The process of financial planning ideally should start as soon one starts earning and its always good to start soon. Financial fitness come with a detailed plan and commitment towards your planned goals. It can be best achieved if you are able to foresee the future and stay disciplined towards your financial habits. Its important to maintain your financial health so that you can live the life you aspire and become successful in future by following few simple steps –
Setting your Goals – List your top five goals that you would like to complete in next five years. Categorize them further into Short, Medium- and Long-term goals. We shouldn’t set our goals unrealistically high as in case we are not able to achieve them it can lead us to disappointment. Instead we can break our larger goals into smaller ones and gradually try to achieve them.
Stick on the Budget – Making a proper budget and sticking to it is the fundamental step to stay financially fit. It helps to track our expenses and brings financial planning into action. Ideally it should be prepared at the starting of the month and tracking of expenses should be done at month’s end. Check your financial statement on all the spends that you make like ATM withdrawals, Bank fees and charges, penalties, unnecessary subscriptions and try to eliminate them as much as you can to keep a control on your budget. Doing it regularly for few months will become a habit for being on track.
Keep your Contingency fund ready – This is the fund which every family must have for the uncertain times like medical emergency, job loss, economic slowdown, urgent travel etc. Without these funds people tend to exhaust their savings or use other options like credit cards which can be costly and can disturb the monthly budget for several months. For maintaining this kind of fund, one should put the money in such a place where it is NOT accessible through your debit or credit cards. This kind of funds should ideally be able to cover your expenses up to 3 to 6 months.
Diversify your Income and Investment – Income must increase with time, one should always explore other sources of income for financial growth. If you own a full time job, you can start a side business to earn some extra money and reduce your debts. A person doing business too can diversify his business by adding more products, outlets etc.
Just like income one must diversify their investments too. Investments carry certain risks, so diversifying them can help us to minimize them. Some investments might show better return in the long term, so read the trends, identify them and figure out to restructure your portfolio towards better returns in the future
Keeping your family secured – If you have a family, then you need to be responsible for their well being. It can be securing your aged parents, spouse or children. One must take health insurance for the parents, life insurance for self and spouse and other schemes for children welfare. One might find it burdensome initially while paying all those premiums but these small amount can save you from incurring huge expenses in future. Having an insurance also ensures protection of your family, even if you are not there to take care of them.
Eliminate your Debts – Never accumulate your debts, always try to get away from the debts in a timely manner which can save you from high interest charges. Try to set up an automatic transfer for all your fixed expenses every month as soon as you receive funds or salary in your account.
We at home credit believe in hassle free payment service in timely manner. For EMI payments we have ECS facility which automatically deducts the amount from customer’s bank account every month. We always encourage our customers to pay their EMIs on time so that so that our customer does not end up paying additional interest charges on their EMIs.
It is certainly not difficult to achieve financial freedom by following the above steps without much struggle. You can reap multiple benefits by incorporating these methods in your daily life.