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Lock-down learning - a 15-day plan to level up your financial know-how

To ensure that you make the most of this lockdown in terms of financial know-how, and have the essentials covered, we have designed a 15-day action plan for you. Just one hour every day for 15 days will ensure that you are at the top of your finances. You can reserve weekends solely for family time.

Hectic jobs, busy schedules through the week and no time for self, means that our personal finances take a back seat. The current lockdown though has given us some time to pause and reflect.

To ensure that you make the most of this lockdown in terms of financial know-how, and have the essentials covered, we have designed a 15-day action plan for you. Just one hour every day for 15 days will ensure that you are at the top of your finances. You can reserve weekends solely for family time. Click on the headings below to go to the relevant article that talks about the lesson.

Day 1. Start with automating your bill payments 

Rent, electricity, WiFi, cable bills are monthly affairs. Do away with manually paying off each by setting an automatic debit instruction. This one task takes this mundane monthly activity off your plate and you can focus on the more important or interesting things.

Day 2. Reduce the number of bank accounts that you have because one bank account is all you need

Your task for day 2, is to consolidate all your bank accounts into one and make your life easier. This will help you see all of your savings in one place and know exactly how liquid your money is. At the very least make you don’t have more than two accounts (possibly in the same bank) as it is more a hassle rather than of any practical value.

Day 3. Reduce the number of credit cards to one or two

Third day’s task is to reduce your credit cards to one. This exercise helps you use only one credit card for all your bill payments and other expenses. This removes the task of keeping tabs on multiple card statements. Besides, having only one (at most two) credit card helps you pay off the debt every month on time and avoid falling prey to a vicious debt cycle.

Day 4. Figure out how much debt do you owe

Your next task is to calculate how much do you owe in terms of loans and debts to other institutions, to arrive at your personal net worth. This will indicate how financially sound you are. Outstanding credit card bills, student loans, car loans, home loans or any other personal loans - make a list of how much do you owe and how much time do you have remaining to pay it off.

Day 5. Do you have the right health insurance for yourself and your family

Once you know how financially sound you are, you need to check if you have the right health insurance plan in place. You need to get this for your family (dependents) as well. Along with safety from health hazards, getting insured also gives you tax benefits.

Day 6. Get your emergency fund in order

Once your health is secure, get on with financially cushioning yourself with Rs. 1 lakh at least. Make this the SOS fund that you invest in liquid funds and do not disturb, for random expenditure. Strive towards creating this fund, as soon as possible. This amount will give you the peace of mind you might not have had earlier. If possible save more to ensure you have four months of pay saved up in your emergency fund.

Day 7. Make sure you inform your family where all your investments and wealth are

After safeguarding your loved ones and yourself, you now need to communicate the same to them. Make sure your family always knows where all your money is. This will help them assist you, should you be in a difficult situation and do not have access to important documents.

Day 8. Get life insurance if you have dependents

Get life insurance ASAP if you have people depending on your income. Understand the difference between term insurance and life insurance. A good rule of thumb is to insure for 300 times the monthly amount you need. Stay insured, stay safe.

Day 9. Plan your tax saving for the coming financial year

After most of your familial responsibilities are taken care of, you need to focus on getting the optimal usage of your income. Start saving taxes by investing in ELSS funds to get maximum benefit on your investments, as compared to other tax-saving instruments.

Day 10. Learn about inflation

Knowing about inflation is essential for certain long term financial decisions and to make sure that when the time comes to choose to do what you want for yourself rather than for money, you have enough money. Investing in and withstanding the volatility of equity becomes easier when you understand why. That why is inflation for the most part.

Day 11. Worried about the possible downturn? Learn what to do

Smart and prepared people never take anything for granted. The economy has, and will, go through ups and downs. What matters is your readiness to handle either. Here are some straightforward steps you can take to make sure that a slowdown, imagined or otherwise, doesn’t derail your financial life.

Day 12. Learn how to create and decide on financial goals

Creating financial goals is key to making sure you achieve all that you save for. Deciding between multiple goals and the sequence in which to save and invest for them is an essential skill. This is true for anyone serious about achieving their dreams for themselves and their family.

Day 13. Learn about asset classes and which aims and objectives they are meant for

When investing for any financial goal, knowing what you are investing is essential. Do you know what you will need to invest in if you need the money 10 years from now? Or if you are planning to give a boost to your emergency fund, what makes the most sense? Knowing about asset classes will help you here.

Day 14. Growth rates and investment returns, learn how you should really look at them

More than formulas, what you need to know is how to view your investment returns from the right perspective. You need to know before you invest why exactly do you need the returns. The answer to this question will decide what to invest in and your baseline return expectation from that investment.

Day 15. Plan for retirement 

You have taken care of most responsibilities at present and learnt the essentials. It's time to plan ahead and think of retirement. If you haven't started already, you've got to start right away and start putting money aside for your old age, when you would be retired and your money would be facing inflation.

These tasks will get your finances in order for a long time to come. The time you then save and the money you invest well, will help you enjoy the finer things in life and attain peace of mind, along with financial security.

 

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