When you took up your first job, you must have heard your parents telling you to save more. The constant pestering is for a reason. The more you save from an early age, the better it is for your future.
Managing your finances tactfully will not only give you financial freedom, but also help you plan your future in a better way.
So, if you have just started to save money, the following tips may help you a bit in your journey.
- Start investing: It’s always good to invest early. By the time you reach the retirement age, the return on your investments will be more. After all, who doesn’t want to lead a stress-free retirement life? It’s not that you have to put a huge amount to work right at the very beginning. You can start putting your money into something small like fixed deposits (FDs).
- Keep aside 15%-20% of your income: You can set aside a percentage of your income as emergency funds, retirement savings, or for debt repayments. You can use the amount whenever you face financial distress.
- Create a budget calendar: It’s somewhat true when your friend says its’s hard to save these days. You have rent and other bills to pay. On top of that, the weekend splurge seems inevitable. However, with grit and determination, you can still save a lot of money. The best way of doing so is by creating a budget plan. That way, you can keep a tab on your expenses. Also, it will work as a reality check for you whenever you are spending on unnecessary items.
- Build a credit history: Having a credit history can work as an advantage, especially during emergency situations. Most lenders will see you as a responsible borrower if you have a good credit score. And once you’re in their good books, lenders won’t hesitate to finance your debts. So, gradually start building your credibility as a borrower. You can do that by using your credit card or taking a personal loan.
- Have a retirement plan: Though retiring from work seems to be a distant affair for you right now, there’s no harm in creating a plan beforehand. You can start investing and have a savings account running simultaneously. There are quite a few retirement schemes available in the market, which you may like to consider too.
- Clear high-interest debts: If you have a pre-existing loan with a high interest rate, you might consider closing it first. It will help you manage your personal finances in a better way. Same goes for credit cards too.
- Get an insurance policy: Getting a life and health insurance policy for you and your family is a must. We don’t know what life has in store for us. So, it’s best to keep your family financially protected and independent if anything untoward happens to you.
- Use your credit card wisely: Credit cards, if used tactfully, will let you save more on your purchases. You can also keep an eye for card promotions to enjoy a host of deals and offers.
what you shouldn’t do:
- Take too many loans: It’s a strict no-no. Piling up debt can have adverse consequences and should be avoided at all times. In fact, it’s best to close one loan before you consider applying for another one.
- Overspending: Avoid spending more than you require. This is where creating a budget works. Don’t spend on luxurious items unnecessarily. In fact, you can put your money in something that will give you returns in the long run.
- Withdraw cash using your credit card: Avoid withdrawing cash by using your credit card. The interest starts accumulating from day one. A cash withdrawal fee will also be imposed. This can seriously take a toll on your finances and create a serious damage to your financial plans. Always use your debit card to withdraw money from ATMs.
- Be a guarantor: Even if it’s one of your relatives or close friends, try not to be a guarantor against a loan. If the borrower fails to repay the loan amount, the entire burden will be on your shoulders. That’s because as a guarantor you are officially subscribing to the fact that if the borrower fails to repay, you are the one who’s going to settle the amount.
Start taking care of finances from now so that you can relax in the future. You can consult a financial planner to help you out with the intricacies of different plans and schemes. But make sure you start early, so that you can have more time to settle down.
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