Ace financial planning with these secret hacks!
You don’t need higher-paying work or an inheritance from a family to enhance your personal finances. You just need solid financial planning. For many people, better money management is required to cut expenditure, improve their capacity to invest and save and accomplish previously unattainable financial objectives.
Even if you believe your finances are in a rut with no way out, there are several steps you may take to improve your financial planning.
Here are five examples to get you started.
1. Track your spending
If you don’t know what and where you’re spending each month, your personal spending habits are bad.
Spending awareness is the first step toward better financial planning. Using a financial planning tool, you can track your spending across categories and see how much you spend on non-essentials like eating, entertainment, and even your daily coffee. You can establish a strategy to modify your behaviours by educating yourself on them.
2. Create a realistic monthly budget
Set a budget based on your monthly spending patterns and your monthly take-home money. Setting a strict budget based on extreme changes, such as never dining out when you regularly get takeout four times a week, is pointless. Make a budget that fits your spending patterns and lifestyle.
A budget can be viewed as a means to encourage healthier habits, such as cooking at home more frequently, but you should also allow yourself a realistic chance of reaching this budget. This is the only way this strategy of financial planning will work.
3. Pay your bills on time
Paying your payments on time is a simple approach to financial planning effectively, and it has several advantages: It assists you in avoiding late penalties and prioritising necessary expenditures. Solid on-time payment history can also increase your credit score and interest rates.
4. Build up your savings
Make an emergency fund that you can use when unexpected events occur. Even if your contributions are tiny, this fund can rescue you from potentially dangerous circumstances in which you are obliged to borrow money at excessive interest rates or cannot pay your payments on time. You should also contribute to a general savings account to increase your financial stability in the case of a job loss.
5. Remove recurring charges
Do you pay for services you never use? It’s easy to overlook subscription fees to streaming services and mobile applications that charge your bank account even if you don’t use them frequently. Examine your budget for such costs and consider canceling needless services to save extra money each month.
Importance of Life Insurance Policy
The following are some of the reasons why you should get a life insurance plan:
1. Provides protection to the family
This is one of the most significant benefits provided by a life insurance plan. If a person is the family’s primary earner, they would not want their family to struggle even after they are gone.
A life insurance plan protects a family against all responsibilities, whether it’s replacing lost income, providing financial aid to the family, or paying for the child’s schooling.
2. Helps to deal with debt
Nobody wants their family to be saddled with financial obligations during a crisis. Any outstanding debt, such as an auto, house, credit card, or personal loan, is covered by the right life insurance plan in the event of an emergency.
3. Helps to achieve a long-term financial objective
Because life insurance plans are a long-term financial product, they assist an individual in achieving long-term financial goals such as purchasing a home or planning for retirement, among others.
Furthermore, specific life insurance plans, such as ULIP, allow participation in the market and earn significant returns on investment. These plans function as an investment opportunity to build wealth over time.
4. Assured income through annuities
This is another significant advantage of having a life insurance plan. The retirement plans provided by a life insurance policy not only give the insured’s family insurance but also offer an opportunity to build money in the long term, allowing them to enjoy a comfortable life after retirement.
Life insurance pension plans have evolved into the best vehicle for providing consistent pay-outs in the form of annuities. Simply put, it serves as a source of retirement income.
5. A steady investment option
A life insurance plan is more than simply a simple instrument that provides guaranteed replacement income in the event of death; it also serves as an investment alternative, providing a significant return on the premium paid throughout the policy’s active duration.
Depending on the policyholder’s preferences, numerous life insurance plans provide substantial returns at maturity. As a result, it provides dual protection by allowing the buyer to fulfil financial goals while also shielding the family from a sudden income loss.
6. Tax benefits
The tax benefits provided by a life insurance plan make it an attractive investment for many policyholders. The following are the tax advantages offered by life insurance settlement contracts under particular parts of the Income Tax Act:
Section 80C: A policyholder can claim tax advantages for paying the policy premium under Section 80C of the Indian Income Tax Act, 1961. Tax exemption is available for premiums paid up to a maximum of Rs.1.5 lakh.
Section 10D: The maturity proceeds are free from tax under section 10(10D) of the IT Act.
7. Discount while paying online
An individual’s payment mechanism for a life insurance premium influences the premium of a life insurance plan in various ways. Furthermore, the insurance company’s administrative costs are significantly reduced if the premium is paid online. As a result, the policyholder might receive premium savings.
Because paperwork is excluded, the associated expense is likewise excluded. Simultaneously, it removes the middlemen’s or an agent’s costly commission from the insured, which is payable for offline purchasing and renewal. There is no set amount because the discount varies from company to company.
Wrapping It Up
Changing your personal behaviours is the first step toward improved money. Some of these adjustments will be more difficult than others, but if you stick with them, you’ll end up with exceptional financial planning skills that will serve you for the rest of your life—and, in the meanwhile, you’ll have more money in your pocket.