It’s common. You earn Rs. 20,000, or Rs. 50,000, or even Rs. 80,000 a month, but somehow at the month’s end, you have no idea where all the money went. First off, you are not alone who is having trouble managing his or her finances. Instead, you are a part of the majority.Here's What Your Financial Starter Kit Should Look Like #FinancialStarterKit Click To Tweet
But you are not here to be just like others with dwindling finances. Instead, you are here to start handling your money wisely. You are here for personal freedom and financial stability!
And, the road to financial stability starts with savings, which is probably way more comfortable than you would’ve ever imagined. Here’s how you can uncover your hidden green and begin your journey towards financial freedom.
1. Open a Savings Account
The first economic ingredient that you will need is a savings account. While most banks offer minimal interest rates on savings accounts, these accounts are still considered as the foundation for efficient financial planning.
Unlike any other account, a savings account is an interest-bearing deposit bank account that helps your money grow risk-free, while providing seamless liquidity and access to the funds.
Serves as An Emergency Fund
Financial crisis and emergencies can come up at any time. With an emergency fund in place, however, you can easily convert a financial catastrophe into a minor hiccup. Further, the money you put away in a savings account as an emergency fund will never let you scramble to find money.
Of course, just opening a savings account would not be enough. You would have to use it regularly. You can start with setting up regular, automatic transfers into the account so that your savings will grow without you thinking much about it.
2. Make a Simple Monthly Budget
Once you have a savings account and have begun making automatic transfers into it, you must proceed to create a simple monthly budget.
Budgeting is one portion of financial adulting that helps you organise your money so that you would know where to spend it and where to keep a tight hand. You can start with keeping track of your income and expenses.
There are several ways to do this. For example, you can maintain a diary or a spreadsheet to not down every expense that you make without fail. When you have an idea of your expenditures, then you can start managing your funds.
How you manage your money is entirely up to you. However, creating a budget would help you save your splurges and cut back your spending on things you don’t need.
3. Invest for Long Term in Equity
No matter how much you run from it, but the fact remains that investing is the only way you can maximise your finances. That said, if you keep going in and out of your investments because of market upheavals, you are bound to lose.
Therefore, you must have a long-term investment horizon and invest in an asset class such as equities, which offers thriving returns in a period of a market upturn. With long-term investment into equities, your money has the best chances of growth, and despite the risk involved, equities deliver significant returns over long-term.
Overall, you must start with assessing the longevity of asset classes and then create a portfolio, which comprises long-term equity investments.
4. Get a Rewards Credit Card
At this point, your finances should be working in sync to take better care of you. Therefore, the next level of financial expertise would be to start using your regular spending to achieve more in life. You can do all this with a credit card that complements your spending with attractive rewards.
Nowadays, credit cards from reputable institutions such as myzone credit cards from Axis Bank allow you to earn anything from hotel stays to flights to simple cash back and too many other benefits. However, you need to understand that credit cards are meant to supplement your income rather than substitute it completely.
You can quickly forget your budget limitations with a credit card. However, you need to make savvy use of them, making sure that you can pay off your credit card in full every month. Overall, a credit card would make a nice little addition to your nifty financial kit.
Whip Up a Financial Adulthood
Wouldn’t it be very convenient if you could raise a magic wand or put a hand inside your Christmas stocking to find a financial starter kit right next to your headstand? In reality, however, it is very simple to put together a kit of your own. All you need to know are some essential ingredients that work best for you and be consistent in your approach.
You will go from broke to the bank in no time!
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