8 Financial Habit You Should Start Today!
Whether it’s our personal life or financial life, good habits go a long way in keeping us healthy and happy. There are some financial habits that one must inculcate irrespective of their age or financial status. Having a disciplined approach to finance will ensure that you stay financially comfortable and are able to achieve your financial goals whether pertaining to your everyday life or important events like a child’s education and retirement. When looking at following a good habit the best time to start is right now so let us look at a few good habits that you should start today!
- Budget your Monthly Expenditure:
Making a monthly budget and sticking to it one of the most important and useful habits that go a long way in ensuring a healthy financial life. Make sure you make a monthly budget, it is important that the budget be practical and one that can be followed by every month. Take in account your actual income, all expenditures, keep some cushion for unplanned expenditures and do keep aside something every month for saving and investment.
- Start Saving Early:
Ideally one should start saving right from the time when they get their first pay cheque. Irrespective of how much you earn you should make it a habit to save a small amount every month. The power of compounding does wonders to you savings. In case you have already not done so, do not waste any more time and start doing so immediately.
- Making Saving a Priority and Not a Matter of Choice:
When you budget an amount for saving every month then that saving or investment should be a priority and not a matter of choice. It should not be such that you make an investment if you have some surplus left. Savings should be done before you make any discretionary and avoidable expenditure. Saving should be aligned with your income and your age as well, as income rises so should your savings. The amount that is invested in debt and equity should also vary as per your age; when you are younger you should invest more in equity and in later years more in debt.
- Focus on Your Credit Health:
Being credit healthy is an important part of overall financial health. Now you have the option of getting a free CIBIL score annually, this will let you assess your overall credit position. If your score is low and any aspect in your credit report requires attention then you should immediately work on that aspect and get your credit health in shape. A healthy rating reflects your overall credit health and also allows you get access to credit
- Get Adequate Insurance:
Interesting read – The Power of Compounding.
Having adequate insurance both life and health is an important aspect when it comes to good financial planning. Insurance should never be confused with investment and must be treated as a financial net for the insured and family in case a medical or some other exigency befalls them. Adequate life insurance will ensure that dependants do not face financial distress in case the primary breadwinner is no more. Medical insurance saves a family from financial crunch when faced with illness.
- Take Loans after Careful Consideration:
While debt is a part of most people’s lives today all loans should be taken after careful consideration and comparison. If you are planning to take a personal loan then do consider if it is really required or are there some other sources that can be tapped. When taking a home loan pay enough attention to all aspects like hidden costs, compare interest rates and so on
- Do Not Miss Paying Your Taxes:
Most of us may find that taxes are a burden but do remember that they are a necessary burden. Paying taxes to keep your financial records clean and ensures that you do not have to pay any fines for not paying them or you do not get into any legal hassles at a later point in time. On some occasions you might have to submit your tax records and defaults may pose a problem.
- Review Your Finances From Time to Time:
It is essential to review your finances from time to time to ensure that you are moving in the right direction as planned by you. Do review your saving and investments to ensure that they are in line with your overall financial objective. Do review your loans too, check market rates and check if you can benefit from prepaying a loan or a balance transfer and so on.
Hopefully, you would be following a few of the above-mentioned habits already but in case you are not then it is to start following all of them right now.