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7 Smart Things You Can Do with Your Money

Neeraj Kumawat |
Category:  General  
| 26-07-2016 03:10 PM

7 things you can do with your money

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 debts

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 student loans.

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 emergency fund

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?

Insurance Policy

Image Credit: Pictures of Money

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 quality purchases

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.

Financial Planning

Image Credit: 401K Calculator

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.

Neeraj Kumawat

Neeraj Kumawat is a marketing consultant at Livewell, a reverse mortgage planning company and a passionate writer. He shares his ideas on finance, investment, money management and insurance. He loves travelling and reading travel books in the free time.