Have you recently got an increment in your salary? But at the same time are you stumped by the fact that you are even saving less than before? Well, this indicates that there is a serious issue with your finances which needs to be corrected as soon as possible. This is a common phenomenon with many as they are not able to increase their savings with the scaling income. This can be corrected only if the personal finances are evolved accordingly.
To check this condition it’s important to know the reasons that are causing this situation and why you are saving less despite earning well.
Here are the Few Reasons:
Living beyond Means
Everyone aspires for a better quality of life, but this doesn’t mean that one will start spending beyond their means. To live a financially balanced life one must focus on savings and investment.
Naturally, our wants increase as our income scales up but having control over these tones for our financial future.
Spending more on Credit Card
As the income scales up, so does the access to powerful financial tools. This includes a higher limit credit card and increased eligibility for different loan amounts.
All this feels tempting and people start spending more on their credit cards. Some even go for personal loans for big purchases or gadget updates. But, when you get access to such financial tools, it is important to use them wisely. This is because- be it the credit card or personal loan the interest charged on these are high. This ranges from 16 to 32% for credit cards and 10 to 16% for personal loan.
So, before you use them think twice and always analyse your repayment capacity and affordability.
Investment is Ignored
Investment is the key to a healthy & secure financial future. But, this is often ignored by the majority of people. Generally, youngsters find it boring and think it’s just the start of their financial life and they can invest later.
But it’s a fact that just saving money in your bank account is not enough to live a secure financial life. Investing money not only puts your hard-earned money in the right place but also secures your future. Investment in mutual funds, stocks, shares, IPO, etc. is a few great ways to increase your wealth.
Not Tracking the Spends
The key to a secure financial future also lies in tracking your spending. Knowing where your money is going helps you analyse your finances. This can be easily done by analysing your bank statement, credit card statement, and maintaining a spreadsheet of your expenses. Doing this will help you keep a track of your finances and to achieve financial freedom.
Going for loans unnecessarily
Loans are financial tools that can prove to be quite helpful in emergencies. But, it’s a fact that loans come with a commitment that needs to be fulfilled for a long time. So, availing it only when necessary is the wise thing. Loans like personal loans come with tempting offers and are easily available with any of the banks. But for balanced finances, it is important to go for this loan only after doing a proper calculation. For this using EMI calculators before availing of the loan will help you know your EMI and hence plan your finances accordingly. Moreover, before you go for a loan, it is important to know how much necessary it is for you to borrow money. And avoid it until it’s not necessary.
As the income increases so do our dreams for a better life. However, it’s only up to us that we want temporary happiness for a sure future. Remember controlling our desires and proper financial management strategies can be the keys to a secure future.