When you aren’t well or when you want to see if you are healthy, you visit a doctor. You assess your health and see how healthy you are. Now let’s talk about your financial health. Are you financially sound?
You will have to start from scratch to find out how good or bad your finances are performing. Les begin.
1. Discern your net worth
Simply it means finding out your own net worth. First take into account your assets and subtract your liabilities. Your assets consist of your home, your investments, insurances, etc. Subtract that with liabilities which, for instance, are student loan, credit card debt, etc. But don’t compare yourself with others. Compare yourself with yourself when you see the end result of everything such as when you finally saved up sufficient amount of money for your next vacation. Note that income doesn’t include in this calculation. [Get Personalized Advice On Financial Health From Kuber Mindz Visit]
2. Enumerate your ratio of debt to income
Debt to Income ratio is evaluated by your total debt payments divided by monthly gross income. Let’s say your monthly gross income, before taxes and other deductions, is 10,000 $ (Indian Rupee 6,85,150) and you have debt payments of $ 2000 (Indian Rupee 1,37,030). [Get Personalized Advice On Debt Funds From Kuber Mindz]
Divide 2000$ by 10000$ to get your debt to income ratio of 0.2%. It is recommended that debt-to-income ratio has to be lesser than 30%. Debt to income ratio informs you whether your debt is under control or not and whether other lenders will offer you loans by looking at your credit score.
3. Quit trying to keep up with the Joneses
Society does a million things. It isn’t necessary for you to do everything others do. Stop trying to please everyone, you can’t please everybody. Rather concentrate on your finances. Your neighbor bought a fancy car, his neighbor bought a gold chain, her friend bought a silver utensil while her friend turns out to be that same neighbor who bought the fancy car. The list goes on and on. It’s endless. Mr. x has a separate budget than you so don’t try to copy his lifestyle and choices. Free Online/On-Call Financial Planning Advisory in India
4. Adhere to your budget
Commence a budget and obey it! A budget consists of your monthly income, your monthly expenses, savings and investments, financial goals and time target and your insurance. Begin this if you haven’t. If you have, stick to it! You have to check your budget at least once every month, reduce your expenses and increase your investments based on your financial goals which include the time frame (short term, midterm and long term).
Invest your money. Mutual Funds, ELSS, stocks and bonds, EPF, PPF, NPS or even 401(K); invest your money. Investing for the future is an absolute requirement today. Inflation is on the rise and investment is the only way to beat inflation. Investing also means keeping a rainy day fund, otherwise known as an emergency fund which is recommended to contain at least 6 to 12 months of your monthly income to sustain expenses in case of any emergencies. Don’t forget to invest for retirement. The earlier you start the better. However, before you get into the water ensure you know the depth. What is your risk tolerance? How much time do you have before retirement and how much risk can you handle? Does a particular fund align to your values or not?
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