We all want to grow financially in our lives but what pulls us back is our financial responsibilities and our spending habits. However, good money management skills and financial awareness can always lead to financial growth and success. So, to encourage financial management skills in this blog, we will be discussing a few financial tips that will change the way you think about money and can lead to financial security and success in very little time.
Create a financial calendar
Well, it’s not expected that you can remember paying your quarterly taxes or pull a credit report and pay your bills and premiums on exact dates. So, to do it without any default you need to create a financial calendar. If possible add reminders on bill dates in your mobile calendar itself. This will help you remember all the important financial dates and will help you to default with any of the payments.
Check for the interest rate
Nowadays it’s quite obvious to have loans. But it can become complicated when you have multiple loans and are not able to manage them properly. Your loan management skills play a great role in determining your financial growth. So, you need to know which loan you should pay off first. a. The one with the highest interest rate. b. The loan with the longest tenure. Well, the answer to this depends on the total borrowing cost of the loan. You can use EMI Calculator to do accurate calculations and see the breakups.
Choose your savings to account wisely
Which savings account should you choose? The one that offers the best interest rate? Well, you have lots of options available in the market and people mostly save their money in their salary account only. But this habit can restrict you to gain profit. To gain good returns, you need to compare different banks and interest offerings on their savings account. Choose the one which offers good returns and has no login period.
Choose your credit card wisely
For most people, credit card debt is such a headache. The reason for this can be the compound interest rate and the flexibility of the end-use. But, do you know if credit cards are managed properly there will be no problems. But, for this, you need to be careful while choosing your credit card itself. Go with one which has a low-interest rate, a larger interest-free period and which suits your requirement. For example- you can go with a travel credit card if you are a frequent traveller, or a shopping cart when you are a shopaholic and spend more on lifestyle. More than this, making regular and timely payments can help.
Set a monthly budget
This is one of the basic steps which needs to be followed while trying to achieve any of the financial goals. You can start by listing your daily needs and expenses and set a budget for your monthly expense. Remember your budget should include all your needs, not your wants. Try to cut down on the unnecessary things and stick to your budget. At the month-end, you will surely notice a remarkable difference in your savings account.
Allocate your income toward financial priorities
Well, making wealth is not only about earning money. It is actually managing your hard-earned money properly and investing it in the right place. Building emergency savings, paying off debt, and padding your retirement nest are some of the important parts of financial planning and can result in a secured financial future. So, while planning your finances it is important to allocate a fixed percentage from your income to all these. Ideally, 50 % of your income should go towards living expenses, i.e. household expenses, 20 % towards savings for your short, medium, long-term goals, and 20% towards lifestyle and 10% towards building emergency funds.
Life cover & other insurances
Having a life cover is quite important, as it not only provides cover to your life but also provides financial assistance to your loved ones when you are not there. Additionally, it comes with tax benefits and one can claim it under section 80c of the Income-tax act. One should ideally have a life cover that is at least 10 times of your annual income. However, the actual requirement and premiums for it depend on one’s age and goals to be achieved. Apart from life insurance, one can also have term insurance and family health insurance policies as this may help you save a lot of money in medical conditions.
Set your financial goals
Setting up financial goals is one of the most important things which leads to financial growth and success. Start with setting up short-term financial goals and move ahead with bigger ones after the accomplishment of a shorter one. You can start with setting a monthly savings goal, on accomplishing this start focusing on retirement planning and kids’ education.
Having money management skills is a must to build finances and achieve success in life. However, following these tips will show a remarkable change in your finances.