Personal Finance – 5 tips to know what exactly we want from our MONEY and how to value it!

TOP 5# Personal Finance Tips

Tip No. # 1  –  Keep questioning

Ask, ask and ask! Yes, although it sounds very simple, knowing the exact purpose by being true to yourself and knowing it genuinely will make this exercise quite easy. To know exactly why money is important to you will guide you on every financial planning decision moving forward. One highly qualified medical consultant understood that money was important to her to spend more time with her family and kids specially. Then with the cooperation of her husband they were able to make those decisions that stuck well with their values. Some others may have than one big reason to start saving money and they can well justify those for their own well being.

Tip No. # 2  –  Know the point of start

To know where you want to reach you need to know where you stand today. You should clearly know the amount of assets that you hold and what your liabilities are. This may sound very simple and easy, but you should detail everything as much as you can to make this exercise a truly formal start to know your financial position. You should also add those loans which you had stopped servicing and completely sidelined those to only realize that the debt had now ballooned to more than double of what you started with. The trick is to stop blaming yourself and clear those as fast you can to make your personal balance sheet strong.

Tip No. # 3  – Keep procrastinating big spends

It doesn’t mean that you need to keep delaying on everything that’s big and important for you. The key here is to clearly identify the unnecessary stuff which we try and pile up just because of some impulsive actions or also at times due to peer pressure. One simple way to find out whether that thing is really important is to keep the buying on hold for a week and see if we still crave for the thing and its usage after carefully evaluating the purpose it will serve and justify the high spend from our hard earned money. This might be tough to do in the beginning but you will get the hang of it if you really remember this or have someone to stop you and give time to complete this exercise.

Tip No. # 4  – Buy enough insurance soon!

Most of the people even till their early 30’s skip buying insurance for many reasons. Initially they put off buying the same because it doesn’t seem urgent for their health is good or at times it involves having awkward conversations with people that they would rather avoid. In reality, life insurance is all about replacing economic loss and not the emotional loss. So the idea is to start getting rationalistic soon and view it the reality in cold hard light. Then the rest of the exercise becomes easy once you are convinced in this way, as you just need to calculate what the loss will be and find the most economical insurance for you to do the job. For most of the population, a term policy, which is like renting life insurance for a certain time period, will just do best. Just do some research online and you will find hundreds of options to best suit your needs at the minimum of premiums.

Tip No. # 5 – Appoint a professional financial planner

We can be very emotional when it comes to choosing with the ways for our money to work best for itself. The main idea behind this is not to undermine your own smartness at investing money but it is indirectly an answer to the fact that when we assign it to someone else it is a part of their job to look for the best avenues in a professional way and you can always check their past track record before you appoint one. One very important point to keep in mind here is that you need to be very clear in communicating this to your manager that he has been kept in charge not to sell you financial products and make more money for himself but to advise you regularly on the financial path and ways to achieve your target without having any conflict of interest.