Presonal Finance
Personal Finance:Track Your Expenses

The 10 Best Personal Finance Tips | How To Build Wealth

Do you want to own Personal financial independence at age of 40 years? Here are the 10 best Personal Finance Tips to build wealth:

Start following tips to save & grow money so you can retire at age of 40 years

Start saving money now

To get Personal Financial Freedom Self-discipline is a key ingredient in achieving your goals and freedom. It is being rightly said that “The art isn’t in making money, but keep it”

As per Benjamin Franklin “a penny saved is a penny earned”.

You should start saving as you start earning. Save money and money will save you.

For saving money following Personal Finance tips should be followed:-

          Set your priorities

          Only spend money on what’s necessary

          Monitor Your expenses

Figure out your Personal Finance priorities

Set financial goals & make payments on time. It is not important how much you pay for rent or other people. The important thing is you pay on time and you do not miss a payment. The most important part to start managing your Personal Finance is to maintain your creditworthiness.

The more you pay on time, the faster you repay debts without incurring extra interest & penalties.

Don’t take loans to enjoy life. Most people take loans to have fun in life, when they don’t have money to pay back their debts they are doomed. You can use your money to have fun in life and pay your debts later, but be careful and make sure you pay on time.

Determine your tax-wise goals. Planning your income and expense depends on what kind of person you are. If you don’t know about financial planning, get a good financial planner to advise you on saving more money.

Personal Finance
Personal Finance Tip: Track Your Expenses

Track your expenses

  1. Track your expenses
  2. Only spend what is left after savings
  3. Decide your priorities Plan ahead by budgeting.
  4. Monitor your spending Plan
  5. Manage your expenses Track your spending Don’t let your spending go crazy Look out for opportunities to save money Be consistent
  6. Do not fall in trap of marketing gimmick’s which may lead to overspending
    • Like Prime Day Sale, Big Billion Sale , Black Friday sale ,Christmas sale etc. These marketing strategies by online and offline vendors may induce you to purchase unnecessary things which are not required by you.
  7. Go easy on yourself Don’t push yourself too hard but don’t be timid about savings
  8. You can use mobile applications to track your spending such Monthly Budget Planner & Daily Expense Tracker,Spending Tracker etc
  9. Sign up for mobile phone banking Make deposits/withdrawals via your cell phone
  10. Be aware of your ability to save Don’t just accept what others tell you. Be aware of your ability to save money at any given time( Once you fix your savings target try to be consistent)

Set aside savings for emergencies

Reinvest returns on savings Create an emergency fund, then you can invest in the markets once you’ve saved enough

Always take insurance for uncertainty. (Medical insurance, Life Insurance, Property insurance, motor insurance etc.)

Do not consider insurance as an investment but it is a necessary expenditure for emergencies. Insurance helps to meet obligations at the time of emergency.

Invest Your Saving for Long Term

The best self-made investor of all-time Warren Buffett said “If You’re Not Investing, You’re Doing it Wrong”

Warren Buffett

Set your goals of saving every week and invest all your money in a diversified portfolio for the long term. It will help you to achieve your Personal Finance goal. You can invest your savings in the following assets to build wealth over the long term

  1. Stable & Fixed Income Assets: Such as bank fixed deposits, government bonds, Debenture of stable and large cooperation’s.
  2. Risky but Growth oriented Assets : Such as Shares and stock (You can start investing through Mutual Funds by way of taking sip)
  3. High Risky Assets: You can invest a small portion of your savings (say 5 to 10% in cryptocurrency)

Remember not to invest your savings in different assets classes as per your risk appetite.

The suggested proportion of investments:

CategoryStable & Fixed income AssetsRisky & Growth-oriented AssetsHigh Risky Assets
Proportion60%35%5%
Table showing Investment Proportion in Different Asset Classes
Growth of Investment
Growth of Investment

Make separate funds for Big Dreams

After the first few years off your saving and investing try to make separate funds for your big dreams like owning a house.

Set a total target for such funds with a timeline to achieve it.

Stay focused on the end goal

Don’t overlook the budget to meet to make short-term savings goals. In other words, ensure short-term goals like emergency fund and retirement are met first.

Annual Goal-Setting can be done alone or with a partner. Some people prefer to set up goals in separate banks or even with a financial advisor.

 However, if the goal is financial independence at 40, then it should be set as a joint goal with a partner. One important point to note is that you must agree on the total amount that is required to achieve the goal.

Save for retirement

The Facts of Life A lot of adults are living paycheque to paycheque and with all the economic challenges, it’s a hard and stressful time for all of us. They don’t have time to manage their personal finance.

If you are not getting a pension at the time of retirement then you must create a retirement fund from day one.

You can invest a regular amount in National Pension Scheme(NPS) to build a retirement fund

Make it automatic

The next step is to apply what you’ve learnt and started putting money into savings regularly to build a savings account to add to your liquid assets for retirement.

Try to develop a mechanism to invest your savings and earnings from investments automatically by opening swap bank accounts where money over a limit is invested automatically.

Conclusion

Finally, three golden rules to manage Personal Finance & build wealth are :

1.Spend on what is necessary

2.Be consistent in your savings

3.Invest for long term

In all, we hope you find the knowledge shared in financial coaching for managing Personal Finance is useful and of use to you. Copyright @anishtrix.com.

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CA ANISH

Anish is post graduate in commerce & management. He is a qualified Chartered Accountant & Information System Auditor with experience of more than 20 years in the field of management, accounting & taxation. He is visiting the faculty of various universities and providing career advice to aspirants Anish Agrawal has authored many books on Accountancy & Taxation.

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