A good financial management plan enables you to manoeuvre through the ups and downs of life without much hassle. In your goal to achieve financial stability, the right use of money is as important as earning the money in the first place. If you don’t have a framework for spending and investing plans, you might land in the soup when there’s a sudden requirement of cash. So, how do you ensure that you not only earn money but plan things in a way that you have a backup in case of an emergency? Here we try to give out a few broader points that may help you to save your money and use it to invest and grow financially.
Stick to a monthly budget
Tracing your spending is almost impossible if you don’t have a set monthly budget for your spendings. Categorise your spending budget depending upon your need and stick to the set plan. This way you can calculate the money you need to sail through your month and put the surplus money to better use.
Save When you can
Now, many people complain that they aren’t able to save because their earnings are ‘too little’. Or at least they think that. So a helpful way to start your saving journey can be separating an amount at the start of the month. This could be an amount you think won’t hamper your monthly expenses. You can borrow from this pool during an emergency, but if you are able to leave it untouched at the end of the month, you have a saving amount in your hands. Now, we are not asking you to cut down on your fun and leisure but being just cautious would help you manage your finances well
Avoid Credit
With credit available so easily, we often tend to spend more than we earn and get stuck in a cycle. This hampers our financial stability and the capacity to deal with emergency needs of funds. So, look for loan/credit options only when it’s very necessary.
Invest
A lot of people associate investment with just share market trading, which is not true. The market is full of other investment options that offer good returns without much risk. You can go for a unit-linked insurance plan or ULIP that offers good returns. Instead of trading in equity, investing your money in trusted mutual fund plans can give a good return on money. And there are several government-backed schemes as well.
But the most important rule of investing is researching. Don’t trust anyone with your money, if you aren’t convinced. Read, research and understand before investing
Understand taxation
Paying income tax and understanding the taxation policies are very important components of financial management. As a reward for paying taxes, there are several tax benefits you may get. Hire a tax advisor to make you understand the policies and advise you on the investment options. Go for investment options that come with tax benefits in addition to good returns.
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