Personal FinanceFinance » Personal Finance
Many people dream to accumulate a lump sum amount at the time they retire, but few of them are able to do so. Planning your personal finance helps you in many ways; you can keep a track on your spendings and also know more about how to invest wisely so as to increase your wealth. It is something you will never be taught in your school or college but would need to use it in real life till the time you live.
- Managing your expenses: Most of us do not keep a track of expenses till the time we end up spending everything. In today's fast pace of life, the availability of credit and debit cards have made it very easy to spend money. Although it has made life very easy for us, it also makes us prone to overspending. You should learn how to use your credit card wisely, plan a monthly budget according to your income and keep a track of your expenditures, create funds for emergencies and get to know how to create wealth by investing in products available in the market. You can even buy a software to keep a track of your monthly budget. You can make your short term and long term financial goals and save accordingly.
- Investing wisely: Before you make an investment, find out how much it would yield in the future and how much risk it would be prone to. For example, if you are a market savvy person, you would know which shares to invest in and if they would yield profits and how much risk your money would be exposed to. But if you do know much about the share market, you can invest in mutual funds so that your money is managed by experts and is lesser prone to market risks. If you prefer to invest in gold, you should know the options you have. For example you can buy gold coins, gold bonds, gold certificates etc, but investing in jewelry is not a good investment. Experts say that gold should be bought long term and not short term investment. So when you invest your money, you should try to find the risk involved and the profit you are likely to get form it.
- Increase in awareness level: When you become very keen on investing in products that would help your wealth multiply, you start looking at various options. You get to know the options available to you for investing in the long and short term. Some of the modes of investments include bonds, fixed deposits, shares, mutual funds, debentures, post office investments, life insurance etc. The kind of investment you would like to make would depend on the amount of money you have, the amount of risk you are willing to take and whether you are looking at short term or long term investments. You would have knowledge about this only after you start investing in various types of products in the market or you can take help from professionals for this purpose.
- Saving for emergencies: Planning your personal finances helps you to save for financial emergencies. These can come up unannounced at any time in your life. You may have to pay for medical bills, lose your job unexpectedly, have loss in business, pay off a debt, help a family member in distress, etc. All these contingencies always arrive unexpectedly and can leave you devastated. You should keep aside some money to tide over such situations in life.
- Accumulating money for retirement: If you plan for your retirement early in life, then you would have accumulated a lot of wealth when you retire. Plan to pay off your loans and debts well before your retirement age so that you can enjoy those years. You should also find out more about the various investment plans available in the market that you can invest in and which would yield you wealth when you would be unable to earn. Saving money for your retirement would also make you stress free.
- Keeping aside money for family: When your kids grow up, you would need money for their higher education and for their wedding. You should be ready to face financial emergencies of your family members in the future. These will help you become independent and you would not have to rely on anyone else for help.
If you understand the importance of financial planning as soon as you start earning, you would be able to stop worrying about your future and also plan things well in advance. Setting financial goals would enable to save for short term as well as long term requirements and would also become a confident and responsible person.