Whether you’re in your 20s, your 30s, or even your 40s; it
can be difficult to spend or invest
your money wisely. As the years go by, some of us gain a bit of financial
wisdom but not everyone manages to do that. The good news is that it’s never
too late to start learning and looking for advice. If you’ve got a bit of extra
cash flow, avoid going on a spending spree or splurging on something expensive
yet unnecessary. Instead, why not try some of the following ideas and make the
most of your money?
1. Pay off your
You don’t want to get into retirement with a load of debt. Even if you
manage to pay off all your debt before retirement, it would have made a
significant impact on your retirement savings by that time. So it’s better to
start early and work towards paying off debts like credit card bills and
Maybe you could pay off an entire credit card or start paying more than the
minimum payment for your student loans. Living debt-free at the earliest
possible will eventually give you an opportunity to save more and even buy a
home earlier than expected.
2. Create a
budget and stick to it
Having a perfect budget in place is essential when you wish to retire comfortably. You need to keep a close eye on your cash flow to ensure that you’re not spending more than you’re earning. Consider your fixed expenses, financial goals, and occasional expenses when creating your budget.
3. Start an
None of us expect to have our car break down or to face a medical emergency.
But having extra cash reserves to prepare for such possibilities is always a
wise financial move. Otherwise, these unexpected and unforeseen scenarios could
turn into expensive realities. Save up a bit of money from your monthly
pay on a regular basis to help you in case of such emergencies.
According to financial planners, you should tuck away at least three to six
months’ worth of living expenses in an easily-accessible savings account. It’s
always easy to dismiss the idea of losing your job and remaining unemployed for
quite a while. However, there’s no harm in thinking of the “what ifs” and start
putting away a bit of your monthly pay into your emergency fund.
4. Get insured
Insurance is another excellent use of your finances to prepare for emergency situations. Some people make the mistake of foregoing insurance just so they can save a bit of money. This could land them in a deep and dark financial pit if they experience some unexpected circumstances that require plenty of money. What if you get injured in an accident? Or what if you happen to get seriously ill?
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It would be ideal to get started with insurance options like
Term Life and Mediclaim. With a Term Life plan, you can ensure some financial
security for your family in case of untimely death. You can find options that
pay out lump sum benefits and some even pay out monthly income in addition to
the lump sum benefit. Mediclaim will provide you with financial insurance in
case you get hospitalized.
5. Invest in
Making investments isn’t always about buying stocks or bonds. Sometimes, you
can also make investments in things that are worth the money. Maybe upgrading
your laptop could help you work faster and do more work, resulting in a higher
income. Or maybe you could invest in a commuter bike to get to work faster
while staying fit. Weigh your options carefully and make quality purchases that
will serve you will in the long run.
6. Make the most of EPF and Pension Plans
Even if you’re in your early 20s, avoid putting off your pension plan. You can look for pension plans that match your requirements or even start enrolling for an EPF or a PPF if your employer offers one. You can take full advantage of the EPF program if your company offers it as your employer will match whatever amount you put into the plan and you’ll end up getting twice the amount you saved. You’re basically getting free money to help you fund your future house or retirement. The amount you invest in it is tax free and the amount you withdraw is also exempt from taxes.
7. Take a chance with Mutual Funds
If you’re just getting started with investments, mutual funds are a great way to start. In a mutual fund, you’ll be pooling in money
with several other investors and then have this invested in stocks, bonds, or
other types of securities. You can find a range of options that offer different
levels of returns commensurate with risk. The funds are managed by professionals, meaning
you’ll be placing your investment in the hand of an expert.
There aren’t enough financial advices you can follow but you
might end up getting too caught up with all the planning and saving as well. Don’t
forget to take some time for yourself and set aside some money for short breaks
and vacations. Make use of the tips given above to spend or save your money and
ensure a comfortable retirement.