Personal finance is a common concern among everybody at some point in their life and the sad news is that the majority of us lack the knowledge to plan this properly. There is no universal code or rule that suits everyone, hence is it exclusive to everyone. No one wants to spend time budgeting their finances, yet it is the most important of all affairs. Especially, the millennials who graduate from good schools, land up in rewarding jobs with a handsome package. But what they lack is a plan, a good future plan that prioritizes finances.
So this is the time you have very few responsibilities, few expenses as compared to ones with family and greater savings; hence this stands out to be the best time to lay the foundation for a strong financial future. For a strong foundation, you need to avoid some mistakes which end up being expensive, they may be;
- NO BUDGETING OR PLANNING
A poor budget or no budget at all is the biggest mistake one can make. If you have no account of what is coming in, what is going out and more importantly where is it going and lastly what is left in hand after all expenses, then you may land up in the pit from which there is no getting out. A proper budget which spares at least 20% of your income to savings is a must.
- UNRESTRAINED EXPENSES
This is one thing that is bound to happen if you don’t exercise self-control. Spending is much easier than saving. While you plan your budget, it will bring a conscious in you regarding what expenses are important. There are needs, there are wants then there are luxuries. Being vigilant about your expenses is important.
- NO FINANCIAL PLAN and GOAL
This is one thing everyone talks about but only briefly. Having a plan is as important as having money. Had your studies not been planned, you would not have the wealth and things you possess now. Your financial future depends on what you plan today.
- NOT INVESTING
Again many of us think I am too young to start saving or you live life once or I have enough ancestral support but the point which needs to be understood is you do live once but that once is not that short. Sustaining the one life you have is quite important and more importantly, you should save for the upcoming generations.
Invest in plans which have appreciable returns so that your money does not get stale by being the same 20 years down the line.
Another important aspect is retirement planning; a survey shows that 7 out of 10 Indians expect their children to support them post-retirement. This number is alarming because those kids are not thinking the same way. Start saving and investing so that you don’t depend on anyone post-retirement.
- NO INSURANCE
Problems and emergencies do not knock before coming. Make sure you are insured, be it health insurance or life insurance or term insurance. Think of insurance as a financial firewall against those rainy days which are unavoidable.
- NOT INVOLVING THE FAMILY
A casual survey once revealed that in 92% of Indian families financial decisions are taken by male members, be it father or husband or elder brother. What is more revelatory is it not the males barring females or family in finances, the family itself is uninterested. This is not right. The life, health, everything is so uncertain these days; if not all at least two members of a family should have the know-how of finances and other important things.
With all these don’ts in mind, it would be convenient to take an informed decision regarding your finances. The sooner the better is the key to it.