Golden rules for financial success, active life and a secure future

When you start working and have a consistent source of income. Everybody around you begins giving you Wealth Management related tips. In light of their past experience, these well-wishers have a plenty of advice. These pieces of advice are mainly on what you ought to do with your money. A portion of these suggestions unquestionably forces you to consider the need and advantages of financial planning. However, some simply put you off, influencing you to question the logic of this process.

One direction most people frequently find discomforting is to 'compromise on social life' for Financial Planning. Hanging out with friends and family is a lifestyle for twenty to thirty-year-olds. They trust that the reason of making money is to have a decent or adventurous life. They spend their money on trips, experiences, movies, and dinners form a major chunk of their financial outflows.

After understanding the significance of saving and investing, they compromise their present way of lifestyle for a comfortable life at some point of time in future. So, when anyone advises them to trim their extra expenses to build a financially secured future, they find themselves in a tight spot.

With a proper Financial Planning, in any case, one can discover a way out of this situation. By grasping the rules, one can enjoy both, a Financially secure future and an active social life.

Here are some Golden rules for Financial success, active life and a secure future:

Make a list of priority:

Be it watching a movie every other weekend, planning a fancy dinner with friends or taking a quick holiday with your loved ones, you want to do everything that your heart desires. However, if you have limited income, fulfilling all desires at one go would be challenging.

The best strategy to adopt in such a scenario would be to make a list of priority. If you are prioritizing events like parties and holidays in a particular month, you can shift activities like eating out or going for a movie to the next month. Chalking out a calendar of your social events would be of immense help to pursue all activities in a systematic manner without putting yourself into a financial mess at any given point.

Plan your finances well:

Once you have identified the activities you wish to undertake, put an amount that you would require to actually do them. Stick to the golden rule:  "Do not save what is left after spending; instead, spend what is left after saving."

Look at your income flows in each month and see if it is enough to fulfill all the goals after you have set aside a certain sum of money for savings, investments and fixed expenses. If it is not sufficient, then start by revisiting the amount that you have assigned to each social event and see if it can be worked around.

For instance, if you have set aside say Rs 10,000 for a fancy dinner, try to select an alternative restaurant where your bill will come down to Rs 5,000 or Rs 6,000. By doing so, you will still enjoy your time out, but in a pocket-friendly manner.

Have an emergency fund:

Life is full of uncertainties. We may not be able to predict them, but we sure can prepare for them. For events like loss of job or medical emergency, strive to build up a contingency fund which is separate from your savings and investments. In case of emergencies, you can use this fund. It provides you the much-required cushion to enjoy your life without bothering about the rainy day.

To accumulate this fund, deposit a certain sum of money in a special account as soon as you receive the salary. Use the remaining salary for planning your social calendar.

Avoid financial burden:

Sometimes the need for instant gratification is so high that we use our credit cards to indulge. There is no harm in using credit cards if you strictly adhere to the payment cycles and make payments on or before due dates. If you fail to do so, you may get trapped into a vicious debt cycle which gets difficult to break.

Payments on credit card usage cause unnecessary financial burden as the interest rate tend to be high. Late payments attract high penalties piling on to your debt. It is, therefore, advisable to use credit cards wisely. Limit the number of credit cards that you have to one or two.

Use them as sparingly as possible and in unavoidable circumstance. Whenever you use your cards, make sure to pay your bills on time. This simple awareness goes a long way in ensuring you do not have to compromise on your lifestyle in future as well.

If you need help ask an Advisor:

Maintaining current lifestyle without establishing a sound financial future is also not an ideal situation. Investing your savings in the right instruments will make your money work for you. It will ensure you maintain the same living standards up until the end. Include instruments like equities and mutual funds in your investment portfolio right from the start. And invest regularly to enjoy the benefits of compounding.

In case you feel overwhelmed with the process, take guidance from a professional advisor. They will help you to implement a financial plan by taking into consideration the lifestyle that you desire.