Personal finance is rarely taught in high schools or colleges even though it is the most important chapter of our life. As we step into more demanding roles in our life, figuring out finances becomes increasingly tricky. Hence, we have curated a list of the most important pieces of financial advice. Here are the five things you must follow to grow your money pot.
1. Track Your Expenses And Learn To Budget
There are about two rules that every personal finance advisor can’t get enough of repeating:
Never let your expenses exceed your income, and
Always keep your eye on where your money goes
This can be best achieved by developing a budget. Write down your expenses. It will wake you up to the amount of money you lose on petty expenses. These illustrate how something as trivial as your regular street food snack can add up to a significant amount by the end of the month. Many expenses like commuting are not under our control. But you can easily save on other expenses such as coffees and meals.
2. Protect Your Wealth And Invest In Insurance
To make sure your wealth doesn’t disappear overnight, you must protect your financial resources. Your ability to provide value generates your income, which further generates the need to manage your income. But what happens to those who depend on you once you're unable to make an income? Thus, investing in life insurances becomes an utmost necessity. Insurance helps by providing you with a considerable payout at the completion of your term. It enables your loved ones to reap the benefits of your hard-earned legacy.
HDFC Life Sanchay Plus, a non-participating, non-linked savings insurance plans helps you secure your future alongside that of your family. You can choose from a variety of alternatives depending upon your finances’ trajectory. Key benefits of investing in HDFC Life’s Sanchay Plus are:
Policyholders can choose to claim their guaranteed benefits as regular income with the Guaranteed Income and Life Long Income Plans.
They can claim their benefits as a lump sum as well under the Guaranteed Maturity plan.
With the Long-Term Income plan the policyholder can receive guaranteed income for the fixed term of 25-30 years. The insured will most likely receive the guaranteed income till 99 years of age.
The insured receives assured returns and stays protected from market-risks.
You can enhance your protection coverage with rider options on payment of additional premium.
3. Staying Out Of Debt And Avoiding Credit
A rule of thumb in finances: Pay with cash, not with credit.
Pay with cash or a debit card. This deducts the money from your account immediately without additional fees. Whereas, a credit card can serve as a high-interest loan. Thus, you must learn to use them to your advantage and not to that of the bank or the credit unions. Use credit cards for emergencies only—and make it a point to clear your balance in full when the bill arrives.
4. Compound Interest And Saving For Retirement
You must start saving for your retirement early on in life. Why? Because you want your money to multiply and compound. So that you don’t have to worry about your expenses when your active sources of income dry up in your old age. In short, compound interest is an investing model where you invest a set amount each month and gain a percent return on investment. These returns along with your investments pile up over time and can be responsible for extremely beneficial savings.
5. Learn To Do Your Taxes
Staying on top of your finances comes with keeping track of all the avenues that charge you taxes. You incur taxes on everything from your salaries and stock investments to your property and your business.
Take your time and learn to do your taxes to avoid paying a tax professional. There are plenty of tax softwares that will help you understand everything taxation.
The logic behind becoming financially aware as an adult is a fairly simple mantra - start early, save more. With HDFC Life’s Sanchay Plus, now you can rest assured knowing that the future of your family is secured. Learn more about this savings insurance plan and start investing in a better future now.
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