One of the primary goals of life is to live a cushy, stress-free life. And financial planning is a way to create a long-term strategy with your money to help you achieve your dream lifestyle, as well as give you much-needed security. But planning your financial future can be an arduous task. To give you a head start, let us throw some light on what you need to do to achieve your life goals.
1. Write down your life goals and revisit them often
The first step, and often the hardest is to establish your personal financial planning goals. Jotting down your aspirations or what you want to achieve will help you understand your goals better. Perhaps it’s a long-term goal like retiring with a comfortable financial cushion, or a medium-term one like buying a house/car, or a short-term one where you want to clear your debt. No matter what you want to accomplish, a financial plan will be of immense help.
Over time, your goals can change. For instance, you may wish to buy a car before putting up the down payment on a house. So, revisiting your financial goals from time to time will help you amend your plans along the way.
Looking to achieve short term goals with your Demat Account? Click here to read more on it!
2. Focus on where you are spending rather than your income
Everyone struggles with the month-end blues, where your bank accounts don’t necessarily agree with you. This, coupled with “planning ahead is not my style” or “I enjoy each day to the fullest” chain of thought, can prove to be detrimental to your financial health. To combat this, rather than worrying about your earnings, focus on your spending. Other than avoiding impulse purchases, also maintain a savings budget. This works better than an expense budget where you have to curb purchases.
Work on saving 15%-25% of your income and safely deploy them in real estate, mutual funds, or other forms of investment. You will be left with 75%-85% of your income, from which you should settle important expenses such as rent, EMIs, etc. The rest you can use for entertainment, shopping, etc. The lesson here is you need not be a crorepati; diligent planning and savings can get you there!
3. Don't just invest, invest smartly
Saving money is not enough. When you save money, it’s akin to simply putting all the seeds in a box and locking it away. However, when you sow (read invest) the seeds and nurture the saplings, you get to reap the benefits. While the traditional pathways are a good start, just like the tree grows and spreads its branches, you need to diversify too. With your money in the right place, spread across different asset classes, not only do you get tax benefits, but it also builds you a sizeable corpus.
With investing, the earlier, the better. And here’s where the HDFC Bank Demat Account comes in handy. You can open this paperless account from the comfort of your home. Via a seamless, secure, and safe network, you can start trading with just a few clicks. The HDFC Bank Demat account makes life easier by letting you almost instantly redeem your returns to your HDFC Bank account, making it easily accessible.
What’s more, with the all-new 3-in-1 integrated account (savings account + demat + trading) you can create an account, start trading and work on building your corpus – all under one roof! An added advantage is that you're open to multiple investment platforms that are personalised, especially for you. All you need to keep ready are copies of your PAN card and Aadhaar card, and you're good to go.
In short, if you want to build wealth, it’s essential that you learn how to invest your money.
4. Start building an emergency fund
All your planning will not be of help if you’re not prepared for any eventuality. An emergency fund can protect you from life’s surprises. It’s like a financial buffer that’s easily and quickly available, so you’re readily able to meet an unexpected expense without tapping into your long-term savings. Typically, the norm is to save enough to see you through a minimum of three months’ expenses, but six or more is even better. The amount should be enough to cover all expenses – utilities, transportation, rent, groceries, bills, etc. It’s best to keep this fund liquid so that it’s accessible when you need it.
Last words
If you want a comfortable life while also achieving everything on your bucket list, financial planning and investing are practices you need to take up early in life. Regardless of your goal or income, a sound financial plan will eliminate stress and help set you up for life. Remember, the mantra you need to breathe is to spend wisely, protect, and invest.
Looking to open a Demat Account? Click here to get started.
*Terms and conditions apply. This is an information communication from HDFC bank and should not be considered as a suggestion for investment. Investments in securities market are subject to market risks, read all the related documents carefully before investing.