Wednesday, 23 September 2015

5 things you should do to be financially fit

Financial management is an important aspect of everyone’s life, be it a salaried employee, a self – employed professional, a business owner or even a homemaker. Just like physical fitness, mental fitness, being financially fit is also a key to happiness. There are some basic things that each individual can do to ensure financial fitness:

1. Set proper financial goals: Whoever you are, you should plan well for future always set proper financial goals according to the money requirements you may have at different stages of life. Some of the basic goals to plan for are pension fund, children’s education, property purchases, lifestyle purchases like car, electronics and finally a good insurance cover.

2. Never let your expenses exceed your incomes: It is common sense that if you let your cash outflows exceed your cash inflow; it is going to get you in trouble sooner or later. Expenses can include, day to day expenses of maintaining your current lifestyle and the payments for credit cards, loan EMIs etc. To maintain financial fitness it is imperative that you keep a good control on your expenses and avoid splurging on things beyond your financial capacity.

3. Take credit cards and loans; but remember to pay them back on time: To create a good credit history, it is important to have taken credit / loan from time to time, depending on your needs. In fact, a person without any credit history is treated as bad as a person with bad credit history by credit bureaus. Simply because in absence of credit history, they have no way of judging your credit worthiness and calculating your cibil score. Taking loans for life essentials like a house, car helps you live comfortably but making the repayments on time is essential to avoid any credit troubles.

4. Monitor your bank statements, bills, payments and credit history : Many individuals are so busy trying to earn more that they forget to check if there are any unnecessary cash outflows. It is like trying to through out water from a sinking boat without plugging the holes in the base. Whenever you go for a new account, new credit card or loan, please understand the terms and conditions very carefully. The caveats and hidden charges are always hidden here. The bank executive may try to avoid informing you about these charges, but it is your own responsibility to ask for them until you are satisfied.  Also, many customers pay off their monthly credit card bills without actually looking at each line item. Sometimes credit card companies may charge a very small amount for a service and quietly mention that it is customer’s responsibility to call up and ask for deactivation. If you do not pay attention, you may keep paying charges for services that you don’t desire.

5. Good tax management: This is again like a leaking boat. Every year, many people hurriedly take schemes and tax saving plans just before financial year end without really setting any financial goals. If you do not have time, hire a professional to manage your finances. The saving and earnings over time will more than pay back for the fees you pay.

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