Fearing going bankrupt with your finances? Personal financial management has emerged as one’s way of financial well-being. An exclusive list of dos and don’ts to stay financially healthy and protecting oneself from the possibility of going bankrupt could be something as below.
The Do’s:
1) Probably it’s time you checked your savings. No matter how old you are it’s never late to think of starting a Savings bank account. That’s the first step to start one’s financial management.
2) Have plan of your spending and adhere to the plan as strictly as possible. You could have a personal budget of your own. You could have your own rules on your spending, something say, 50-20-30, in which 50% of your income could be used for your basic necessities, 20% towards saving, and the remaining 30% on socializing, entertainment, leisure, holiday and personal interests. A personal financial calendar could also be set up.
3) Invest smartly. Look in to the risks and to ensure that you can safely bet your money. Go for investments which offer higher Return-on-investment (ROI). A fixed deposit in your bank could be your first step in investing. Your investments could come in handy during emergencies, mitigating the need for unplanned borrowing.
4) There are several providers today to manage your debt. Decide on the merits of the situation to approach one. It might be needed to restructure a loan mid-way through. One could also make use of online financial management tools for free.
5) It could be so that you are a gambling enthusiast and wager regularly, in land, online and mobile casinos. So, you could think of starting a bank account for your gambling interest. That lets keeping track of your gambling expenses and manage your interest in a planned manner.
6) Most important of all, always look for a source of a subsidiary income as a backup to your primary source of earning. If you work five days a week, think of dedicating your weekend for your alternative source of income.
7) Pay all your bills on time to avoid hefty penalties.
8) Forget not to insure yourself. You never know when a need arises. Plan for your retirement income.
9) Have short and long term financial goals and try to meet them strictly. You could also have a financial vision of yours. Monitor and review your financial position and progress from time to time. Evaluate your spending.
10) Involve all your family in your financial management plan and keep each one regularly updated.
11) Remain focussed on what you earn and how you want to spend it. Otherwise you would end up overspending on things which are more of a luxury than an absolute need.
12) Have no hesitation to look for help from peers. There are seasoned counsellors also, whom you could turn to. Quite often, your close friends, colleagues and mentors could give you good advice for managing your personal finances.
The Don’ts:
1) Do not overspend or over indulge. Don’t invest in schemes which ask for heavy spending.
2) Do not launder using your credit or debit cards. They could pile up and land you in a miserable position. Have a limit on the transaction with your cards. Do not spend impulsively. However, that does not mean that you have to be frugal.
3) Credit cards are known to have high interest rates, as high as 3% per month, meaning they could accrue high debts.
4) Most importantly have a cap on borrowing. Borrow only in the most critical situations. Do not borrow from less trustworthy sources. Do not fall in to the trap of high interests owing to the acute need of money. Loans for cars or personal reasons could leave you debt ridden, no doubt how necessary they are.
5) Do not spend without priority. Normally we tend to spend when it is required and don’t think of saving. That shouldn’t be an acceptable way of managing your finances. So, prioritise your needs and go accordingly.
6) Never be complacent about your money and expenses. No one can predict the situations that one might have to face and therefore be cautious.
It is finally your say on how you manage your money. The best way can be resolved by ‘YOU’…
