Don’t make these financial mistakes to avoid crises in the future…
“By failing to prepare, you are preparing to fail.”
No one around us likes failure. Failure because one hadn’t prepared is a whole other scenario.
The worst kind of failure one experiences is when he or she fails to plan for the financial needs of his or her family needs.
What is one of the important necessities in this era?
Studies have shown that money stands in the same position as shelter, food, and cloth on the basis of necessities.
In this blog, you will read 5 TIPS on personal financial management.
1. Planning financial management from early
Experiences of hurdles and hardships in one’s personal life make one realize the value of money.
These make them appreciate the importance of saving and planning the financial stability of their family.
Financial Management is the process of planning, organizing, directing, and controlling financial activities such as procurement and utilization of funds of the enterprise.
It basically means applying general management principles to the financial resources of the enterprise.
Imagine you won the lottery of 1 crore (INR) rupees.
You are not in habit of planning financial management.
Now since you don’t know financial management, you might even spend the entire amount in the first two years.
Now if you are well versed in financial management, you will know to save and use the money accordingly.
2. Indian Tax Perspective
One should know the tax regimes before they cater to it.
It is important for them to plan ahead from a financial perspective.
There are two regimes- the new and the old.
If someone is catering to the highest income tax, it is always recommended to go ahead with the old regime as it will help him save more money.
In these aspects, one should know the tax regime they follow and should plan ahead beforehand.
3. Mistakes students make in their early careers.
Huge pay packages always result in more disposable incomes.
People don’t always know how to handle this income.
There is always an inertia of keeping high social status among people due to which they buy expensive cars and luxurious houses.
Young people tend to spend their money lavishly without thinking deeply about the future.
This can cause them to compromise on other things such as to meet the ends in the future.
It is very important for young people to realize the importance of saving and channeling it to the right financial products.
They should comprehend what they should do now so that they have enough when they retire.
4. Advice for young people on financial management
It’s important that every student visualize the worst outcome that can happen.
The worst outcome could be anything!
Having no sponsor to finance the education.
What would one do in such a situation?
What would one do now so that their journey is not stopped in between?
When one starts to visualize these, they would naturally surrender and do something for their future which include saving also.
They will be more careful about the expenses they have.
5. Resources to learn more about financial management
The first step is to understand the basic concepts like savings, expenditure, and investment.
One should also have a basic idea of microeconomics.
They should also develop an idea about the investment options they have.
Understand the risk you might have with financial statuses.
One should not only plan for their career finances but also should focus on their personal finances.
As we know, savings = income — expenses.
If one needs to save more, one should plan on bringing down the expenses.
They should have this aspect cleared in their mind which would help them save more.
What are your personal strategies for financial management?
Do let us know!
Have you found this post useful? If so, please share with your friends/colleagues or those who can benefit from this.
Also, if you have any tips or questions, please share/post in the comments section.
This blog post has a few excerpts from The Guiding Voice podcast Episode 194 ft. Yudhajit Baul, the founder of Yudhajit Financial Services. (Episode link is available in the first comment)
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