29 JUN 2017
Steps to get your finances on track
Are you striving to achieve that perfect balance between expenditure and savings but you are somehow unable to do so?
Numerous plans have been made to handle your finances better but that new gadget introduced may distract you from your path towards financial stability. In such a scenario, your long term goals may suffer.
Don’t fret; here are 4 simple steps which will help you get your finances back on track:
- Budget, and never stray:
The simplest and most important way of keeping your finances in check is by having a budget.
While some may feel that maintaining a budget is a strenuous task, it is a fool proof way of helping you streamline your expenses, thereby helping you keep your finances on track. For a month, keep note of all the things that you spend money on; make sure that you note down everything - from a new gadget to a simple pen. Once you have done this, separate the items in the list into two categories - items which you need and items which you want. You have to work towards reducing the money that you spend on the items which you want. Once you have an estimate of what your monthly budget should be, make it a point to stick to it. A small habit does wonders.
- Create a financial plan:
Keeping your finances on track is the only possible way you can chalk down your long-term and short-term goals. Your goals will tell you how much you need to save in order to fulfill all your dreams. Your short-term goals could be buying a new car and your long-term goals could be a good retirement life. Based on what your goals are you will need to create a financial plan. Understanding your needs can help you create an appropriate financial plan.
- Limit your loans and start investing
It is important to understand your finances before spending an exorbitant amount of money.
EMIs, overuse of credit cards, and loans can leave you in debt, crawling out of which is an immense task. In order to avoid such a situation, start investing at an early age. You can consider investing in plans that give you a tax benefit. This way you’ll be investing for your future goals and also get a tax benefit. Investing at an early age will help you to reach your long-term goals with systematic planning.
- Plan for uncertainties:
You may have some savings and investments but you also have responsibilities and liabilities. Life is unpredictable and you are aware of it. Death, Disease, Disability – the 3Ds everyone fears. There’s one thing common between all three situations i.e. loss of income.
In the case of death of the breadwinner, the entire family is shattered both emotionally and financially. If you have a child who is still schooling your spouse will have to manage his/her educational expense all alone. If you have loans, your family will be burdened with heavy EMIs.
In the case of a critical illness or accidental disability, you may need to take a sabbatical or quit your job until you get completely recovered. Now, this recovery period is undefined and it depends on the severity of the illness or disability. A critical illness will not only impact your health but also your financial stability. The cost involved in the treatment may exhaust the entire savings of you and your family members. They may have to compromise on their lifestyle and future goals.
You wouldn’t want your family to go through such hardships during such crucial times. To be financially prepared against such uncertainties you should choose an insurance plan that will provide you comprehensive protection against 3Ds. If you plan at an early age, you can avail low premium rates.
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