Financial planning can be both easy and incredibly complex. But if you focus on the basics, you can get a big jump on saving for the future. Just follow these three tips and you are building a solid foundation.
Start investing early: The longer you wait, the more you lose. You have time on your side today, this benefit won’t last forever. If you don’t have any savings, start now. All you need to do is cut down on your savings by just Rs 1,000/month and invest that amount in an equity mutual fund. Let’s say you invest Rs 1,000/month in a systematic investment plan ( SIP ) for 10 years in an equity fund that returns 12% pa., the end result is amazing and you would be patting yourself on the back.
Check out how well SIPs in mutual funds have performed over many years – Mutual Fund SIP
Get medically insured: Numerous illnesses and accidents are pretty much age agnostic. So don’t live under the deluded notion that you do not need medical insurance. Should you need it and not have it, you will watch your savings rapidly disintegrate. Granted, you may have a medical insurance provided by your employer. But what if you quit your job or get handed the pink slip and between jobs you fall ill or meet with an accident? What if you decide to become a consultant and the employers no longer provide medical insurance? Get a medical cover. The younger you are, the lesser your premium so you won’t even feel the pinch. Not to mention the tax benefit.
Avoid credit card debt: When you use your credit card, you pay for an item with money that is not yours. So basically you enjoy life on borrowed money. It starts off as a convenience, more of a stop-gap arrangement. You pay just the bare minimum amount and walk scot free. But as you well know, or will soon learn, there is no free lunch. Remember this. This instant gratification can put you on a slippery slope. If you have started revolving credit, which means that you could not afford to pay your monthly bill, then the only way out of this ditch is to stop using your card till your debt is cleared.
Saving money doesn’t have to require drastic steps. Instead, small, simple methods can make a big difference for your bottom line.
Be a smart investor !