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When you visit a financial advisor, he might ask, what was the smartest and proven financial decision you ever made. Your answer might vary from I cannot remember to I tried to do that but could not find somebody who could help me in this regard. As you know, we all have financial regrets, sometimes less, sometimes more. The key is to make good financial decisions early in life which can help in avoiding any hassles at a later stage.
Healthy Financial Decisions that You Should Know
Making good financial decisions can move you up the ladder and secure your financial future. Take your financial decisions now, as it is never too late to take plan your finances, especially when it comes to your personal income. Here in this article we have discussed important eight financial decisions that can help you increase your net-worth and enroll you towards a better financial future.
- Try to Save More for Your Retirement - One often thinks how much money is needed every year to enjoy a happy as well as healthy retirement life. Though that totally depends on the materialistic things one needs and wants to do post retirement. If you love exploring the world along with your family, then you will need more money no doubt. And if you like staying at home, spending time on reading books, etc. then definitely the requirement will be less. And since it is a long-term goal, the amount will keep on varying depending upon the life-style you wish to maintain post retirement. But nevertheless, you should save more.
- Try to Build an Emergency Fund - Emergency fund is one of the most important fund that you require. Nobody can predict the future, even you do not know when you might face an accident, you may get hurt or there is some family emergency like loss of job, there will be requirement for money. Yes, you can take credit from your bank with the help of your credit card or a personal loan, but easy cash that you would have built for an emergency can cover more and that also at no extra cost.
- Try to Pay Off Your Credit Cards on Time - Carry forwarding little or more balance on your credit cards every month is one of the terrible financial decisions people ever make. That is because these credit cards come with such high rate of interest, often up to 20 per cent or more, and non-payment of money in some situations can make you fall in a terrible monthly debt trap. It is kind of a cyclical trap, where after one point of time you can’t come out even if you wish to. So, you need to pay off your cards on time.
- Try to Pay Your Bills Every Month on Time - Most of the people don’t set their monthly billing schedule and due to this they forget and fail to pay their bills on time every month in spite of having enough money at hand. One should avoid paying late bills as this also helps in saving lots of late-payment charges which gets levied on your account.
- Buy a House That is Affordable - You should not go for a home that is beyond your budget, buy an affordable home. This way you can save a lot and also you will achieve a mental peace of mind of having an EMI which is affordable despite any unforeseen emergencies coming your way. Ideally your EMI should not be more than 40% of your monthly income.
- Try to Track Your Spending Always - You should track your inflows and outflows each month, if you do that you will know what and how much you are spending and saving at the same time. This way not only you will be savvy in budgetary control but also create a spending limit. It might help you to change your lifestyle and add up to the big savings each month.
- Evaluate your buying methodology – Most of the times we buy things we need at credit to earn those extra reward points. But we miss the point that if we pay by cash we can save on the processing fee and interest rate that these credit card companies charge. I’m not saying that buying from credit card is always a bad deal, but you should evaluate both the options and then take decision.
- Insure Yourself – Be it your family’s health or your life, always keep yourself insured. Looking at the increase in cost of medical treatments, it has become very difficult for a common man to afford these expensive procedures. So, it is always better to have one floater health insurance for the family even if your employer has covered you. And when it comes to Life Insurance, no one can ever replace you in your family, but it is your duty to ensure that they have enough financial aid in-case at any point of time you stop being with them.
There are lots of personal financial planning websites which can help you with your Personal Finance. You can also visit your financial advisor to seek help in making sound financial decisions. He/She can guide you in fixing the mistakes you’ve probably committed in past, and can give you tips for future budgetary control and hence enroll you towards full-fledged Comprehensive Financial Planning.
Charu Hastir, CFPCM is founder of http://www.theriteplan.com/. Rite plan is an online financial planning portal created to achieve a single objective of providing easy and Do It Yourself Financial Planning to netizens. Rite Plan is wholly owned by Tikkun Olam Financial Planning Services LLP. Please visit: https://theriteplan.com/index.php?route=common/home/