Personal Finance refers to the management of financial and monetary decisions of an individual or family. It is helpful in making key financial decisions such as creating budget, purchasing financial products (like insurance, mortgage & credit cards) and investment planning to ensure optimum returns. It’s wise to implement disciplined financial practices, as it facilitates you towards fulfilling financial goals.
The working youth usually start earning in their early 20’s and they tend to spend their entire salary. Due to their casual spending habits, they are not even able to meet expenses from their earnings. In order to meet their expenses, they end up availing personal loan or borrow money from friends. Working youth should think before applying for loans, as it can bring them under a vicious cycle of debt burden. It can be avoided by controlling overspending.
There is a propensity in today’s youth to also indulge in impulse pending. Thus, everyone should track their spending and check whether there is overspending. The money you saved will help you to meet the future financial obligations. Therefore, it is imperative to save a portion of your income by following a disciplined savings habit.
Developing some key personal finance habits will help you to become more financially efficient, take control of your finances, and stay out of debt. It facilitates you towards building more wealth and achieving stable financial future.
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Plan your Budget
Get an estimate of your monthly expenses, allocate a budget and try to stick on it. When it comes to preparing a budget, you can list your monthly expenses that help to keep track of all items purchased and your spending pattern. By tracking your expenses, you can check if there is over spending and try to avoid unnecessary expenses.
Investment Planning
As soon as you start earning, you should make a habit of regular savings and invest it to attain financial goals. Firstly, you need to explore various investment avenues which can help to grow your money.
In Personal finance you should invest in insurance to ensure you are prepared enough to meet the uncertainties. Getting a comprehensive life and health cover help you to feel secured against uncertainties of life. Upon insuring your home, car & bike, your assets will remain protected against any mishap.
You should invest your savings in growth-oriented investments that will help to build a corpus. You must invest in EPF or PPF to have secure investments to plan for future. Investing in mutual funds or equity investments help to grow your wealth.
Avoid Impulse Buying
As mentioned earlier, impulsive buying is an unplanned decision to buy a product or service without planning or absence of proper research. It is an irrational buying which usually disrupt your savings efforts. You must be wary of impulse purchases, instead you must plan well and do your research before buying. You must think upon your purchase whether you really need to buy.
Pay Bills on Time
Paying credit card bills before scheduled date help you to build and maintain good credit. It also helps you to avoid late fees. It’s wise to pay the bill as soon as you receive it. If you think that you may forget to pay the bills, it’s better to opt for auto pay and you don’t need to remember the date for paying bills.
Also, don’t ever pay a bill before checking it thoroughly, as it may include charge or fee which is not valid. So, study your bill to ascertain inaccuracies and ask the concerned banking institution to rectify it before paying the bill. It reduces the chances of overpaying the bills.
Maintain Backup Fund
Emergencies may occur at any time and it is required to stay financially prepared. Everyone must maintain backup fund that will help to fight against emergencies. You are advised to invest in liquid schemes such as bank deposits to get a corpus during emergency. Buying life insurance, health insurance, car insurance and home insurance offers protection from risks and these plans come to rescue during unfortunate events.
Be Realistic
You need to be practical while investing your money. Don’t ever invest in get-rich-quick schemes, as it doesn’t work at all in the real life. Investing prudently will help to grow your money and achieve financial goals as well.