It is very important for the beginners and young investors to understand Money’s worth. The young investor should learn that the money is what you get in exchange for your precious time in some fruitful pursuit. If you are earning per month rupees 44000 i.e for working 22 days in a month or say for 176 hours, this implies your income per hour which comes to Rupees 250. Each and every time when you wish to spend your money on something, you just have to understand and realize whether such specific thing is worth the time you spent on earning the same. It’s essential to learn how to be good with money.
Today, here at Financegab we provide you 7 Financial Planning and Management Tips for Beginners:
1. Set Your Financial Goals:
The foremost important financial planning is to clear yourself about your financial goals. Setting objectives for Short term and Long term. What do you want to achieve? Your goal should be based on short or long term i.e. buying a new car in the next couple of years or planning for your retirement.
2. Know Where Your Money Goes:
It is very important to ensure that your expenses are not exceeding your income. The best way to manage your expense and income is to make budgets. Start from a weekly budget and check the variance at the end of the week. Once you get the control over your weekly budget then start with a monthly budget. It’s better to check your priorities and start spending money on necessities rather than overspending on luxuries. You will be able to enjoy all the luxuries you wished once you have set aside funds to make yourself financially secure.
3. Start Saving:
Start investing a portion of your monthly income (at least 20%). Use such financial instruments which fetch you better return as well as save taxes such as Mutual funds (ELSS), SIP, PPF. NSC, Tax saving bonds etc. but use it after understanding the pros and cons.
4. Create an Emergency fund:
It is important for you to create an emergency fund, contributing at least 10% of your monthly income, this will help you to overcome and manage emergencies like Job loss or health problems.
5. Plan a Life Insurance:
Applying for a life insurance plan at the earliest is consider a good financial planning tip for the family breadwinner. In order to ensure the security of the family, having a good life insurance plan is very important. This security can be achieved through a proper protection plan, this protection plan is also known as a term insurance plan.
6. Early Health Cover:
As mentioned above the importance of opting a term insurance likewise it is equally prudent to have a medical-claim or a health insurance plan at the earliest. As you age, the health insurance policies get expensive and if there is an unexpected medical condition, you might be in a struggle to get a medical policy, at competitive premiums, if at all.
7. Manage your Debt:
If you do not follow a strategic debt management plan, it is possible that you will continue to accrue debt which takes you further behind and makes situations tough and harder to escape. Strategic Debt management involves paying down strategically the most expensive debt first, like then personal loans, outstanding amount on credit cards and then housing loan. It is always better to avoid credit purchases and as it helps to reduce your credit card bills.