Keep yourself financially healthy
While people are quite health conscious these days and take part in various activities to stay fit, they do not echo the same sentiment for their financial health. As staying fit is important for your physical health, staying financially fit is important for your overall well-being. Remaining fit in both the aspects, that is, physically and financially, often leads to mental and emotional peace. Here are a few things that you need to keep in mind for your financial health.
Savings
To start with, it is really important to inculcate a habit of saving. These days, people usually first earn, then spend and, if something is left, then only think of saving. However, the right approach is that first, you earn, then you save, and then spend the remaining as per your need or desire. When it comes to savings, it is wiser to save at least 10 to 20 per cent of your income before proceeding to spend.
Debt
As more fat deteriorates our physical health, more debt deteriorates our financial health. Thus, it is crucial for managing your debt on time before it gets unmanageable. If you have any long pending credit card bills then either pay them off, if you have the lump sum amount available, or it is better to shift that to a personal loan as the rate of interest is way less than that of credit cards. Limit your use on credit cards to emergencies. Even if you wish to go for a vacation or buy a few appliances at home, avoid the use of personal loans and credit cards. Rather plan and save for those things.
Emergency Fund
The next important thing you need to do is to plan for rainy days. This means, in case of any temporary income loss, you should have certain provisions to take care of your fixed expenses and mandatory monthly commitments. Building an emergency fund is very important - even more important than investing and risk protection. This is because this emergency fund is the foundation of your personal finance. If it is not in place then either you would surrender your insurance policies or redeem or withdraw your investments or, at worst, you would take a loan to cope up in case of an emergency. Hence, it is really important to have an emergency fund in place to protect your wealth.