- Date : 04/12/2019
- Read: 4 mins
These financial tips will help you be in charge of your money, make it grow, and build a safety net
The New Year is about to roll in and it’s time for resolutions and to get things in order. While your health should be priority, your finances are equally important. So how do you ensure you stay on top of your money? These tips can help.
1. Create a budget
Every good financial plan starts with a budget. Work backwards and calculate how much you need for bills, groceries, school fees, rent, and other expenses. Add a small miscellaneous amount to this. Create a monthly expense sheet and set it in stone. Allocate the rest of your money for an emergency fund, travel fund, savings, etc. depending on your needs.
2. Manage your own money
It may seem slightly tedious, but learn to manage your own money. It may seem natural to pass on money decisions to one’s father or brother or husband, especially in Indian society. Do not do this. There are resources online where you can learn the basics of money management. Do not give up power to anyone else. You can definitely consult family members, but make your own decisions and maintain a separate bank account.
3. Invest wisely
Every woman needs to put herself first. Yes, family and kids are a priority, but you also have to think about your financial security. So start investing early. Start with small recurring deposits, fixed deposits, and SIPs. Let the power of compounding work its magic. This money will prove valuable in future, whether it is to buy a home, travel, help in your child’s education or marriage, etc. Investing in gold is also a good move.
4. Cut down expenses
Draw up a list of things/expenses you can do without. Eat out only once a week. Shop less – after all, one can only wear so many clothes and shoes. Meet friends at home instead of going to cafes and pubs. Set a monthly budget for toys instead of giving in to your kids’ every whim. You will realise it is possible to give up or ration whatever you can without it having a major impact on your lifestyle or comfort.
5. Start a side gig
With inflation, a single income or even dual income is often insufficient. Channel your creativity and see what you can do to supplement your income. If you can bake, make custom cakes on weekends. If you are a good cook, start a tiffin service. One can also set up an online business selling goods on e-commerce sites. The options are many.
6. Make a plan to repay debt
This is crucial if you want to be debt-free. Whether it is a home loan, car loan, or business loan, figure out how you can repay it at the earliest. You can set aside an amount every month in addition to the EMIs you pay. For example, if your house EMI is Rs 50,000, try to put aside another Rs 10,000 a month. In a year you would have saved Rs 1,20,000, plus some interest if you invested the same. You can use this amount to prepay the house loan, shaving almost three months off your repayment plan.
7. Buy insurance
It is imperative that you buy health and life insurance to safeguard yourself and your family members. Pick a health insurance plan for yourself or a family floater plan for the entire family. Ensure it covers aspects such as critical illness, cashless hospitalisation, etc. Buy an insurance plan that also acts as a savings opportunity. You can pick an endowment plan that ensures life cover as well as savings, or a ULIP that gives an investment opportunity along with life cover. The money you get on completion of the term will come in handy post-retirement.
8. Make a retirement plan
Invest in a plan that will take care of all your needs. Do not rely on anyone – no, not even your children. It’s great if they help, but build a safety net if they don’t. Do not give away your home or precious belongings to your kids just yet; you can always leave it to them in your will. Invest in a monthly income plan and build a corpus for your retirement phase. This will ensure you have an income every month, say 40 years from now, and will be financially independent.
So open that Excel sheet and get cracking. We wish you a financially sound 2020!