Marriage is a promise of love, happiness and security. Even though money may not buy happiness but financial security may come in handy in keeping the happiness and peace of mind. Life is uncertain and no matter how cautious you are, life will always surprise time and again.
This makes financial planning utmost important which is usually overlooked because of its complexities and lack of knowledge.
Don’t panic, we are here to give you a heads up and help you understand what all factors should be kept in mind while deciding finances for your family.
Create a budget on the first of each month
The most basic step towards your financial planning is to know where your hard earned money is going. Without the knowledge of your expenditure, one can never manage their finances. Its sheer common sense, how would you reach to the destination without knowing the directions?
Hence, make it a habit to plan a budget every first of each month to get an idea of inevitable spends and then regularly keep a track of every single rupee you spend.
Trust me! Result will tell you a lot about yourself as well.
Well ! This may sound cliche but this is most commonly taken for granted. Youth today considers insurance unnecessary as it doesn’t give high returns, however we forget that its not an investment but as the name suggests its ‘INSURANCE’.
Tragedies never knocks the door before coming in and when you have your loved ones depending on you, you have to make sure that you are prepared for any unlikely situation.
Start with Health and Life insurance from a reputable institution after a thorough research as it should meet your family’s needs.
After securing yourself, now you need to be prepared for inflation and financial goals. I always advise my clients that you cant work forever but money is required at every step and unfortunately as you grow old your income declines, however expenditure increases. Therefore, your money should work harder than you do today.
Best way to make that happen is by investing in reliable and profitable assets. Initially one should start by investing in Mutual Funds which gives really good returns in short as well as long term with minimal to high risk depending upon your choice of funds.
There are SIPs, ETFs, Equity and many more Mutual Funds offered by many financial institutions. Make sure you do your homework and choose wisely.
Being liquid is a necessity. You never know when you might need it. Therefore, always keep a portion of savings as emergency fund which will help you smoothly come out of any unexpected expenditures.
Always remember, the main motto of having emergency fund is immediate access to it, so make sure it is in the form of liquid assets.
Control your Debt
Loans and credit cards might give you flexibility for a short period of time but when overdone it can be devastating.
Definitely, not everyone can buy a car, house and other expensive amenities with cash, however many a times we start taking credits for luxury instead of needs, thinking that it can be paid off in small portions. These small portions when accumulated can turn into a huge debt. Therefore, learn to differentiate between needs and luxury and always have clarity on how you will pay that off. If needed keep saving a portion for debts every month first and then plan your expenses for the month.
Finances are as easy or as complex as we make it to be. There is no way our finances can get ruined if we are vigilante and keep our expenses in check. Don’t get impacted by your peers vacation or friends new iPhone X.
Never get carried away by your expenses and lured by easily available credit cards. Understand your needs and then your desires and then plan finances accordingly. No luxury is more important than your health and peace of mind.