Timeless wisdom: Essential financial advice to guide your money matters

Let’s admit it — at some point in our lives we have all made some mistakes regarding money matters. Whether by being extravagant in spending on unnecessary items or by ignoring to contribute to a retirement plan quite early, we all have walked the path of financial negligence at some time.
Having said that, there is wisdom in embracing financial planning as soon as possible to avoid future shocks and surprises. Financial planning provides you with a framework to achieve your goals in a more systematic way. Moreover, it is always advisable to start financial planning at an early age. But first, you need to figure out where you are today and where you want be - financially, after 10 or 20 years.
In this article, we will explore some financial investment tips that can take you towards a secure and prosperous financial future.

Table of contents:

• Financial advice to consider for a stable future
  • Your home is an investment
  • Pay off your mortgage early
  • Set your retirement plan
  • Save money and set it aside for emergency funds
  • Credit cards can be a bad idea
  • Use your age to allocate your funds
• FAQs

Financial advice to consider for a stable future

Your home is an investment

Purchasing a home is something almost everyone desires. However, owning a property is not just about finding a place to live, it also acts as a long-term investment in the future. A well-thought-out decision in real estate can do wonders allowing you to enjoy the benefits of property appreciation and build wealth over time.
Unfortunately, due to several factors like student loans, debt, unemployment, spike in real estate prices, and strict loan procedures, many put off this dream for later. However, systematically done financial planning can help you achieve this dream.
Owning a property comes with a bunch of other expenses like insurance, taxes, necessary repairs, and emergencies. You must factor in all these expenses before heading to buy a property. Consult with a property advisor before investing in real estate.

Pay off your mortgage early

Debt can slowly eat up your finances. Many individuals end up borrowing more loans to pay off their old loans, which is an extremely poor decision. Therefore, your financial planning should be such that it doesn’t let you fall into debt trap. The only way to save yourself from such a situation is to chalk out a schedule to pay off your mortgage as soon as possible. If you have many mortgages, then start paying off the biggest one first.
One financial investment advice is that you can also consider transferring your loans to other banks offering lower interest rates. Furthermore, loans like personal loans that come at a high interest rate should be avoided. Strive to build a corpus to accelerate your journey towards a debt-free life.

Set your retirement plan

The saying "time is money" holds particularly true when it comes to retirement planning. Planning for retirement is not an option but a necessity. Start early and contribute consistently to your retirement accounts, such as a EPF or any other retirement plan. Take advantage of employer-matching programs and automatic deductions from your paycheck. Starting an SIP now and continuing it for 20-30 years can easily accumulate a reasonable corpus for your later days.
By setting up your retirement plan and allowing it to grow, you can benefit from the power of compound interest and ensure a comfortable retirement.

Save money and set it aside for emergency funds

Saving a portion of your earnings is the foremost step towards financial planning. Saving money helps you avoid falling into debt traps. Moreover, since life is unpredictable, your savings can prevent a situation where you may have to borrow money from private lenders.
Now the question arises, how to save and how much to save? Well, as soon as your salary gets credited to your account, maintain a habit of saving at least 10% of the total income every month. To further grow that saved amount over time, you can consider investing in mutual funds or other proven investment instruments. In addition, mutual fund investment can help you establish an emergency fund that can cover at least three to six months' of living expenses.

Credit cards can be a bad idea

While credit cards offer convenience and rewards, they can quickly become a financial burden if not managed responsibly. High interest rates and mounting debts can derail your financial stability. Instead, practice responsible spending and use credit cards sparingly, paying off the balances in full each month. Focus on building a solid credit history that will serve you well in the long run.

Use your age to allocate your funds

As you progress through the different stages of life, your financial goals and risk tolerance change. A prudent strategy is to allocate your funds according to your age. In your younger years, when you have more time to recover from market fluctuations, you can afford to take higher risks for potentially building wealth over time. As you approach retirement, it is wise to shift towards more conservative investments to protect your nest egg.

Conclusion
Having a solid financial plan, making informed decisions, and adapting to changing circumstances are key to financial well-being. Start saving part of your income every month, invest in real estate, plan for retirement, pay off mortgages as early as possible and avoid credit cards as much as you can. Remember, your financial journey is not a sprint but a marathon. Stay disciplined, make wise choices, and if necessary, seek professional advice to ensure financial stability in the long run.

FAQs:

Should I use a credit card for everyday purchases?

You must keep in mind that in order to prevent damaging your credit score, you should only use a credit card for items you can afford to pay back in full. While you can use credit card for your everyday purchases, make sure you do not default on the repayment.

What is the purpose of making a financial plan?

Financial planning gives direction to your financial decisions. You can adapt to life changes more confidently when your financial goals are on track. A well-defined financial plan enables you to comprehend how each financial action affects other aspects of your budget.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views / opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.