Wednesday, 26 September 2018

How to set your financial life in order?

How to set your financial life in order?

How to Set your Financial Life in Order?


Life and money are inextricably linked with each other, whether we like it or not. Our financial priorities keep on changing as the years pass. For many people, it is difficult to think of anything less enjoyable than taking care of their finances. But it is very important to do personal economic checkup every few months like we do for our health. There are simple ways to keep a track of how your finances are doing. So, let’s get started.



10 Simple Ways to Set your Financial Life in Order
1. Set financial goals
You need to set financial goals for yourself. You should have some goals for which you are trying to save money. Your financial goals can be short-term or long-term as per your needs. For example for buying a new car in near future or after two years, saving for children higher education or saving money for retirement. Different people have different goals for saving money according to their needs. Setting these of goals will make it easier to save money for that particular goal. Setting financial goals will make you move from where you are now to where you want to go.
2. Keep a record of your expenses
The important rule of saving money is to know where and how much you are spending every month. You have to make a note of all your expenses to examine them at the end of the month. It will take few minutes to write down your expenses every day. This way you will come to know about your spending on useless expenses. This data will help you in making your budget for the next month.

3. Make a budget
Now you have an idea of where and how you are spending every month. On the basis of this now make a budget for the next month’s expenses and income. With the help of this budget, you can track your income against your expenses. You should also keep at least 10-20 percent of your income as saving every month. If you are unable to save that much then this is the right time to cut down on your non-essential expenses. Making budget not only keep a tab on your habit of over-spending but also encourage you to find some ways to earn extra income to increase your savings.
4. Check your credit score
Check your credit score and credit report annually for free from Equifax Credit Information Services Private Limited, TransUnion CIBIL Ltd, or Experian Credit Information Company of India Pvt. Ltd. A credit report is a detailed report of your financial history related to all forms of credit. A credit score of 750 or above is good. Free Credit Report. How to get your free Credit report? 


5. Get insured
Life is uncertain and life insurance can provide financial help to your family if something tragic happens to you. Nothing can replace a loved one but an advance planning with life insurance can make things easier for those, you leave behind. This type of security for family is priceless. And do not stop with just life insurance cover. With rising medical expenses, you also need to buy health insurance to cover you and your entire family. Health insurance or mediclaim policy provides financial cover to individuals for any unforeseen medical emergencies, be it an illness or an accident that has led to hospitalization. With the rising cases of illness like cancer and cardiac diseases, it is also important to have a critical illness cover. How to choose Term Insurance   

You can also Read: Why do you need Life Insurance
6. Save for retirement
Plan for your retirement when you are in your early age because you have the advantage of time that older people do not have. It is always good to have enough money at the time of retirement so that you do not have to rely on your kids for your expenses. So start investing for your retirement and put some part of your income every month in a good and suitable retirement plan that will help you reach the target you have set for your retirement.
7. Build an emergency fund
Future is uncertain and we could not predict the future. So you should keep aside at least six months worth of expenses in an emergency fund for emergencies. The size of the emergency fund varies according to individual needs and circumstances. While building an emergency fund, you also need to take into account your existing insurance premiums and other EMIs if any that need to be paid regularly. The habit of building emergency fund will make your life easy and you can tackle any financial emergencies easily. However you have to make sure that you do not withdraw money from this fund unless it is for emergencies.
8. Track your net worth
Keep a track of your assets and liabilities. Tracking your assets and liabilities will show you where you stand financially today. Just subtract your liabilities from your assets to know your net worth. This is a good way to measure your financial health at a particular time. By updating your net worth over time, you can see the progress you make towards achieving your financial goals you set.



9. Get out of debt
It is very stressful to be in debt. If you have taken a loan, you have to pay it back, no matter what are the circumstances. Make a proper plan to get out of debt (if you have any) and stick with your plan until debt is paid off. It is never easy to get out of debt but at the same time it is no impossible. The most important step is to stop adding to debt – put your credit cards aside and pay all your bills with cash or using your debit card.



You can also read: Money Saving Tips
You may also like to read: How to invest in mutual funds online?
10. Accumulate assets
Everyone wants to have more money. Increase in assets is the key to building wealth. You can improve net worth by reducing your liabilities and increasing your assets. All the wealthy people have a large number of assets. If you want to build wealth then you have to acquire assets. Accumulation of income generating assets can transform your life.

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How to set your financial life in order?


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2 comments:

  1. All understand but not follow even after such an advice. Thanks. Sharing it.

    ReplyDelete