As important it is to earn money, it is equally important to have the right financial planning. The technique of managing your investments with the help of various financial activities is called personal finance. Simply put, it shows the readiness to achieve your financial goals. Let us get to know about the principles of personal finance, which can help you achieve financial goals and make money out of money…
Creating an emergency fund is essential Money can solve most problems. In such a situation, it is necessary to create an emergency fund. If you want to create an emergency fund, you can open an account in a bank and deposit a small amount in it every month. Use this money only in case of emergency.
Extinguishing high-interest debt People take personal loans for car loan, home loan or other needs. Due to which a huge amount has to be paid in the form of interest for a long time. If you want, you can pay more every month by adopting an automatic debt repayment plan. Apart from this, one can also pre-pay part of the loan every year. Paying off the loan will not only improve the credit score but also save interest money.
Saving for retirement Saving is the capital of old age. In such a situation, retirement planning is essential. If you are employed and have a PF account, then you can increase the contribution through Voluntary Provident Fund. If you do not have a PF account, there are many options like recurring deposits, PPF, ELSS, mutual funds, in which you can build a good fund by depositing a part of the salary every month.
Investing in stock market Shares give better returns in the long run. In the stock market, you get more returns than bank FDs and RDs. However, before investing in the stock market, do a thorough research about the market.
Investment in insurance policy Buying an insurance policy is essential to protect yourself and your family from any untoward incident. It is better to buy a policy at an early age as less premium has to be paid. Apart from this, health insurance should also be taken so that the burden of the cost of treatment can be reduced.
To know more about managing your personal finance, click here: IIFL
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