Wealth Guide: Financial Planning for Beginners - Steps, strategy you can adopt to become rich
Wealth Guide: Financial Planning for Beginners - To effectively manage your life financially, you must learn the basics of money management for proper allocation of income, effective debt management, building savings and creating wealth.
Wealth Guide: Financial Planning for Beginners - Understanding personal finance is the first step to financial education. To effectively manage your life financially, you must learn the basics of money management for proper allocation of income, effective debt management, building savings and creating wealth. Harsh Jain, Co-founder and COO, Groww, shares his knowledge on Financial Planning for Beginners and Steps, strategy one can adopt to become rich.
Master the Art of Self Control
"The sooner you learn the art of self-control when it comes to money, the better equipped you are to keep your finances in order. It might seem effortless to buy something on a credit card the minute you want, but it’s better to wait until you’ve saved up for that purchase. It’s always preferable to make money from your checking account than racking up on interest charges," says Harsh Jain.
Outline your Financial Future
"Managing money is not as easy as you think. To learn more, read a few basic books on personal finance, do more research on how you can control your financial future, and once you have done this, you will be guarded with knowledge. This will help you reconsider your purchase decisions before spending away tons of money every weekend, and you’ll also be financially sound. This means you will never be caught off guard when it comes to finance and financial planning in your life," adds Jain.
Find the Routes of your Money
"Knowing where your money is going is one of the most important factors of financial planning. Once you’ve gone through some personal finance books, you will know how important it is to make sure that expenses do not exceed your income. The best way to do this would be through budgeting. So, once you know how much your morning coffee adds up to the overall course of a month, you would realize that making small manageable changes in your everyday expenses can be a big impact on your financial situation. So how are your monthly expenses exceeding your income? Do you know where your money is going? Begin by creating a route map to where all of this money is flowing and determine which stream you want to block and which one you want to let flow," he added.
Always have an Emergency Fund
"It is a mandate for personal finance management to have an emergency fund. No matter how much you owe in loans, credit card debt, and no matter how low your salary may seem, it is always wise to find some amount, any amount for that matter, to stock away in an emergency fund for every month. This can help you keep out of trouble financially. If you get into the habit of saving money and treating it as a non-negotiable monthly expense, you would soon have more than just an emergency fund saved up," he suggested.
Save up for Retirement
"Financial planning also means preparing for retirement early on. Don’t wait to save for retirement and start as soon as possible to make up your financial goals. To reap the benefits of compound interest, start saving and investing early on. As a result, you will have to put aside a lesser amount as principal to accumulate a sizable corpus at retirement. Start investing in some new investments such as stocks, mutual funds, FDs and others to grow your retirement fund," he explained.
Don’t Take Taxes Lightly
"You might overlook the fact of taxes, but income tax is work even before you get your first paycheck. When you get your starting salary, you must know how to calculate whether your salary will give you enough money after the taxes is deducted to meet your financial obligations. Fortunately, there are plenty of online tax calculators, so you do not have to set and do the Math by yourself," he further explained.
A Cliche – Your Health does Contribute to your Wealth
"Don’t make health negotiable. If meeting monthly health insurance premiums seems impossible, just imagine what you would do if you had to go to the emergency room, even if it was a minor injury. How much would you be spending on it? Do not wait for the perfect date of life for Health Insurance. It is easier than you think to wind up in a car accident or fall on a flight of stairs, but when you are financially prepared for it, it’s much better," he opined.
"Financial planning for beginners is very easy, you don’t need a fancy financial degree to be an expert with your personal finances. All you need is some effective techniques and good financial knowledge, and you will be set to lay the foundation of a secure financial future," he concluded.
(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)
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