Are You Managing Your Personal Finances Smartly?

Protect Your Money

The problem with almost all of us is that we tend to complicate our lives. This includes every sphere of our life including our finances. As far as our personal finances are concerned, the choices that are available to us in today's context are more in number than those available in the past. So, we must be wise while making our financial decisions. Therefore, we must adopt smart steps for managing our personal finances.


Simplifying Your Finances


It is true that you may have to make many payments towards credit cards, home loans, other EMI's, insurance and so on. In addition to these things, you may be interested in stock markets, retirement plans, etc. also. Though every single item in this list is important, you must first make a firm decision that you will keep things simple and will not allow them to get messy. This is certainly possible if you adopt a strict approach. At the same time, it is not necessary that you need to compromise on your comforts.


Prioritize And Allocate


When you make spending decisions, you must accord priorities depending upon the urgency and importance of the expenses. Not only that, you must learn to make your budget also. You must be strict in following the budget and this process involves regular monitoring of your expenses. Consistent practice alone will help you in mastering this strategy. You can once in a while 'indulge' in splurging in order to avoid feelings of deprivation.


Never Rely Excessively On Debts


Almost every one of us may have debts and you may not be an exception. But excessively relying on debts may spell doom to your aim of managing your finances. Of course, you can go for loans when you want to own your home, provide for your children's higher education, etc. But if you start borrowing for self-indulgence, you will mire yourself in deep debts.


You must find out ways to replace your high-cost debts with low-interest loans. This rule is applicable even if your income is very high and you can afford high-interest debts. Likewise, you must always aim to clear your debts as quickly as possible also. The advantages you can enjoy by leading a debt-free lifestyle are too many to miss.


Never Count On Your Future Income To Plan Your Finances


This is one of the greatest blunders many of us commit. The economic melt-down that hit countries not long ago brought to light how millions of people counted on their future incomes and squandered their current incomes as well as savings. Many of these people have still not recovered from the impact of their mistakes. Therefore, you must take into account only your current income levels while making your financial plans.


Small Mistakes May Prove To Be Expensive


Even small mistakes like defaulting on EMI's or paying the minimum amounts due on credit card debts may turn out to be highly expensive because lending and credit card companies charge penalties and exorbitant interests on the default payments and remaining credit card dues. If you ensure to make payments on time and pay the entire credit card dues before the due date, you can escape from penalties and huge interest rates. In the same manner, you must not opt for high-interest loans because they may increase your total debts very rapidly.


Never Delay Your Bill Payments


Vow to make all your bill payments on time including mortgage, credit card dues, utility bills, mobile and telephone. Delaying these payments will result in penalties and though they may be small, they may certainly affect your finances in the long run.


Re-arrange Or Refinance Your Loans And Reduce The Quantum Of Interests


When there are announcements about reduction in interest rates, you should avail the resultant benefits by arranging for refinancing. This includes home loans. Sometimes, other banks or financial institutions other than your regular bank may offer loans at less rates and so, you can make a switch so as to save on your interests.


Never Believe Investment Fads


Some of the investment fads may be short-lived and so, you must never believe them and park your funds in them. A wrong choice may land you in trouble and you may lose your money. You must do a thorough research and evaluate these opportunities before you make your decision.


Importance Of Life Insurance


Never under-estimate the importance of life insurance. Life may throw sudden shocks. There are many families that have undergone untold sufferings when the bread-winner suddenly dies. Therefore, you should ensure to cover your life and those of other members of your family by buying adequate and appropriate insurance policies. There are many life insurance policies that cover life and that may help you in your efforts to create wealth.


Be Realistic In Your Expectations


You may be making a number of investments but you must never expect huge and unrealistic returns from them. Better be conservative than expecting excessively and running into serious difficulties.



You can think of many other ways also for managing your personal finances smartly.

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