We all want to create wealth and live a stress free life. But all this can happen when we value our money the right way. Now you ask what do I mean?
Money when kept in the bank account, will not grow. One needs to be wise to juggle and manage the finances well. Like they say, money attracts more money. But that only happens when you know how to handle it well.
Also Read: Financial Goals to achieve in your 20’s
So here are the 4 money advice one can practise in 2022.
- Pay off the Loan: A wish for a big house and a good lifestyle made you buy the house of your dream. But once you move in, don’t forget the house still belongs to the Bank and not you. After taking a loan, pay off should be your top priority. Banks allow pre payments, so as and when you have money to spare, pay it off towards your loan. Life is unpredictable and you really don’t want your family to loose the house or pass the burden of the loan. So sooner the better.
- Get a life insurance: Continuing from the previous point, one needs to have a good life insurance to cover up the family in ones absence. When you fail to do so, you leave behind you family laden with loan and financial crunch. One smart move from your end can secure your family’s life.
- Invest 20 to 30% of your income: When we talk about investment, we just don’t mean Bank FD. There is much more to investment like Mutual funds and Equity. Start early. As soon as you secure a job after your college, make sure you start saving. Investments can start from as low as Rs 500/- . So you don’t need to have a lot of money to kick start. Build your knowledge about the investment market and start investing. Also make sure your investment accounts at least 20 to 30% of your income. When single and young, you can dedicate a higher percentage as you don’t have additional responsibilities of spouse and child care. As the age progresses and so does your experience, alter the portfolio to accommodate more.
- Power of compounding really works: When it comes to money and investment, the one word that you will love is “Compounding“. Compounding means you earn interest on the principal as well as on the interest that you earned earlier. And works best when you intend to stay invested for a longer period of time. To understand more about the Power of Compounding read my blog here.
Money matters are personal. One may have money but also an ailing family member who is draining all the money out. While other may have a low income but no liability what so ever. In both the scenarios, what helps is investing the right way. All you need to do is weigh your options and choose what is right for you.