After you have started earning for a few years, you would naturally want to start saving your hard-earned money. During the first few years of your work life, you may have most likely focused on spending your cash on shopping, partying, travelling, dining out, in order to reward yourself for your dedication in your first job. Some of you may have spent most of your initial salaries on clearing your education loan or on helping out your family with certain requirements or paying a high advance for renting your home.
Once you are done using your money for such expenses, you should take a few moments to pause and plan your finances for the future. If you have a lifestyle where you’re broke within the first 20 days of receiving your monthly salary, you should put an end to it. We understand that you are packed with multiple expenses every month. However, you need to start being financially agile so that you are not left in the lurch when you actually need money when an emergency arises.
First and foremost, before you make any new investment, clear all you’re pending EMIs, personal loans, educational loans and make a fresh start with no pending payments. Clearing an old loan is extremely important as it determines your credit score and your eligibility for getting a new loan of any kind.
How to Allocate Your Money Wisely
You should ideally distribute your funds for different purposes. When you sit down to plan your personal finances, you should consider returns and protection. The financial market has numerous personal financial products which you can choose from. Moreover, you can procure these products conveniently while sitting on your couch as they are available online. You may compare different options on financial web portals or official websites of companies that offer these products and then make a judicious decision.
What Choices Do I Have to Earn Good Returns?
To earn good financial returns on your investment, you can apply for a Unit-Linked Investment Plan (ULIP) or a mutual fund, or even invest in gold. A ULIP not only offers returns but also gives a risk cover for the policyholder as it is a type of life insurance plans. So, there, with a ULIP you get both protection and financial returns together. When you invest your money in a mutual fund, your money will be allocated in bonds, stocks, and other securities. However, it will not give you protection for your life. On the other hand, when you invest in gold, you can be sure that you will have a fixed portfolio, which will not change, and you will also get high returns.
What are My Investment Options for Getting Protection?
You can secure your life by setting aside a portion of your money to pay premiums for a reliable life insurance policy. You can also select your spouse or child as your nominee under such a plan. This will ensure that your family is financially secure even when you are not around. Your family will be able to survive without you and they can attain their goals even if something unfortunate happens to you suddenly.
Taking care of your health and being financially prepared for handling ever-rising medical expenses is also a necessity. Hence, you should keep an amount of paying your medical insurance plan premiums. You can decide your premium payment frequency according to your convenience. While applying for a health insurance plan, ensure that your spouse and children are also covered in the plan.
The last investment option that we will be mentioning now applies only to those who own a car or to those who are planning to own one. Apart from making your sure your car is shining and giving good mileage, you should also ensure that your car is insured. You can apply for a comprehensive car insurance policy to make sure that you (as the driver), your car, and third parties are protected in case your car is involved in an accident.
How Do I Minimize My Existing Loan Burdens?
This tip is for those who have existing loans. Imagine you have an existing personal loan that you would have taken to install an Italian modular kitchen in your current home a few months back. You now need additional funds for arranging your destination wedding at a pristine beach in Goa. Don’t worry! You can go for a personal loan balance transfer and transfer the balances of your existing personal loan to a new lender. You can enjoy a lower interest rate and also gain extra funds for your additional purposes. This way, you will have to manage only one personal loan and you will be able to repay it without missing the payment deadlines.
You can apply for all the above-mentioned financial instruments without stepping out of your house. You can even upload the required documents online if it is allowed. When you set aside a part of your money for such fruitful purposes, not only you will have peace of mind, you will also be ready to face emergency financial requirements fearlessly!
This is a Partnered Post.
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Updated Date: Jan 25, 2018 15:43:26 IST