The two behavioural devils that do not let any beginner start with their financial planning are ignorance and procrastination. By the time people realise that, they already would’ve lost their initial working years without streamlining their finances.
Here are the 4 financial tips for beginners to sort out their finances:
- Make a Budget
Irrespective of your income, you should always have a budget in which the expenses could be sorted under three heads and those are Essential, Discretionary and Entertainment. The amount that you allocate to each of these expenses should be jotted down and you should keep a track of it so that you don’t deviate from it. The entire budget can be made and tracked on an excel sheet or you can even make use of the different apps available for it.
2. Frame Your Financial Goals
You should be clear about your financial goals like buying a car, a house, family needs, your retirement plan, etc. Some of these goals are short term which means it has one to three year timeframe and some are medium (four to seven years). Goals like retirement are long term and they can range anywhere from 8 years onwards.
3. Start Saving Early
One should start saving early and these savings should be made keeping your goal in mind. For short term goals, the savings should be made predominantly in debt instruments while the long term goals should be in equity-linked instruments where returns are relatively higher. The sole idea is to put a definite amount (each month) religiously in savings before you spend from the income.
4. Adequate Insurance
It is very important to have an insurance for your health in order to guard your savings. Also, never buy a product that would mix the investment and insurance together.
If you plan things strategically right from the beginning, you will always be sorted financially and you won’t have to scramble to fund each of your aspirations.