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In this day and age, we constantly worry about our future financial stability and financial independence, so much so that we often forget to appreciate the importance of present that we are living in right now. We spend our energy in the wrong place when we worry about money rather than worrying about not having sufficient knowledge related to money.
<Take up Financial Quotient Quiz to understand your financial literacy & financial health - Link in the end of the blog>
The phrase “time is money” reminds us that any time wasted in non-productive tasks equates to losing potential money. Therefore, instead of wasting time worrying about not having the money, we should actually think about the ways to obtain and manage money.
If you are reading this blog, it means you, unlike most people, are already on the right track and are looking for ways to do efficient financial planning.
Here, you will learn a number of very important financial lessons that are going to help you plan better and be financially more secure. So, without further ado, let’s get right into it.
· Set clear financial goals: This is the first step in financial planning. You need to have a very clear picture in your mind regarding where you want to be financially in a certain number of years. When you have a clear destination in your head, it makes it easier for you to get there.
So, figure out your retirement plans, what you want to own 10 years from now, where do you want to live after getting married, how much savings do you want to have in 3 years to start your own business, or whatever it is that you want to achieve. Having clear financial goals will also add to your motivation.
· Spend less than you earn: Make a habit of spending less than what you make. When you do that, it automatically ensures that you are saving some money. You can invest those savings somewhere and have another stream of income as a backup. The current pandemic has made it very clear that having just a single income stream is very risky as you can lose your job anytime.
Therefore, having a habit of spending less than what you earn will put you on the path to a secure financial future.
· Make your budget: When you create and follow your budget, you don’t lose track of your expenditures. Budgeting also makes sure you stay on the right path and achieve your long-term financial goals. You should create daily, weekly, or monthly expense forecasts (depending on which suits your spending needs), and strictly follow those in order to avoid over-spending.
You can easily create a budget on the paper as well on mobile apps.
· Prioritize your spending: Make a list of things that are important to you and spend on those things in accordance with the level of their importance. If you can spend only a limited amount of money according to your budget, you can do so in the manner that you get to spend on things that are on top of the list even if it means not spending any money on things that are on the bottom.
In this way, your money won’t be wasted on useless things as it usually happens when we don’t prioritize our spending.
· Don’t let lack of financial expertise get in your way: Contrary to the popular belief, you don’t have to be a stock market expert or a financial analyst in order to make your own financial plan. All you need to do is set a clear goal and commit to it. You can always read relevant topics online and expand your knowledge if you are facing any difficulty in planning.
One thing which is even more important than learning financial planning lessons is learning about your own financial ability. The knowledge of your financial literacy can give you insights into areas in which you might need to improve and areas in which you are already good.
In order to help you find out how financially smart you are, we have designed a quiz. We will ask you a number of multiple choice questions and compute your score based on your answers.
Take the quiz and find out your Financial Quotient (FQ)!