It doesn’t matter what line of work we’re in, we’re all experiencing the effects of COVID-19 in some way or the other. India, like many other countries, is on lockdown, and the effect on our economy has been quite massive.
If you’ve always avoided financial topics, even when you’re just thinking, we have some bad news; it’s time to face your fears. There was never a more crucial time to start learning more about finance and your particular financial situation. Though it may seem complicated at first, and we’ll be honest, some of it is, it’s still a whole lot easier to grasp than you realize.
Financial stability stems from healthy financial habits. Though we’ll definitely be delving deeper into some of these, it’s best to start off nice and simple with this list of 7 habits that all financially healthy people have.
1. Saving money
This is an obvious one and if you haven’t started doing this, you need to start as soon as possible. Why should you save? So you have enough of it or can make more of it (we’ll tell you how soon enough). How do you do it? By simply spending less than you earn. How much do you need to save? According to experts, at least 25-30% on average in order to maintain your lifestyle, even if you retire. This may seem difficult but COVID-19 has really streamlined life so maybe it’s time to rethink what seems essential but really isn’t.
2. Tracking their spending
If you don’t know what is essential and what isn’t, the best way to find out is start tracking your expenses. Since most payments are made electronically, you need only track the transactions. No need to be obsessive about it. Even doing this once a month will give you a better understanding of where your money is going and what you can save on. It can also help you notice if you’re being lavish in your spending so that you…
3. Don’t make impulsive purchases
Impulsive doesn’t only mean buying a 55-inch tv because it was salary day, it can also mean ordering in food when we could have eaten leftovers from last night or shopping for a new jacket when the old one is still good to go. This money is what we could have otherwise saved. We can only achieve financial stability by reining in our spending. We can all slip from time to time, and that’s okay, but an impulse buy should be the exception, not the rule.
4. Invest in the future
If you were wondering who all that money you were saving was for, the answer is you; you when you want to take a vacation next year or you when you want to buy a car the year after that. Those in their 20s or 30s think that investments aren’t a priority but one thing to learn from this pandemic is that it doesn’t hurt to be prepared but it might if we’re not. Start investing pockets of your savings for a rainy day or a well-deserved reward or so you can stop working at 45.
5. Pay off their debts and loans
Like people, not all debts are created equal. A high-interest debt, like credit card debt, is not the same as low-interest debt, like student loans. Keep a track of how much you owe at any given time and make your repayments in time. If you’re in debt, always pay off the debts with the highest interest rates first.
6. Don’t wait until the last minute
When it comes to your finances, better safe than sorry might as well be a motto. Don’t just pay off loans on time, pay off everything you can on time, whether it’s your rent, phone or internet bill, or anything else that’s due. If you especially have trouble with this, set up auto-debit or reminders on your phone. It’s a digital world and we no longer have the excuse of losing track or forgetting. If your billing cycle is falling at a time when you know you won’t have money, talk to the company in question to change your billing cycle.
7. Set a budget and stick to it
The basic point of a budget is planning, not caging. If you want to make the most of your money, which is basically what personal finance is all about, then you need to plan for things. Plan how much you’ll spend each month and on what. Plan things like large purchases and account for unexpected expenses like hospital visits or a punctured tire by adjusting your budget or dipping into your savings.
Though this list isn’t the end-all and be-all of personal finance, it’ll definitely ensure that your finances are in much better shape so you’re ready for all the things life throws at you.