of options based on your needs and pay yourself first.
Create an Emergency Fund
You never know when an unexpected emergency may come knocking. That’s why saving money for financial emergencies is an important part of personal finance. The easiest way to do this is to open a savings account and keep saving some money consistently each month.
You could also make use of any sudden lump sum amount you get to grow your emergency fund. For instance, if you receive a bonus at work or a sudden inheritance, you could put it in the emergency savings account. Keep in mind that you should not spend the funds in this account for any other life goals. This money is to be used only in case of any financial crisis, where you are in need of immediate liquidity.
Secure your future with Insurance plan. Insurance of any kind can help you be better prepared for emergencies in life. Health insurance, in particular, can ensure that any sudden illness in your family doesn’t wipe out your savings.
These tips should help you get started with understanding your money better and managing it more optimally. To truly make the best use of your savings, you need to invest in your future. And you can find a variety of investment options on Finserv MARKETS, ranging from Fixed Deposits to Mutual Funds, and Digital Gold. With the right products and personalized offers, Finserv MARKETS makes it easier to achieve your goals.
And as with anything else in life, if you’re having trouble with a particular area of your finances, don’t hesitate to seek expert help. A financial professional can help you with whatever queries you may have.