7 financial picks you cannot afford to ignore
You ask anyone in your family, friends, circle and so on for any financial advice and you will be loaded with tons of it. People have so much to tell you about their experiences, about people’s experiences that it becomes next to impossible to grab everything, forget about implementing and following it.
But with loads of information at hand, it is important to understand and filter out the important ones which if not caught at the right time may end up in a huge loss. To ease out your search for the most important things to do, we have listed 7 most important financial lessons you cannot afford not knowing;
Save for yourself first
Many people out there do not understand the importance of saving money even before they get hold of it. Yes, it can happen and it should. Once you have money in your accounts, it requires a great deal of discipline to save it from being spent on your last month’s credit bill or long-awaited smartphone or anything which will empty your pockets. It is not like people do not have money, they do, of course. Where else does your monthly income go then? What they fail at is planning the route of their money. Living paycheck-to-paycheck is one deadly habit people these days possess.
Be cautious of lifestyle inflation
This is one thing that has adversely affected a lot of households in recent times. Lifestyle inflation is one thing that makes people spend like mad-men on things that depreciate with time. Peer-pressure works on its best in a passive manner while you have a look at your neighbour’s new luxury car or your friend’s new house.
If you are making a fortune, you are free to spend at your own will but do not forget to keep a check on the route your money flows through. The crux of this is to live lesser than what you actually can afford.
Invest, don’t time
The stock market is an untameable animal which can only be walked along. Do not wait for the right time as there is no such right time. Also, do not try to time the market, just get your hands onto the funds of your choice and invest. The more time you spend time the market, the more time you are wasting. If markets are low now, they will bounce back and vice-versa.
Also, you do not need a lot of money to get going, start with a SIP and you can see your money grow over the period of time.
Save tax and Create Wealth by putting a portion of your money in Equity Linked Saving Schemes (ELSS) Funds some of the best funds being Axis Long Term Equity Fund, ICICI Prudential Long Term Equity Fund, Aditya Birla Sun Life Tax Relief Fund and more
Build your emergency fund
Another very important thing to prioritize as far as your finances are concerned is to have an emergency fund. An ideal emergency fund must be 3-6 months salary plus the expense of the last emergency that occurred in your family. Even if you have your life sorted and events and finances planned, there will always be things out of your control. The best you can do is to be pro-active and prepare in advance for any such situation to occur.
There can be events like losing your job or poor health or divorce or recession or company breakdown or any drastic thing imaginable. Life is unpredictable, the best you can do is be prepared in advance. This will be far better than going in for a debt or loan and spend a major part of your life repaying it.
Now that you have time and chance, do it!
Stand clear of your bills
Do not and absolutely do not keep any back-log as far as possible. A credit card bill is one of the biggest enemies of your money. It may feel like free money but once you swipe it, there will be a huge bill waiting for you by the end of the cycle.
Now, if do not make enough to clear off the bills in totality and have adopted a habit of paying the minimum amount only, this is going to come as a bubble-burst soon.
Just one time you forget to pay your bill and the late fee is going to cost you a fortune. Also, when it actually comes the time to pay the total bill after a series of minimum amount payments, it may come as a nightmare.
Before such a situation arises, make sure you clear-off all your bills every month. If for once you feel you cannot do so, stop spending beyond what you can afford and please refer to point 2 again.
Do not just save, invest
It is good to have savings, a lot of them but that’s not just it. Saved money is like a seed, it has a potential to grow into a fruitful plant or tree but not without all the desired inputs like water, sunlight, air, soil, etc. similarly if you do not provide such stimuli to your money, it will be like the dormant seed. Your money needs to be invested in order to grow into a fruitful plant.
There are a lot of options available in the market, select and invest.
Lastly, be patient while your money is doing its work. Assuming that you have invested in SIP, you are blessed with mathematical magic power- Compounding. Invest your money now to finance your retirement or to build your own home or for your child’s marriage or anything. The power of compounding works over the years to create your desired wealth.
So, invest, wait and watch.