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5 personal finance habits to inculcate

Henil Shah
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5 personal finance habits to inculcate

The main aim of our life is to earn and spend those earnings in such a way that not just take care of your basic needs but also helps us enjoy life. Personal finance is something like that. It involves various financial aspects of your life such as your cashflows, that is, your income and expenses, assets, loans, banking, retirement planning, insurance, investments, tax planning and estate planning.

Managing finances demands a lot of patience in addition to proper planning. It is not like magic which would happen immediately. In fact, it is like a tree which takes time and effort to reap good flowers and fruits. So, in this process, you need to be more disciplined and start saving as early as possible. Your first job pay is good to start with.

Inculcating certain good personal finance habits can help you to become more financial efficient, take full control of your finances and move and stay out of debt. It would help you to be financially and stable and lead you towards financial freedom.

Saving
Start saving as early as possible. Your first paycheck, whatever be the amount, is good to start with.

Budgeting
Budgeting is one such thing which people usually avoid doing out of boredom. Initially, they start with good energy and then after few days or probably few weeks they keep it aside. But it is important to understand that budgeting is a very crucial part of your personal finance as it will help you clearly understand from where the money is coming from and where it is going. This will help you control such expenses which actually are done out of impulsion. So, developing a habit of having a budget in place and maintaining it regularly would help you in managing your cashflows properly.

Use credit wisely
When it comes to our money, we think a lot before spending but when it comes to borrowed money, we spend it like anything. However, it is important to understand that you should use your credit card and even personal loans wisely. Don’t delay the payments of credit cards as it can come at a huge cost of around 30 per cent to 40 per cent, annually. So, it is better to pay it off in the month it is used. If you are currently having such credit card dues then pay it off as soon as possible or if you don’t have ready lumpsum available then shift credit card debt to personal loan.

Have emergency fund in place
Emergencies don’t knock your door with prior intimation. So, it is good to be prepared for the same. Having an emergency fund in place would ensure that at least your fixed expenses like daily needs, insurance premiums, EMIs, etc. are covered well in the times of emergencies. This will help you swim away easily until your financial position returns to previous state. In recent times, Jet Airways can prove to be one such example where many employees have not received their salaries for months and now the company 's operations remain suspended. Till these employees get other jobs or the airline starts to function again, they need to fulfil their basic expenses as well as unavoidable obligations such as EMIs and school fees.

Have a financial plan in place
It is really very important to seek the help of a financial planner who would help you in designing your unique financial plan and recommend you on what to do, how to do and when to do it? Having a financial plan in place helps you to understand your current financial status and from here were you need to go and how to reach there? Financial plan is not just about your goals and investments but it also talks about your cashflows, networth, liabilities, taxes, estate planning, retirement and emergency fund.

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