Personal finance is not only about earning more than you spend. Staying out of debt is a just a small part, but it also includes investments, retirement plans, insurance of self and assets, child education fund and much more. Learn a few smart things you can do with your finances now to help you in the long run.
Maintain an Emergency Fund:
Life is uncertain. There is a high possibility to incur unexpected expenditures. Living pay-check to pay-check is not a smart move. Create an emergency fund and put some money in it every month for the rainy days. This will also give you a peace of mind and avoid problems during emergencies to avoid any debt. Resist the urge to tap the emergency fund for non-emergency expenditures.
It is a good practice to maintain an emergency fund which contains three to six months of living expenses in the bank.
Avoid Becoming a Defaulter:
Always keep your credit score in check. Credit score may affect your ability to get a loan or the interest rate you may receive. To improve your credit score, do not become a defaulter,pay all your loans and credit card bills timely.
Clear all Debts:
One of the smartest things you can do to improve your finances is to clear yourself from all debts. Pay all your credit card bills and any loan which you may have taken. Avoid late payments fees and interest which you may have to pay extra. The faster you get out of debt, the better.
Plan Your Retirement:
There might be a point in your late life when you would not want to work anymore. Certain professions have a set retirement age as well. It is very important to plan a retirement fund separately to avoid having to work in old age.
Save Early for Kids:
One of the major expenditures occur in educating the kids. Instead of venting out all your savings in the education, start maintaining a separate savings account for the child from the time he/she is born. Save little every month. You will not even miss that money now but, in future, the accumulated money would help you a lot and refrain you from tapping your emergency funds.
Learn to Save Money:
Start to become street smart. Be alert and find out where you can get best offers and deal for any purchase. If it can wait, shop during the sale season. If you are buying a new car, go into a dealership store and negotiate a good deal for the car. Further, you can sell your old cars for cash and use that as a capital to buy the new car.
Get Sufficient Insurance:
There are a few unavoidable, expensive expenditures which may arise anytime without any warning. It is better to get yourself insured beforehand. Certain insurances you should consider getting are
- Health Insurance
- Life Insurance
- Renters/ Homeowners Insurance
- Vehicle Insurance
Also, make sure to insure every member of your family to avoid expensive expenditures in the future.
Start Saving Early:
When you start saving in your 20s, you do not require to save a huge amount every month and by the time you retire, you will have enough money. Start planning your finances well in advance
It is never too late to plan your finances but the sooner you start, the more financially sound you will be.