Personal finance: 10 strategies to take control of your financial future

Managing personal finances include planning and budgeting for how money is saved or spent. This involves establishing various financial targets and pursuing them with discipline. To make wise decisions and distinguish between good and bad advice, one must be financially literate.

Financial planning as per your goals could help you generate wealth with regular investments. The success of your financial journey depends on multiple factors from early investments to choosing the right savings instruments.

Here are 10 strategies on personal finance that can change your life and ensure a secure future:

Think long-term and define your goals accordingly

Creating long-term financial goals is one of the most important aspects of money management. After you’ve established these goals, you may create a financial roadmap that outlines the actions you must take to reach your targets. Whether your objective is to buy a property, pay off certain debts or build a retirement corpus, having a well-defined goal will help you develop a strategic plan to achieve that.

Make a budget and ensure it aligns with your financial goals

Making a budget is a crucial first step in managing your personal finances. To do this, you must recognise your saving and spending habits or patterns and match them to your long-term goals. You should take into account things like your monthly income, regular household expenses and liabilities like debts or EMIs. Also, factor in your income tax outgo or any other expenses while preparing the budget.

Build an emergency fund

Start building an emergency fund as early as possible in your life. It would go a long way in taking care of any large spendings during an emergency, such as medical expenses. It would be prudent to save around six months’ expenses as an emergency fund. It may take some time to build this fund and starting early could be helpful in easily achieving the target.

Take into account retirement expenses early in life

Starting investments early in life is usually a good decision because it allows your money more time to grow ensuring higher returns. Investing for retirement may seem distant in your youth, but if you delay your retirement savings plan, it could become difficult in later stages of life due to increased liabilities.

Use credit cards wisely and only if necessary

Since the money you spend with a credit card does not physically leave your wallet, it’s easy to lose track of your actual spending. To avoid running up too much debt, use credit cards wisely. Interest charges add up if you fail to pay off your balance within the stipulated time. One of the principles for investing for beginners is staying within their means and having the funds to pay off credit card debt monthly, preventing the accumulation of debt.

Clear existing debts as soon as possible

Managing personal finances effectively involves paying off existing debts to safeguard your future. When you reduce your loans or credit card outstanding amounts, you can redirect that money towards savings and investments. High interest rates often erode the money in hand that you could have invested. However, you can devise some alternatives like using a balance transfer for credit card repayments. Also, while planning to clear debts target high interest loans first or the smallest loan outstanding, as often advised by the financial planners.

Find newer ways to grow your income

At any age, it’s essential for everyone to grab new opportunities for increasing their income. Some common methods include requesting a salary hike in your existing job or switching jobs for better pay packages. Additionally, you can also explore more rewarding investment avenues like mutual funds, stocks and other capital market instruments compared to traditional savings or fixed deposits. Though stock market investments are considered risky, with the right strategy and knowledge about markets you can safeguard your money. With careful research and by selecting diverse stocks, you can potentially benefit from gains in stock price.

Hire a financial planner to evaluate your portfolio

In life, there may be times when you’d have to incur some big-ticket expenses, such as investing in a property, growing your family, funding the education of your kids or supporting your ageing parents. While managing these expenses may seem daunting, you don’t have to navigate them alone. Find a financial planner and take their help. They can evaluate your financial situation and objectives, providing valuable insights you may have overlooked.

Consider medical expenses you may incur after retirement

Start planning for out-of-pocket healthcare expenses well before you approach your retirement age. These costs can significantly deplete your retirement savings. Consider what you may need to fill the gaps early in your career to ensure financial security in your golden years.

Avoid extravagant expenses

Embrace a modest or frugal lifestyle to save, accumulate, invest and grow your wealth. Even billionaire investor Warren Buffett is famously frugal. Learn to prioritise value over extravagance. Instead of squandering money, investing wisely will ensure long-term peace of mind.

To sum up

The success of financially securing your future depends on a host of factors. The key to success is financial discipline and your timely action. A small step in the right direction today can help you in securing your future tomorrow. From mutual funds to stocks, there are a plethora of options to choose a suitable investment instrument. Go and start your investment journey today with as little money as you can save.