5 Good Money Habits That Will Pay You Back In The Future: Personal Finance Management

Most of our day-to-day activities are out of sheer habit, be it the ₹500 coffee or the daily snack at your favourite eatery. While you may feel these are harmless, expensive spending habits can wreak your finances. While bad money habits can ruin your budget, good money habits can help you build a strong financial future and meet your goals. Taking control of your finances is key to nailing your financial plans.

In this article, we will look at 5 good money habits that can help manage your personal finances. Let’s get started.

Budgeting is the most essential habit that can significantly help in personal financial planning. Making a budget helps you keep a tab on your expenses and make necessary adjustments so that you can ensure that you’re living within your means. While making your budget, you must make sure that you’re being realistic and are considering all the necessary expenses and savings before including any discretionary expenses.

However, just making a budget is not enough for effective personal finance management. You also need to stick to it by controlling the urge to make any unnecessary spending. This will help you stay on track to achieve your financial goals.

With multiple attractive discounts offered on credit card payments, many of us end up using our credit cards to pay for lifestyle expenses like mobile phones, travel, etc. Some people also take up personal loans for such expenses. While using a credit card or taking a personal loan is not a bad thing, you must ensure that you repay these debts on time. Not paying them on time can be quite expensive as the interest rates on such unpaid debts can be quite high.

One thing that the COVID-19 pandemic has taught us is that life is unpredictable, and an emergency can hit you without any warning. To ensure that you are financially prepared during such emergencies, you must build an adequate emergency fund. Ideally, your emergency fund should be big enough to cover 9-12 months’ expenses. You can consider investing in liquid assets like liquid mutual funds, gold and bank accounts to build your emergency fund, as this will ensure that the amount is easily accessible during an emergency.

Allocating a specific amount for savings in your budget is great. However, is it enough? No, it isn’t. Just saving your hard-earned money in a savings account to earn interest at 3-7% per annum is not going to help you meet your financial plans. You must start investing your money as early as possible to grow your earnings and meet your long-term as well as short-term financial goals.

While it is necessary to invest your money to meet your financial goals, it is equally essential to get adequate insurance to secure your and your family’s future during unforeseen circumstances. This includes both life insurance and health insurance.

Getting life insurance coverage is necessary as it ensured that your loved ones are financially secure in the unfortunate event of your demise. On the other hand, the rising healthcare costs in the country make health insurance also a necessity. Your health insurance plan will provide you with the necessary financial cushion during any medical emergency.

Suggested Read: 5 Reasons Your Corporate Health Insurance Isn’t Enough To Protect Your Family

Like any habit, you must practice good financial habits consciously for a while till they become a way of life for you. These habits will help you control your personal finances and secure your future.