Need assistance?
Allow us to help you setup your account. Enter basic details only.
The day you receive your pay check can be quite exciting. You can make many purchases and spend on things you’ve desired. But before you go ahead and explore what you can do, here are a few tips that tell you what you should and what you should not do with your MONEY.
Let us start with 'WHAT YOU SHOULD DO WITH YOUR MONEY'
- DO: CREATE A SAVINGS PLAN FOR EVERY FINANCIAL GOAL
- DO: START INVESTING
- DO: REDUCE THE BURDEN OF LOANS
- DO: TAKE INSURANCE COVER
- DO: ALWAYS HAVE AN EMERGENCY FUND
It is always wise to have a plan ahead! – Unfortunately, most of us respond assertive to instant gratification rather than long-term goals. To make things worse, our consumer-driven society encourages instant gratification and offers countless options for spending money. From one-touch shopping to credit card offers, we are now bombarded with the marketing. However, there is nothing wrong with shopping as long as we can afford them without endangering our future. As Warren Buffett once said, “If you buy things you do not need, soon you will have to sell things you need.”
Therefore, it is important to deal with impulse purchases and develop a habit of saving and investing before it is too late. In doing so, you must track your spending and create a saving plan that can help you with your financial goals.
A common regret among many people in their old age is that they did not plan for their retirement or future needs. Saving and investing money is an essential aspect of any personal financial plan - the good thing is that it is quite simple when you start early. You merely need to set aside a sum of money from your salary each month. In the beginning, it doesn’t matter how much you invest as long as you invest regularly. You can do investment in mutual funds through Systematic Investment Plans (SIP's). For example, you can create a SIP with reliancesmartmoney.com with as little as Rs. 500 each month. When you invest regularly through a SIP, you can achieve a substantial amount in the future.
It is sad but our generation has grown more comfortable having debt whereas the old generation saw debt as evil. Improper debt management easily eats away most part of our paychecks. If it gets out of your control, it may get delay your retirement plan or other financial plans. With outstanding loan payments, it will be very difficult to achieve financial freedom. To ensure your financial goals don't get sidelined, all you need to do is to make informed decisions about paying off loans and start building a corpus to achieve your financial goals.
While on the road to achieve financial goals, it is important to have insurance cover to backup your assets. Unfortunately, some of us do not feel the necessity to have insurance policies, as in that way they can save a big chunk of money in case anything happens to them. But, think about a situation when you have to pay for medical bills that would wipe off the money you saved all your life.
Having an insurance cover – medical cover, life cover, and accidental cover will ensure that you are financially secure to face any unfortunate event in future and continue moving forward as per your financial plan without any interruption.
Having an emergency fund can make all the difference to stop a small bump down the road in your financial life from becoming a complete disaster. No one can live from paycheck to paycheck. If things go off-track like you have to leave your job for some reason, you will be one paycheck away from not being able to pay for sudden car breakdown, house rent, medical expense or any emergency. Hence, it would be wise to always have 3-6 months of liquid funds kept separate where it can be easily accessed in times of short-term financial crisis.
It will let your other investments to grow without any interruption in your long-term goals and gives you some financial freedom.
Now that we know what should be done with your money, it is imperative to know what should not be done as well.
Let us see 'WHAT YOU SHOULD NOT DO WITH YOUR MONEY'
DONT'S
It is tempted to buy certain things that we don’t really need. It is pretty common where we have a natural tendency to wish for a lot of things and end up purchasing all sort of things that we won’t actually need. You can witness similar behaviour in many different areas.
• You buy a new sofa for the living room and suddenly you start questioning the other furniture such as chairs and table making the entire layout of your living room.
• You buy a new pair of dress and now you have to get matching shoes and earnings.
It is surprising how we waste money on things that we don’t really need. The regular investing would require you to manage your expenses, increase savings, and patience over the years. So, do not waste money over things that you are not really going to use and would compromise your financial planning.
Cash that we possess is the liquid fund that we can use to purchase anything or spend on anything when we need. But, as once mentioned above, it is a human tendency to get more. In doing so, we tend to spend more, sometimes on things that we don’t really need.
So, it would be recommendable to never cash your paycheck right away as it will be easy for you to burn through it quickly.
A zero interest rate might sound like a great deal – until you wind up paying more than you anticipated. People are falling victim to such special financial deals that may affect your financial life and eat away most of your savings. If that happens, it will have a direct impact on your regular investments as you may soon be short on funds.
Cars and electronic gadgets like smart phones, tablets and computers are a necessary part of daily life. However, from a financial perspective, these are depreciating assets. The value of such assets can come down over time. So when you purchase a fancy, high-end smartphone, you may have to replace it pretty soon. And the resale price would be way lower than the amount at which you purchased. This is why it is a good idea not to spend large amounts of money on depreciating assets. When you cut down on non-necessities, you could end up with higher savings each month.
Taking a loan from banks or Non-Banking Finance Companies (NBFCs) is an easy way to avail credit and meet your financial goals. However, you may want to keep a limit on the number of loans you have at any given point in time. For instance, if you have simultaneously taken a home loan, auto loan and a personal loan, a significant portion of your salary would go towards servicing these loans.Similarly, avoid spending money you don’t have. With a credit card, you can easily purchase what you want, but at the end of the month, you still have to clear the bill.
Gambling is fun when you are in Goa on holiday, and you want to explore your chances on the riverboat casino along with your friends and family. But otherwise, it can be addictive and dangerous. It is highly risky; the odds could be against you, and if you lose, you may have to part with a substantial portion of your savings. Avoid gambling with your money at all costs, and this includes the stock market too. If you are not experienced in the market, do not speculate or time the market to attempt high returns in the short term. It is better to take the long-term investment route.
Conclusion
These tips can help you increase your savings and also help you reach your future goals simply and easily.
