Most of us often choose an occasion of New Year or other prime time to reset our habits. But the recent Corona time has forced us all to rethink our financial habits. The good news is there is no bad time to start practicing healthy financial habits.
And by instilling these 4 financial planning habits you can eventually achieve financial goals.
1. Set financial goals
Setting financial goals is the first and most important step to achieve financial success. Financial goals can be big or small, event-oriented like your child’s high education or time-bound like investing for 10 years. What’s more important is forming this habit of setting goals the sooner you can. Also, by having both short-term and long-term financial goals you’ll stay motivated and focused on continuing your investment through SIP to work towards your financial future.
2. Form a budget
Keeping track of your income and expenses is another important habit you must instill. Having this vital financial information in hand will help you cut back on unnecessary expenses and saving you from debts and poor credit. While you will find various ways to form your monthly budget, only choose the one that makes sense for you and your lifestyle.
The easiest way to make a monthly budget is to track how much you spend on ‘needs’ like grocery and ‘wants’ such as travel and lifestyle shopping.
3. Build an emergency fund
An emergency fund is a critical safety net to make sure you don’t dip into your regular expenses in case of an emergency. Having enough emergency funds reduces your chance of taking a loan or debt to cover emergency expenses.
Financial experts suggest setting up an emergency fund that covers three to six months of your living expenses. Making a regular SIP investment is a great way to start accumulating your emergency fund.
4. Pay off credit cards in full
If you are still following the myth that carrying the balance is good, it’s time to act against it. To maintain your credit score try to pay off credit card bill in full. If you can’t do so, at least make sure you pay off at least a minimum amount or keep the expenses under 30% utilization. Doing so will help you stay away from taking more debt on a higher interest rate every month. Also, if your credit score gets too bad you can face problems while approving car or home loans in the future. You will find tons of financial habits that you can start adopting. But these four financial habits lead you to become an investor by tracking your expenses and saving more to invest in the right plans for your financial future. Whatever habit you may follow, having healthy financial habits as soon as you can is more important. Your financial future will only thank you!