HOW TO STAY FINANCIALLY HEALTHY
The COVID-19 has been giving us all a wakeup call on how important our health is. Talking about health, there are other aspects as well, where it equally fits in as of now. We are talking about financial health and the topic in this situation has turned out to be a nightmare.
The uncertainty on how we will take our household forward to a better future is giving many of us sleepless and restless nights. The “IF ONLYs” and “OOPs” aren’t’ going to provide any solution. Rather we can look into the brighter sides and work towards changing some important habits to stay financially healthy.
- Make a habit of Monthly review
We, professionally, usually review our daily works. A habit of household reviews every month in a similar way will keep you updated on your financial situation, basically the expenses. A clear understanding of your various sources of income (current and likely) versus your expenditure will give you the confidence to plan for your future.
- Don’t compete on spending
Just because your neighbor Mr. X has bought a new car doesn’t mean you have to own it. You should own one only If you are capable and need one. “He did that I should do better” is a mind-frame that lands you in big financial trouble. In Summary: “Bigger Ego will make you spend more”.
- Practice Smart Spending
You don’t need to wear all branded clothes, eat out at expensive restaurants, send your kids to the most expensive schools or own the biggest house. Remember small spending doesn’t make you a miser. A matter of fact is, the one who cuts down to calculated spending and improves savings is one who will come out better in the future. “Spend more on what you need and less on what you Desire”
- Do not put all eggs in one basket
It is always advisable to have more than one source of income. Of course, a family where both husband and wife are income generators is always a financially sound family. However, having a silent stream of regular income can boost your current financial health and gives you insurance when your primary income source takes a roadblock.
A smart investment in share market & mutual fund, fixed deposit interest income, rental income can give you that extra peace of mind.
- Establish an emergency fund
No matter how you try you cannot oversee the future, that’s a fact of life. What you can do is be prepared for what might come. One of the biggest reasons that land you in financial trouble is when you are unprepared for these situations like a big medical emergency to you or your family, natural or man-made calamities, etc. Establishing an emergency fund can help you come out of it healthy.
You might not need to establish a big fund in a bulk but develop a fund by setting aside part of your income as a regular saving in a disciplined manner.
- Plan for your retirement ahead
Financial health is not short term it has to be long term. There are two benefits: a. your future is secured b. knowing your future is secured is a big boost in confidence that allows you to take a new risk for a better life standard. It is never late to invest in good insurance, mutual fund, savings in Citizen trust /provident fund, or various fixed deposit schemes.
- Know how much of credit to take
A big house or a shiny new big car is a temptation. A classic Nepali slogan, ”घाटी हेरी हाड निल्नु” is a big practical lesson. Knowing how much loan to take will keep you in good financial health. A basic calculation with the source of income on one side, your regular expenses plus contingency, commitment to savings on another side will give your exact capability to undertake a credit.
Your diligent discretion will not only help you enjoy what you like but ensure that the same will not be a rock in your chest.
- Take smart financial decisions
Undertaking a credit or investing for an alternate source of income or investment ideas requires a careful decision. The factors like deposit interest rates, rate of interest in the loan, the equated monthly installments, extra financial charges, benefits of various insurance plans, mutual fund plans, etc have to be carefully weighed. A well-calculated smart decision will have a long-term effect.
- Respect your credit
Taking up credit is very easy these days with lots of attractive loan schemes available. Just because you got a credit easily doesn’t mean you can relax. Your monthly review can help you on this, you need to be in your toes to ensure that your credit doesn’t run too far away. Strict discipline needs to be maintained to ensure that your loan EMI or credit card bills are paid exactly when due.
Don’t make an excuse to cover up next month or even utilizing that grace period for payment.
- Involve your family
Discuss your financial situation with your spouse and your children (if they are old enough to understand). Every member of your family should understand your current financial situation and walk in the same path for a better future.
Maintaining financial health regardless of the circumstances is a life skill. Everyone should learn this not only for personal reasons but also for the enhancement of the entire community.
Thank you for reading. Please share it with your friends if you liked it.
Share in
Leave A Comment