Simple ways to form the habit of saving and protect your future
How do you save money that you have earned or inherited or even yours as a gift or allowance? What is most important is the will to want to save. If you get an advisor, you’re well on your way to great savings, provided you take it into account. Otherwise, we learn according to the needs and desires we have. In addition, to face the uncertain times that the future may bring, it becomes important to keep a reserve of money aside. Let’s look at some simple steps to manage the money you have:
Manage your money
Managing money doesn’t have to be a boring task. All it takes is dedication. Deciding to save is the first step towards finance. Saving money can be an effective tool toward greater financial independence. For example, think of a situation where you need to borrow money from a friend for an emergency. But there could also be situations where there is no “friend” who can help you. Swiping can be the easy way out, but you can’t do it every time. Simply because you can fall into the debt trap. So what’s the best way out? Plan. Do you have your salary? Immediately separate into different categories – medical, insurance, rent, etc. However, set aside 10% of your income each month for this “emergency” situation. That’s it. Set aside 10% of your earnings. Now, don’t deposit that in a savings account because it doesn’t earn any returns. Consider investing in a fluid fund. The liquid fund is a kind of financial bond mutual fund that spends money in fixed income creation tools like FDs, industrial papers, installment certification, etc. around 4%. Keep monthly and continuously. See the magic that unfolds at the end of these regimes’ terms.
If you live paycheck to paycheck, there may be many unexpected expenses. Avoid this by making a budget. Unless you have a plan in front of you, you won’t be able to control your capital. A spending plan simply shows how much money you have in your hands and how those funds are being spent.
Manage excess money wisely
Surplus money can be used to make you economically self-sufficient. If you don’t invest, your money won’t grow to close the inflationary gap. Investing doesn’t have to be hard and boring work. Goals that require a three to five year horizon are called medium-term goals. After identifying your goals, you can easily choose the financial investments that correspond to them. On the other hand, a risk-averse temporary financier can turn to a liquid fund or a well-balanced fund.
Mutual funds have become the most flexible financial investment haven. You can start a Systematic Investment Plan (SIP) at a nominal amount of Rs 500. Under SIP, a fixed amount is deducted from your savings and is purchased as a mutual fund of your choice.
Develop your financial investment portfolio
Creating your first financial investment profile is a feat in itself. Building a portfolio involves allocating your financial investments among holding categories such as equity, financial obligations, and also cash. Putting all your money in stocks is not a prudent move. You should allocate the amounts that should be authorized in each course of possession according to your financial investment objectives.
Cover your risks
You must understand that your life and your home are subject to risk. These threats can lead to loss of income and put you and your dependents at financial risk. Just as investing is crucial to wealth building, insurance is crucial.
However, investment and insurance coverage are separate, which many do not understand. A term insurance plan will be a smarter suggestion to acquire. The term insurance plan gives you greater threat insurance coverage at a convenient cost.
Plan your taxes
In tax planning, you assess your financial resources based on a tax performance factor. You try to take advantage of the various advantages, reductions and exemptions from tax obligations to reduce your tax obligation at the end of the financial year.
From a tax planning perspective, there are several tax-saving alternatives you can use. Such as the reductions offered from Sections 80C to 80U which are given in the Income Tax Act. One of the most effective ways to get the most out of Section 80C is to purchase an Equity Linked Savings System (ELSS).
If you don’t know where to start, start by asking someone you trust for help. If not, seek the help of a financial advisor.
(The author is the founder of Money Mantra – a personal finance solutions company)
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Posted: Sunday February 27th 2022, 07:00 IST