We all love to live a stress-free life. Finances are a major part of your professional and personal life. If your finances are not properly planned, then your entire life might take a hit. It is important that you take care of few things for improving your financial lives.
First of all, have a plan in your mind and act accordingly. You need to have a budget in your mind with respect to your financial needs. If you are a fresher and have just entered the professional life, make sure you are saving as much money as possible. Remember, when you are a bachelor, you have lesser responsibilities on you.
Break your salary into three parts - investments, expenses and savings. You need to understand the differences between savings and investment. Savings is all the money you are able to save in a particular month. Investment is the money which you are earmarking for your future needs. For example, If you are able to save 10k per month and you are investing 5k out of it, then, 5k would be your investment and 5k would be your savings.
Remember, the golden rule of savings, income-savings= expenditures. Most often, we spend first and save later. Do the vice-versa. Save first and then spend. This would not only improve your finances, but cultivate a habit of saving money in you, which will reap you rich dividends in the future.
Have an emergency fund. Your emergency fund should be at least 6 times your monthly salary. For example, if your salary is 15k, then your emergency fund should be 90k. As the name suggests, this fund is for emergencies. For example, if you suddenly loose your job, then this emergency fund would cover your expenses, till you get a new job.
Start investing as early as possible. Even if you are able to invest only 2-3k per month, do that. The power of compounding helps an individual to generate good corpus, only if the person gives enough time for his investments to grow.
Keep on upgrading your skills so that you can get better remunerations in the future, which will improve your finances considerably. Try to create another source of income, apart from your job. You can invest money in certain instruments that can assure you some fixed income.
These are some of the tips that will surely help you in improving your financial health in the long-term. Stay blessed.
Stay away from ponzi schemes that guarantee you an assured return of 30-40 perfect. Even Rahul Dravid fell prey to one such scheme and now his money is stuck with the organization.