Everyone remember Food, clothing, shelter are the basic necessities of life?
The sad truth of life is that none of the above mentioned basic necessities of life come for free. Money facilitates these necessities. Not planning for a secured financial future is equivalent to depriving yourself of a tension free future.
Here are few simple ideas that will help you attain a secure financial future.
Have the right mindset
The rich and poor are differentiated, possibly to a great extent because of their mindset towards money. Earning money is different from investing money. While you need to be technically sound in whichever field you specialize in to earn money, you also need to have the right mindset in order to grow your wealth.
Where you invest your money also plays a huge role in how much wealth you can accumulate- e.g. mutual funds give you a long-term annualized return of 14-16% whereas bank FDs, after-tax, give you around 6.5-7.5% annualized returns.
Keep a check on your borrowings
In the open market, loans are available for just about anything- from buying a home to educating your kids to throwing a lavish party (personal loan). Acquiring a loan today is not a big deal, but it is important to understand that taking a credit for a better lifestyle than you can afford is not wise. Take a loan in two cases
Simply borrowing to uplift your lifestyle will only escalate your expenses.
Start saving today
Life is long and you never know when you reach your peak and start your downward journey. You must therefore start saving as soon as you start earning, no matter how small the amount is. Longer the time you saved for, larger the wealth!
Nurture your human capital
When people think about investments, most only think about FDs or mutual funds or stocks. Very few think about the most important asset- themselves. Your ability to earn money in the future put together is your human capital.
The skill and knowledge that you possess and put to use and the experience you gain from your work is your biggest asset. If not taken care of, it will dwarf your potential future earnings.
Planning your finances matters
To have a secure financial future, you need to plan how you will allocate your finances and when your goals need to be realized. Your financial plan should help you realize how much and for how long you need to invest.
Set up both long term and short term goals
Long term goals like retirement, kids,marriage, etc., have a longer investment horizon and typically needs a higher corpus. Short term goals like buying a car is typically of a shorter investment horizon and does not require much capital. Plan your goals and invest in them- tracking them at each stage to measure the progress.
Avenues to spend are ever increasing with a negligible increase in income. Ten years ago, a mobile phone was a luxury. Now, mobile phones are the normal and the prices can be as high as what you’d pay for a 150CC motorcycle- even today.
Inflation rate is inching towards double digits and household income is not growing as fast as expenses. The best way to increase your potential savings is to minimize your current expense. Identify the unnecessary expenses and cut them down.
Disciplined investing is the key to long term wealth creation. There are no short cuts.so, Start Investing today - no matter how small the amount- to secure your financial future.