> Save before you spend
> Invest what you save
> Protect what you invest
> Analyze where you spend
These are the only 4 very basic things that you need to always remember to make sure your financial health is taken care of you. And what`s better - once you are in this habit, the process will automatically take care of your personal finance.
Save before your spend - Analyze your monthly income and make sure you have proper commitment for savings. This saving could be in any form - Idea is to get into a habit.
Invest what you save - Tax saving mutual funds, fixed deposits (FD), bonds, PPF etc. please consult your advisor before investing in any of the options available in the market. All depends on the kind of commitment you would like to get into. A tax saving mutual fund will have a minimum of 3 years lock in period. A PPF account would have a 15 years lock in and FDs have a variety of options starting from a couple of days to many years. Many leading banks in India provide you with an option to make an FD account online.
Protect yourself and your family from the uncertainties of life. Make sure you have a proper life insurance policy which should be a minimum multiple of 10 of your annual salary (in my opinion). Also, make sure you have a health insurance to cover any accidents in life. Generally this health insurance is taken care of by the company where you are employed, if not then make sure you get yourself at least the basic health policy.
Analyze your spending - How often do you check how much you have spent on your groceries? The number of times you went to your favorite fast food joint? How much did you spend on fuel this month as compared to the last? These are just a few questions which need to be answered with proper analysis. Spreadsheet or personal finance software can help you do a proper analysis. Track your credit card usage and make sure you pay the outstanding on time, late fees payment is definitely an expense that can be avoided by having timely alerts reaching your inbox or your mobile phone. Also see to it that you hold the right kind of credit card, there are many options available in India which provides cash back facility or have a very good loyalty point system that can be used to buy other important things in your life!
These four points may sound simple and as a matter of fact they are simple! All that is required is a habit of a regular savings and investing in the right kind of instruments, getting insured and yes, not forgetting to analyze your spending pattern! Please contact a professional financial advisor to get a better guidance on the subject matter.
Kunnath Santhosh is a co-founder and director, Perfios software Solutions. Perfios offers an online personal finance software solution that provides a 360 degree view of one`s personal finance with very little manual effort.
MITUL SHAH
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