Many people face money problems even when they earn a good salary. In recent days, they are not able to save or invest enough, which can hurt their future and retirement plans.
Financial advisors say this problem can be solved if the person takes the right steps. Looking at their income and expenses, they should not be short of money. But they need to act quickly to fix their finances. The longer they wait, the bigger the problem will become. Many families face the same situation today.
1. Correct calculation of income and expenses
People who work get their salary in their bank account every month. Expenses should not be more than the salary. First, they need to calculate all essential expenses. This includes house rent or home loan EMI, food expenses, children’s school fees, petrol for the car or bike, insurance premiums, and so on. After adding all these essential expenses, they should subtract them from their salary. This will show how much money is left after covering all necessary expenses.
2. Stop unnecessary spending
They need to stop spending on things they do not need. Before buying anything, they should ask themselves if they can manage without it. If the answer is yes, they should not buy it. Most of the time, we buy things that are not necessary. This wastes money that could be used better elsewhere.
3. Use credit cards less
Credit cards increase spending power, but later this can turn into debt problems. Once you fall into a debt trap, it is hard to get out. They should first clear all their credit card bills. When only part payments are made, a large amount of money goes into paying interest every month. They can use any bonus or variable pay from their company to clear the bill. After this, they should use their credit card only when it is very necessary.
4. Build an emergency fund
An emergency fund keeps your financial plan safe. Without it, you are forced to use your savings for sudden expenses. Many people sell their mutual fund units to handle emergencies, but this is a mistake. It disrupts your financial plan and prevents you from building a large fund in the long term.
5. Start saving and investing
It is very important to use a part of your salary for savings and investment. The earlier you start investing, the greater the benefit. They should focus on savings and investments based on their financial goals. They can start with a small amount and increase it as their income grows. This will help them build a good fund for future goals.
Today, it is very easy to invest in mutual funds through SIP (Systematic Investment Plan). The returns from equity mutual funds are usually very good in the long term.