5 golden tips for personal finance

Personal Finance is an essential aspect of life that is almost never taught to us. Not in school, not in college, not in any institution. How to save, grow and invest money forms a chunk of our major life decisions. While it may seem to be an extremely arduous concept for many. But by just following a few golden tips for personal finance, you could manage your finances better than most people out there.

Save First, Spend Later

Saving is perhaps the most important aspect of personal finance yet the most ignored, especially by the newer generations. While it is not necessary to live very frugally, a clever distinction between needs and wants goes a long way. But how much ever we may try, our monthly expenses end up leaving no scope for savings. The solution to that is to save first and spend what is remaining thereafter. Allocate a certain percentage of your monthly income, be it 10, 20, or 40%, and keep that aside as you are saving. And spend the rest the way you want. This is one effective method to ensure you don’t overspend and have saved every single month.

Start Investing Early

It’s been said innumerable times before. I’ll say it once more. Compounding is the 8th wonder of the world. It is such a powerful concept and if applied correctly can lead to such beautiful outcomes, be it for your money, goals, or relationships. And for compounding to do its magic, it is always better to start investing early. The amount you save every month, allocate most of it to some form of investment. It could be stocks, mutual funds, gold, cryptocurrency anything. First and foremost, you need to start. Investing in these assets is always going to hold you in good stead. Get out there and get your money to start working for you.

Focus on having a good credit score

The importance of creditworthiness has been on the rise. With increasing defaults, individuals who are creditworthy are valued by all institutions. Get credit cards, not to finance your exorbitant purchases but to build a good credit score. A high score goes a long way in helping you get loans at attractive interest rates and offers other benefits as well. Be proactive and reduce the cost of debt for yourselves and use it to grow your existing finances.

Have an emergency fund

The Covid-19 pandemic was a timely reminder about how important it is to have an emergency fund. A massive number of jobs were lost and there was financial distress for a large part of last year. An emergency fund ideally should cover 6-12 months of your expenses and comes in handy in the face of unforeseen circumstances. Prepare for the worst so that if and when it comes, you have one reason less to worry about.

Be Insured – overlooked among tips for personal finance

There is no point in saving, investing, and growing money if your life and health are at the mercy of one unfortunate tragedy. Paying for an insurance premium early on in your career may seem like a burden but the safety net it creates provides immense peace of mind. It allows you to get back to normal life. Most importantly, to do so without crippling financial burdens. Which in by itself is crucial among tips for personal finance.