How do you manage your money? 5 points not to be missed!

0
Do you feel a small sense of satisfaction in getting things right when you run into discussions about how to use your money? Before clapping yourself on the back, take a minute to make sure you aren’t being lulled into a false sense of security. Take a second look at your financial affairs and make sure that you are free of any misconceptions you may have about your financial situation. Here are the top 5 things to look out for:

Create an effective budget
You may have a budget and are trying to live by it. However, having a budget is not a guarantee that you will be able to save the money you need for your future needs. Do you often deviate from budget and wonder where the money went? This can be an indication that you made a mistake in budgeting yourself and may not be saving as much as you need to. The most likely reasons why you are not able to meet your budget can be because you underestimated your expenses or overestimated your income. Make sure you pay yourself first by storing some of your income in a separate account. On the other hand, arbitrary investments are unlikely to suit your needs. Check to see if you overlooked small expenses or forgot to budget for unexpected expenses.

Invest regularly
Seeing your bank balance grow each month as you save may be enjoyable, but it may not help you achieve your goals. The money has to be invested to generate returns and to work for you. You work day in and day out, but your money is ideally sitting in an air conditioning bank – makes no sense. Perhaps you feel that you have made your contribution by saving. But your goals are of no use if the money that you have disciplinedly saved is in a low-income savings bank account. In order to contribute to your financial well-being, this money must also be invested. Investment products should be selected based on your stage of life and can be a combination of equity, debt, gold and real estate.

Invest according to goals
You have worked diligently to manage your money and have started investing. Every year you make sure to make your tax saving investments. You have signed up for regular investments in mutual funds and invest in bonds and time deposits. You are also open to camping tips from friends and relatives. You would be forgiven if you thought that you were doing everything possible to secure your future. But is that enough? Unless the investments are made according to plan. If you don’t plan, you plan to fail. Make sure to list each of your goals and associate each of your investments with your goals. Allocating your investment to your goals will help you stick to your goal and get there too. Also, the goals need to be reviewed annually as they change from time to time.

Insurance coverage
For insurance, you only need two main products – risk insurance and health insurance. Your health insurance coverage must be at least 10 times your annual income and your health insurance amount can be between 5 and 25% of your income, depending on your stage of life and income level. Adequate insurance is important, but at the same time not overinsured. Also, accidentally taking some traditional plans can disrupt your financial life.

Annual review of investments
Listing your investments and their current valuation for filing your income tax return or a daily stock price review can seem like a review of your investments and give you a sense of control. But does it help you decide if you are on the right track to meet your life goals?

The purpose of a periodic review is to assess the performance of investments, review their suitability for the stage of your objectives, and make changes accordingly. The investment review should be carried out annually.

Views are personal: the author Pankaj Ladha is a mutual fund distributor from Kota


Disclaimer: The views expressed are from the author and are personal. TAML may or may not subscribe to them. The views expressed in this article / video do not seek to predict or timing the markets in any way and do not constitute investment, legal or tax advice. Any action you take based on the information contained herein is your sole responsibility Responsibility and Tata Asset Management is in no way liable for the consequences of any action you take.

Mutual fund investments are subject to market risk, so read all program related documents carefully

Share.

Comments are closed.