Clipping Coupons and scoring flights with credit card miles can save a few buck here and there, but achieving long-term financial stability require a much more holistic approach. Let look at six big personal finance topics
- BUDGETING
- SAVING
- DEBT
- TAXES
- INSURENCES
- RETIREMENT
Budgeting
when budgeting, consider focusing on the big- ticket items. You may have have heard you'd be a millionaire if you'd just skip your morning latte, but it's likely that you can save more by cutting costs on the expensive stuff like housing and transportation. According to market rate, the average new car cos about 10 lakhs rupees. but buying the same car pre-owned could save more than 1 lakh much more than a year's worth of lattes
Saving
When setting saving goals, be specific about your plan to get there. It's easy to say, I am going to save 50,000 for retirement this year, but you also need to define your statics for pursuing your goal. Sub goals can help guide your saving strategy, If you want to save 50,000 this year, think about how you might save 5000 rupees this month by increasing or income or trimming your expenses by about 450 rupees a week. These mile markers can help you assess how realistic your goal is and help you monitor your progress
Debt
Avoid high-interest debt and loan for items that could quickly lose value. You might have heard to avoid debt at all costs, but not all debt is created equal. One type of debt to avoid is debt with an interest rate higher than 5% like credit card debt carried from month to month. also tries to avoid going into debt for any thong that is likely to quickly loses value, like boats, Rvs, Jewelry, and other luxury good. but there are times borrowing money makes sense. for example, loans for education or starting business are often considered healthy debt because they may lead to more income down the road.
Taxes
Reduce you taxable income. this doesn't mean make less money this means find way to pay less taxes on the money you make one way to do this is to receive income in a tax-exempt form, meaning get compensated a way that isn't taxable. for example many employers offer benefits that allow you to receive or set aside untaxed money for things like retirement, health care, education, transportation and child care. A second way to potentially reduce your taxes is to defer them meaning pay your taxes later.
Insurances
Avoid insurance for expenses you can afford to pay for out of pocket. Depending on your personal situation, you can may need car insurance, home or reenter's insurance, or life insurance. and everyone need health insurance .Studies suggest that more than 60% of all bank ruptcies are related to medical issues, so strive to have at least minimum coverage. But remember that the purpose of insurance is to protect you in unfortunate scenarios. In exchange for protection, you make regular payments to an insurance company called premiums. Premiums are garantied and often ongoing expenses.
Invest for Retirement
Don't just save for retirement invest for retirement. Realistically just saving isn't likely going to be enough to reach your retirement goals. Investing can help grow your money over time. As you can see, if you invested 50000 rupees in stock in 1975, by the end of 2019 your investment would be worth over 2,50,000 rupees. how does money grows fast? Over time, compound interest, which means earnings interest on interest can help investors experience exponential growth or growth that occurs at an increasingly rapid rate.
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