Let’s be frank. Finance is not everyone’s cup of tea.
The figures look very good when your salary hits the bank account every month. But when you sit down to reconcile the bank statements, the numbers may give you a serious headache!
Thankfully, there’s a learning curve to personal finance that you can easily meet. If you’re diligent in your efforts, that is.
So here’s what you need to do to make the perfect sense of your financial situation and secure a brighter future.
- Get into the Habit of Saving
- Learn to Live by a Budget
- Spend Wisely
- Don’t Default on Your Utility Bills
- Get Life Insurance
- Use Employee Benefits to Your Advantage
- Be a Responsible Taxpayer
While growing up, you may have never felt the need to save from your pocket money. Maybe, you never had to worry about being short of money even as an adult because you always had a high paying job.
Remember, as you grow older life gets more complicated… and expensive!
You may be happy-go-lucky today, but you may not be able to stay that way for a lifetime, unless you have a decent balance in your savings account or other investments.
Just like the habit of saving, a habit of financial restraint is also crucial to set you on the path of financial security for a lifetime.
Throwing a party for your friends? Make a budget and stick to it.
Planning a holiday? Draw a line for how much you’re going to spend on travel, accommodation and other expenses.
Don’t behave like a miser though. Just decide on a budget for major events and spend within the limits.
While we’re at the topic of spending, let’s get one more thing straight. Unnecessary expenditure is the foundation of mounting debts that can potentially ruin your financial standing.
Be mindful of how often you use your credit cards and how much you spend. Think twice about spending a fortune on something as frivolous as an attractive scarf.
Even when you’re buying something as important as your new car, make sure you evaluate your decision carefully and get your money’s worth.
Mindful spending also means less clutter in your life!
So many consumers default on their utility bills time and again and end up paying a lot of money as penalty.
If you’re in that category too, you’ve got to be more punctual about paying bills. It’s a sign that you are responsible about your finances. It also attunes you to keeping an eye on your bills and keeping a track of your living expenses.
No matter how old you are, if you have any dependents or plan on settling with a partner soon, getting a life insurance policy should be one of your priorities.
With life insurance, you can rest assured that your dependents will have financial support after you’re gone. You can even take a loan on your life insurance policy.
Generally, life insurance will come cheaper if you take the policy at a younger age.
Don’t turn a blind eye on the employment benefit plans your job offers. Sometimes a lesser paid job with good benefits can be financially more rewarding in the long run.
Learn about the benefits your employer offers and how you can get the most out of them. For example, some employers allow workers to have a flexible spending account, which also helps reduce the income tax payable by the employees.
You’re obligated to report your annual income and pay the taxes due to the government. Not paying your taxes or not filing your returns on time can make you liable for penalties.
Educate yourself about tax planning and learn the legit ways through which you can save taxes.
When it comes to tax matters, it’s better to follow the advice of an expert instead of making blunders that you might regret later. If you’re not good with accounting or tax laws, it is always advisable to consult a tax professional.
Personal finance is a huge topic and it’s not possible to master the subject in a day.
But you need to become more aware and understand the significance of financial planning. These tips will help you inculcate the right mindset to become more responsible and take the right decisions.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.