Financial independence is a blessing, but, the one thing you cannot deny is that life is uncertain and there’s always the fear of what ifs. Whether you are a newbie who earns the bare minimum or an experienced professional who has money to spare, your salary won’t culminate into concrete funds unless you put down a proper plan of action. This basic yet effective POA will enable you to not only have more savings but also be better prepared in case a situation arises.
1. Set a monthly budget
As basic as this sounds, a lot of us are guilty of not doing it. Start by making a list of all your monthly expenses and make a monthly budget on the basis of your income. Include all your bills such as home rent, mobile phone, electricity, groceries, travel and food expense and WiFi and set out a particular sum for unaccounted tasks too. This simple process will make you realise how much money is spent on unnecessary things and how much more can be avoided.
2. Get insurance
Medical bills can drain out all your savings and that’s exactly why we all need insurance. Irrespective of your age, a medical insurance can be a big boon. There are multiple policies available in the market and you can get one that suits you, either basis your own research on with the help of your bank. Trust us, while getting insured might sound complicated, a little online research can easily help sort things out.
3. Have a retirement plan
It is always a smart move to plan for your retirement even though it may be far away. You can begin with opening a provident fund (if you don’t already have one) that helps you save a fraction of your income every month for your future (retirement) or time of need. Your employer also has to contribute the same amount as you which means more savings. But in case you are self-employed or a freelancer, you can create a personal PF account which will help you save for your retirement.
4. Build a contingency fund
A contingency plan is basically money kept aside for all the situations that you have no control over. For example, a medical emergency that needs immediate attention or a job loss. Ideally, you must have enough money to survive at least four months. So, start building this fun and keep it separate so that it is used only in terms of emergencies and nothing else.
5. Aim to be debt free
Loans and EMIs are a great help when making large investments but you end up paying more than you borrowed in terms of interest and that can drawn out your income. Aim to be debt-free in the next five years and do everything to reach that goal. This will not only make sure you have more money in hand but also assure you a stress-free life.
6. Educate yourself on government schemes
There are multiple government schemes that have been set up for the benefit of women. These also provide many tax benefits. Check out schemes such as the Sukanya Samriddhi Yojana and Rashtriya Mahila Kosh or the Orient Mahila Vikas Yojana Scheme for women entrepreneurs, to get a deal that is secure and doesn’t cut a lot into your income either.
7. Discuss finances
Every once in a while it’s a good idea to discuss finances with your accountant or someone who is skilled with the knowledge of investment. Getting in some fresh perspective and having an expert look over your investment portfolio will help iron out everything that is not giving you reasonable returns.