Financial freedom gives you mental stability. Once your dates and expenses start increasing, stability starts to look like a dream.
Money Management: According to a study by YouGov in 2021, two out of five urban Indians (40 per cent) consider saving money as their priority for unexpected hardships. Financial stability is one of the most important goals when you start earning money. Financial freedom gives you physical and mental stability. However, once your dates and expenses start increasing, stability and savings can seem like a dream.
Take a look at the figures, India’s Gross Savings Rate was measured at 31.4% in March 2020 as compared to 30.6% last year. As the pandemic continues, Indians may break their savings accounts due to the possibility of inflation and unemployment.
According to a report published by the Reserve Bank of India, Indians are making short term deposits and investments in mutual fund schemes have also been affected due to this pandemic. This was reflected in YouGov’s study “On the Money: YouGov’s Global Banking and Finance Report 2021”, that paying off debt and saving for retirement is not a priority for Indians this year- 22%
You have to make a strategy to deal with difficult times. Here are some advice from experts:
Track your budget
If you wonder where your money went at the end of each month, it’s time to prepare a budget. You may find it difficult in the beginning, but with this you will be able to have more control over your money.
The 50/30/20 rule states that you allocate 50% for essentials, 30% for thoughtful spending and 20% for savings. You can start by listing the essential expenses like bills and rent and then work out the surplus. Looking at your last month’s statement of account, you will be able to understand which purchases could have been avoided which were not very important. Pay your credit card bills as soon as possible as they charge a lot of interest for not paying the bills on time. Similarly, pay off all your loans on time, which will also help you build a good credit report.
There are many apps that allow to integrate multiple bank accounts on a single platform. Apps like Walnut help you keep track of your spending and savings. These apps help to organize money better. Not only this, these apps also notify the incoming billers and keep track of your repayment schedule.
Create an emergency fund
Always be prepared for tough times in life – it could be something as minor as your car in need of repair, or a sudden major problem like an illness. An ideal amount of emergency fund can be a couple of three to six months of your current income, which means you will be able to manage expenses for at least that number of months.
To deal with difficulties like illness, health insurance is a must. Make sure your policy covers your pre-existing conditions and is up-to-date.
Save first, spend later
The 50/30/20 strategy mentioned above has been found helpful in accumulating substantial savings. Thus, 20% of your income should ideally be kept in such a way that you will not use it until you achieve a financial goal. Differentiate between your needs and wants and set long term goals to be committed to saving! For example, Maslife allows you to set savings goals and notifies you to stay on track, so you can sit back and let the app do the work for you.
Stay up-to-date
Money management becomes easy when you keep pace with the changing times and needs. For example, as your family grows, you will need to modify your life and health insurance plans to meet their needs. Similarly, with the changing times, you need to consider investing in a divers portfolio to diversify your money. So that you can accumulate a good corpus for buying a house and for your retirement.
Many of these expenses can seem difficult to manage,
Eventually you will have multiple accounts or cards which will not be easy to track. In such a situation, you can think of a personal money management app that is integrated with the open banking API and integrates all your financial information in a single application.
Instead of an individual financial planner, opt for a new age app that has inbuilt personal finance management features along with the convenience of making payments through UPI/BBPS from bank accounts you are already making payments from.
(The author is the co-founder and CEO of MobileWare Technologies. Views expressed are personal)
