We spend a whopping 37 years earning money, considering that we start working at age 23 and retire at 60 years… and may be more.
More than 50% of life is spent in struggling to EARN livelihood, achieve goals, grow, and improve life style, with an average life expectancy of 70 years.
Continued Heartbeat being the first priority, money is the second most important part of life – no philosophies here – just facts.
But, do you know what the critical money management guidelines are?
Here are some interesting thoughts, which I feel, ought to be taken seriously, am sure you too would…
Make saving a habit: at least 25% of your Earnings:
Start Saving – Even with your pocket money if possible.
Little drops of water make a might ocean. This stands true for investments.
Automate your savings.
Invest!!! Invest!!! Invest!!!
Understand the power of Compounding.
Coz once you realize the Power of Compounding Life sets a very different path for you. Club this action with the 1st action above.
Start investing, Invest in Mutual Funds, Shares, Bonds, FD etc right from your first salary. Make it a habit to celebrate life with investments.
Buy a house before you hit 30 yrs.
You may start your career by 23 or 25 yrs after completion of your education. Considering that you have saved some money it makes sense to use it as down payment. Even if it seems difficult to pay the EMI do crowd source, take in that extra risk and go ahead and buy or construct your first house. Remember – whatever stage of your life and earnings you are, a big investment like buying a home seems an uphill task, but here is why it makes to take the step,
- Real Estate is an appreciating asset, which means the costs escalate. So even if you want to buy a house after 5 years, the prices would have gone up irrespective whether your salary or income grows or not.
- You save on income tax.
- Your salary growth by the next 4-5 years of your job, would make it feel comfortable with the home loan EMI. Actually with a little planning you may plan to pre-pay and close the home loan by 7-10 years.
- Even if you don’t stay in the house, you will start getting rental income
Create a passive income source while you do your job.
It’s important that you have a parallel passive income source. Having a parallel passive income will not only help you to achieve financial freedom over a period of time, but also de-risk the mid-career crisis, job loss, or loss in business. Passive income source examples could be Rental Income, Dividends, Commissions, Earning from setting up a business but you not working actively, royalties, annuities etc.
Budgeting your income and expenses
Budgeting your income and expenses might sound to be a boring job, but believe me you, it will help you to control unwanted expenses and helps prioritize.
A spread sheet with income and expenses throws interesting insights on your spending and lifestyle.
Avoid unnecessary expenses
Very often we get tempted to go in for buying stuff that may not be a necessity. Eg. You find a fine new shirt or an awesome pair of shoes, spectacle etc., which look all good and you get tempted to buy… Or those online shopping festivals, which tempt you to buying those unwanted stuff, just because of attractive prices.
Ask yourself one question “Do I need it, will it add value? ”, reason out logically and decide. A penny saved is a penny earned.
Beware of Over Use of Credit Card.
Have a good payment track record and have a good CIBIL Score.
It is always good to repay the Credit cards in time. It is very important not to fall in the trap of the Credit Card lifestyle. You tend to overspend with rampant usage of credit cards.
Also it is important to repay the loans [vehicle loan, personal loan, gold loan etc] taken from those Banks, NBFCs etc. This helps in maintaining a good Credit Score, which will helpful in future to seek loans.
Get Insured : Medical Insurance and Term Insurance Policies
It is most important to be prepared for the risks life poses infront of you. Please be insured for your health and your family’s. This will take care of any major expenses on health. It is very important for the earning member to cover for the uncertainties in life so that the dependents continue to life a life unaffected financially. Term Insurance policies
Live a Minimalist / Frugal life for a few months.
Why??? A frugal, minimalist life is a life of simplicity which give you lots of free space out from the clutter. Makes you shed off those extra wants and allows you to spend less, be simple. Economically this teaches you how to handle breakdowns
A healthy, happy life is a sorted life only if you have a sorted financial health. Try the above Financial Hacks to lead a more peaceful, prosperous, tension free life….