It’s difficult to achieve complete financial independence. Planning can help you meet money goals, but only if you set the plan in action. It’s easier said than done. If you are still struck with planning finances and you are confused on how to go about achieving long and short term goals, then we are here to help you.
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Saving regularly is the best way to work on personal finances. However challenging saving may be, there’s always scope to set aside some money from your salary. To save money, the first thing you can do is make a budget. Without money put away in savings or investments, it becomes impossible to meet financial emergencies. It might also lead to borrowing at high interest rates and the debt trap.
Budgeting allows you create a spending plan and ensures that you will always have enough money for things you need and things that are important. Following a budget or spending plan will keep you out of debt or help you work your way out of debt if you are currently stuck in debt. Given below are some useful tips that will help you find inspiration to save money:
A debt is often seen as a case of mismanagement of funds. You may have several reasons to borrow money from peers or credit institutions/ banks or credit cards for a big ticket purchase or to fund an emergency. But, not paying back dues within a stipulated time can lead to further problems. Debt is easy to settle when approached with a little bit of planning. Planning your repayment can help you get rid of debt easily.
To make life easy, the primary step is to eliminate existing debt. Make a list of borrowings from different sources and also a list of small loans and the bigger ones. The smaller ones can be repaid quickly and the bigger ones take some time. So, start by repaying the smaller debts as per monthly income. If you are not able to save much money from your monthly salary, then try to cut down on unnecessary spends to save as much as possible.
If your credit card debt has piled up, then move away from the comfort of paying minimum amount due and try settling your bills in full or at least pay as much as possible and try to bring down outstanding balance. Make sure not to acquire new debt. Borrowing money to buy things you can’t afford may lead you to the debt trap. If you have a credit card, borrow as less as possible to reduce debt.
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You may enjoy splurging money on shopping and entertainment. If you are a lifestyle seeker and believe in spending good amount of money on movies, shopping, weekend parties or gaming, then think again. Spending money on impulsive buys may leave you with a poor bank balance. It may bring temporary fun to your life, but in the long run, you will be left with no money to fulfill/achieve bigger dreams like purchasing a home or a car.
However, one cannot completely cut off expenses. But, the idea is to cut down on unnecessary expenses, rather than all expenses. Saving money is an effective way to be financially prepped for all situations. Saving money finances big ticket purchases, emergencies and unexpected expenses and also provides financial security. Track expenses and note down as well as sort out, unwanted spends. The more you note down, the more you become mindful on the amount you have spent over a month or week, the more you will try to re-evaluate before unmindful purchases. Before it’s too late, you will settle on better shopping choices and watch your finances spring back to life.
You must acknowledge that saving is one of the best options to create wealth. To help yourself stay motivated, you must first identify and set specific saving goals. This will help you begin saving money. To set your financial plans, first prioritize your short term and long term goals. Saving for your retirement is one of them. The term “retirement” can be mis-interpreted as planning for old age. Retirement can also mean planning for a period when you no longer want to continue the 9 to 5 job and want to take some time off for yourself.
So, setting your goals for an early retirement helps you retain or hold money for those specific goals that you want to meet. This way you will be able to save money for an early retirement, when you will want some time off to care for your hobbies. If you indulge in proper financial planning and investments, then you may opt for an early retirement and yet be stable and maintain current lifestyle. To achieve this dream, start saving and do your financial planning as soon as possible.
Determine what you are saving the money for i.e. short term as well as for long term financial goals. You then must develop a goal chart, where you can write down financial plans, determine how much money you need to fulfill these goals, write down ways through which you can save money and so on.
Creating an emergency fund is one of the most important points of financial planning. Saving money also provides financial security and helps you stay confident and stress-free for the future. You can diversify savings by creating emergency funds or availing term insurance plans or health insurance plans for risk protection. Keeping aside some money from your monthly income especially for therapeutic costs and unexpected emergencies, is very important. The savings may also prove to be helpful, in case a family member falls sick and provide you a financial cushion to fall back on.
A health insurance plan looks after hospitalization costs, helping you get treatment in the best of hospitals. Similarly, car/bike insurance will help you pay for damages to your vehicle, in an accident.
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When you look back at life, you remember only the fun moments. Something that you really enjoyed will be the company of friends and family like a picnic or a get together or an adventure sport that you tried for the first time, or the people you met and places you have visited rather than expensive splurges or newly acquired accessories.
So, stop making unnecessary spends and use your money for what’s necessary like grocery, utility bills, rent or EMIs. Look at monthly expenses and chalk out some of the ways through which you can save money. Avoid spending excessively on movies or gaming/sports or excessive shopping. So, instead of always chasing materialistic things, try to fill your life with new experiences and you will see how this satisfies you.
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