
1. Be smart with money
To become financially strong for yourself and your loved ones, being financially knowledgeable is necessary. With your hard-earned money at stake, it becomes vital for you to stay current about matters that influence personal finance. This includes opening bank accounts, investing on your own, initiating insurance claims, etc. Moreover, financial awareness is crucial for you so you don't fall victim to any monetary fraud. It would be best if you never revealed your passwords or ATM pins to anybody or anywhere. You must ensure that your registered mobile/email id for any financial communications is updated. Also, before providing your consent for anything, you must always read the terms and conditions thoroughly.
2. Evaluate your financial position
You may not have been alone or saddled with responsibilities since the beginning. But now that you are taking stock of your money once again and know where you stand. Being aware of your financial status will help you organise your finances wisely.
3. Re-prioritise your goals
Take stock of your financial priorities. List down and classify all of them into short-term goals such as buying a laptop, medium-term goals such as funding a wedding and long-term goals such as assuring a peaceful retired life. Create a separate plan for meeting each of them.
4. Set out a strategy
Along with noting down all the sources of your income, put down all the expenses you all incur or are going to encounter. A budget will provide you with a bird's-eye-view of your finances. You can then choose where and how to spend it.
5. Insure your family
Your family is essential to you. Ensure you obtain appropriate term insurance cover for yourself so that their life continues without any financial hassles even in your absence. You must also get a health insurance policy for yourself and your dependents so that medical emergencies don't drain your resources. An added advantage of both these types of insurance is that you can claim tax deductions.
6. Save
No ambitions, no needs, or wishes will be met until you have money. Thus, prioritise saving diligently. To ensure regularity in your efforts, automate your saves.
7. Invest
8. Stay away from borrowing
Try to avoid taking loans and credits as much as possible. Growing dues can wreck the financial calm of your household. Even a tiny percentage of the interest might become an enormous sum later and drag you into the dark abyss of debt.
9. Be alert for emergencies
Life is uncertain. Thus, it is to your best advantage that you plan carefully for any emergency. To develop your emergency fund, you might start by saving some monthly money. Ideally, a person should save six months of living expenses for an emergency. Next, you can invest in Overnight Funds to generate fair returns on the cash in a relatively safe method. Such funds are highly liquid, and you can gain access to money immediately. Usually, the redemption requests are processed within one business day.
10. Calculate your taxes
Taxes take into your hard-earned income. To raise your take-home salary, attempt to lower your taxable income. Investment in Equity Linked Savings Scheme (ELSS), helps to minimise your taxable income by up to Rs 1.5 lakh per annum. You can, thus, save up to Rs 46,800* in taxes per year. Moreover, as ELSS is an Equity-oriented Mutual Fund, it may have the potential to perform and deliver in the long run. This may help you build riches too.
11. Strategise your retirement
You need a source of money even after you retire to sustain your lifestyle. Moreover, you may have numerous things on your retirement bucket list, such as pursuing a hobby or constructing a farmhouse. The golden years of your life will give you enough time to knock things off the list. But, to enjoy these, your mind should be free of any financial anxieties. Thus, retirement preparation is vital. When you start investing for your old age right from a young age, you give your investments the time to increase via the power of compounding.
12. Prepare a will
No human is immortal. Since you are primarily responsible for the well-being of your family, you must make arrangements for their future too. So, plan and develop a clear will. Also, edit your nominee names wherever appropriate. This ensures that your family does not run from pillar to post to inherit your possessions while you are not around.