We as an Indians are natural savers!. Our older generation tend to “Diversify” their savings by saving some money in shelves, some in cup-boars, some in pouches etc.
But as the generation changes, we are using digital payments today instead of cash. Though it is a welcome-note, getting attracted by the Cash backs and offers would lead you to spend lavishly on unnecessary things. It is a practical problem!
Here comes the need of financial planning to overcome this “‘Spending” habit. The important skills required to do financial planning are-
- Budgeting– Replacing the older habit of writing expenses in a note book, today we have so many budgeting apps in google play store. Download any one of the trusted app and note down each and every expense. The added advantage on using this budgeting apps they automatically categorise each expense into unique category which can be tracked where you are spending unnecessarily.
- Managing Expenses- After tracking the expenses at the end of the month, you get an overview on your expenses and be in control on spending from the next month.
- Automate your savings into investments-After verifying your monthly budget, try to invest major portion of your earnings in the first week of the month. This is to be done by setting auto-debit from your savings a/c to recurring deposits, mutual fund sip’s, ppf investments etc in the 1st week itself. This ensures you to be financially free and not to spend heavily on wants; which can be delayed for some more time.
- Increase your investment contributions periodically– To beat inflation, one must increase one’s contributions atleast once in a year. Generally one’s salary rises yearly and it is better to top-up your investments with every salary increase, up on receiving bonus etc.
- Differentiate between “Good loan” and “Bad loan”– we all take loans, but how many of you are aware of Good loans and Bad loans?
Good loan is one which enables the asset to appreciate the value in the future.Example-Housing loan, education loan
Bad loan is that which depreciates the value of the asset day-by-day Example- car loan
- Protect your personal identity from online threats– Never set same PIN for debit cards and same phrase as passwords for all of your banking transactions. This would lead to cyber threat which makes your financial dealings unsecure
so to be financially independent, follow the above steps to lead a better and secure financial life