Keeping up with day-to-day finances adds a fair amount to the stress middle-class people have to face. The cash supply is ever-limited and you need to fulfill all your credit needs within that supply. Most middle-class families find their financial peace to be non-existent due to unplanned ways of living and overspending. But you need to cope up with the situations and this article will help you with the same. Here are the top 7 financial Planning tips you need to start following today:
1. Save First, Spend Later
This is one of the best personal finance tips you could get. Every month, after you receive your salary, you should first save part of it and then spend from the leftover. Start this habit from the very early days of your career and follow it strictly. If you think that you will manage your expenses first and save what is remaining, then that is never going to happen. Set a budget, save a fixed amount of money every month and manage your expenses with whatever is left. Follow this financial planning tip and you would not spend unnecessarily and develop financial discipline.
2. Restrict your expenses:
Window shopping, credit card expenses, and peer pressure are some of the vices in your finance management. One of the top money management tips includes the simple teaching that you should not spend unnecessarily. Ideally, 50% of your income should cover your expenses, so plan your budget accordingly. See if what you are spending on is even worth it, try to cut down the expenses and save the money instead. Roaming in malls, buying something impulsively without second thoughts will not work. You should always consider if you need the product or not and if yes, then you should always look for the best deal. Every penny saved is like earning an extra penny. Always compare the prices of products and go for the best price while spending your hard-earned money.
3. Set Goals and choose the right investment plan
When you design a financial plan, you need to set relevant financial goals. Make sure that you set your objectives straight, be it buying a car or a home, children’s education, etc. The right goal will help you decide upon the amount you need to set aside. Once you are done with this, the next step is quite easy. You would need to choose the proper instrument that will assist you in achieving your financial goals. For instance, mutual funds, SIP Plans, FDs, ULIPs, etc. This is a key mantra if you are someone looking for financial planning tips.
4. Credit Cards are only for Emergencies
Get this rule fixed in your mind. This is a must-follow money management tip for all the middle-class earners out there. Credit cards come with benefits and extra charges too. Try avoiding those credit cards bankers try to sell you, claiming that these have plenty of benefits. Always remember that you need to pay an extra charge while you clear your credit card bill.
Owning more than one credit card could land you in a debt trap. You should own a credit card but only use it only for emergencies. For normal expenses, stick to your debit card only.
5. Secure yourself and your family with a decent insurance cover
Compare thoroughly, do your research, read personal finance blogs and buy good cover insurance for yourself or your entire family. It could be a returning term plan, mediclaim, health insurance, etc. You will be required to invest small premiums only.
One of the most important personal finance tips is that you must get health insurance for you and your family. One illness or one accident will eat all of your savings up and you will be left with nothing. Get health cover for your parents as well. Medical inflation is quite high and life expectancy has surged. You surely wouldn’t want your parents to suffer due to a shortage of money.
Also, term insurance is a must. Life is quite unpredictable and you must make sure that your family faces no financial trouble after you are gone.
6. Compliment your earning
Try to get a secondary source of earning to support your primary income source. Whoever says that they can’t manage to take out enough time for this, is spreading a myth. If you are the sole bread-earner of your family, then you better look out for more opportunities to earn by utilizing your spare time with freelancing or online work from home jobs. You never know when inflation might hit or when you might be laid off of your job, so you need to stay prepared.
7. Emergency Fund
The competition is fierce in the market for all fields. You never know what catastrophe you might face and when you might be laid off. The stress level could become very high then and thus, you need to stay prepared for such situations. You need to have at least 6 months of expenses as emergency funds. These wealth management tips should help you to start saving for emergency funds now if you have not already begun.
Some more Financial Planning Tips:
- One of the top financial planning tips is to invest your savings. The earlier you start, the better the chances will be of you moving up from the middle class to a wealthier one.
- Start investing for retirement from an early age. The future is uncertain and you need to save enough for the time when you won’t be earning any more. Include this financial planning tip as your top priority.
- Start investing in mutual funds. SIP would be a good option and do not directly invest in stocks if you have zero knowledge about it. This is one of the top personal finance tips for people who want to move from the middle class to the wealthier group.
- You should also read personal finance blogs and educate yourself with money management tips.