Not planning for a secured financial future is equivalent to depriving yourself of a tension free future. Here are a few simple ideas that will help you attain a secure financial future.
#1: Have the right mind-set
Earning money is different from investing money. While you need to be good at your job to earn money, you also need to have the right mind-set in order to grow your wealth.
Wealth accumulation happens when your money works for you. That’s called compounding. Investing in equity is essential for accumulating wealth.
#2: Keep a check on your borrowings
Acquiring a loan is relatively easy, but understand that taking credit for a better lifestyle than you can afford is unwise. Take a loan in two cases:
- When there is a genuine reason to borrow money like paying for your kids’ education.
- When it makes logical sense to acquire something like a home by paying more cash now
If you are applying for a personal loan, opt for a reducing interest loans. Fixed interest loans can in-directly charge you more than the promised interest rate.
#3: Start saving early
Life is long and unpredictable. You must therefore start saving as soon as you start earning, no matter how small the amount is.
Longer the time you saved for, larger the wealth!
#4: Nurture your human capital
Your ability to earn money in the future put together is your human capital.
The skill and knowledge that you possess and put to use and the experience you gain from your work is your biggest asset. If not taken care of, it will dwarf your potential future earnings.
Strike a good work-life balance, and make time for learning new skills.
#5: Plan your finances
To have a secure financial future, you need to plan how you will allocate your finances and when your goals needs to be realized. Your financial plan should help you realize how much and for how long you need to invest.
If you don’t have the inclination or the expertise to invest wisely, seek the help of a certified financial planner, or a powerful platform like Scripbox.
#6: Set up both long term and short term goals
Long term goals like retirement, kids marriage, etc., have a longer investment horizon and typically needs a higher corpus. Short term goals like buying a car is typically of a shorter investment horizon and does not require much capital. Plan your goals and invest in them- tracking them at each stage to measure the progress.
For long term goals (>5 years), we recommend in investing in equity mutual funds. For short term goals (<5 years), we recommend debt mutual funds as an alternative to Bank FDs/RDs.