Part of being a responsible adult involves looking after yourself financially. Making smart decisions when it comes to credit cards and budgeting can stretch your finances a long way. Being financially responsible doesn’t have to be difficult. Take small steps towards your goals and watch them get closer and closer to you. There are several things you can do to better your financial situation, like setting up multiple savings accounts and estate planning. Here are 4 need-to-know ways to prepare you and your finances for the future.
1. Know Your Country’s Economy
Knowing what economic factors your country is facing helps you to plan your budget. India’s current account deficit makes a significant impact on your amount of disposable income. When you have more disposable income, you are able to save more money in less time. Familiarising yourself with the imports and exports of the country means that you know which things you should bargain hunt for and which local items you can purchase at minimal cost.
2. Emergency Planning
Having a contingency plan for emergencies and other surprises is imperative. Repairs, medical emergencies, family deaths and more can deplete your disposable income quite quickly, so having an emergency fund can save you from feeling like you have taken a large setback. Having six to nine months’ worth of expenses is recommended for a single woman with no liabilities according to CFP, Nita Menezes. So, if you have liabilities and a family you will need 18 to 24 months’ worth of expenses set aside.
3. Retirement Planning
If you are not interested in keeping regular employment well beyond pension age, it is a good idea to start retirement planning long before you are ready for retirement. The best time to start your retirement kitty is when you first gain employment. You want to have enough money to cover everyday living expenses and a little more. And because women have longer lifespans than men, a woman needs to save more than a man does.
Creating a budget and maintaining that budget is essential to saving. Having a clear goal in mind, when it comes to saving and budgeting means that you will be more likely to handle emergencies, give yourself little rewards and better enjoy your life. Creating a budget is as simple as documenting the amount of money coming in and totaling all of the money going out. By tracking your cash flows, both mandatory and voluntary, it is easy to see what’s important and what’s not as important, and where you can most readily decrease expenses. For instance, rent, medical insurance, savings, etc. these expenses don’t typically change, but your food and entertainment costs are areas that you can more easily change.
Being able to look after yourself financially will certainly give you a sense of pride and accomplishment. Once you know that you are capable of making fiscally responsible choices for both your present and your future, you can breathe easier because you know that you are prepared. Set your money goals and do your best to stick to them. Your future self and those who depend on you will thank you.