If you want to own your own car or house sometime in the near future but don”™t know where to begin, you”™re just like me. I was lost for a long time when it came to managing my personal finances. And I”™m sure I”™m not the only one. It wasn”™t until my birthday in November of last year that I decided to turn things around. Today, I”™m happy to say I”™m well on my way to where I want to be financially. Here”™s what I did to get here:
1st Advice – Built up my emergency savings
My parents always told me to put some money away for a rainy day, and I did. But this year, I followed the “save before you spend” rule and automated my savings. It”™s made a world of a difference. My savings amount has increased considerably in the past year. It”™s recommended that you save at least six months worth of salary for emergencies, but I”™m working towards a years”™ worth.
2nd Advice – Built a credit history
At the age of 27, I now finally have a credit card after avoiding getting one for years. I”™ve been using it for groceries, medicines and other small purchases, and I make sure that my bills are always paid on time. I”™m working towards building up a good credit history for when I need to take out a home loan.
3rd Advice – Took out a health plan
It”™s becoming increasingly apparent that I”™m not 21 anymore. When I realized I can”™t stay out partying as often as I used to, I figured it was probably time that I invest in a health plan. However, you should take out an individual health plan as soon as you can afford one. There”™s no saying when you might need it. Having your medical expenses taken care of can be a huge relief in an unfortunate situation. I”™d rather not think of the trouble I”™d have seen if something happened to me before I had coverage. I”™m just glad I finally do.
4th Advice – Got insured
When I told my friends I bought a life insurance policy, they seemed a bit confused. I had to explain to them that although I don”™t have dependants, insurance is a must since I will need to apply for a few loans in the near future. If something untoward were to happen to me before I paid off these loans, my guarantors, or in other words, my family would be held liable to pay off my debt. And that”™s the last thing I would want for them. Also, since I help my folks with household expenses, it makes sense to make provisions to provide for them in my absence.
5th Advice – Keep investing
There”™s so much I want to do that a single lifetime seems too short. I”™ve always wanted to see the world, and I”™m saving up for just that with my investment plan. You”™re probably thinking it”™s too early. Sure 65 may seem far off now, but at one point so did 27! I invested 5% of my annual salary in an investment plan this year, and hope to be able to increase that percentage as the years pass. Remember that even if you start small, the cumulative interest you earn can make a big difference if you start early.
So there you have it. Although these seem like baby steps, they went a long way towards securing my financial future and giving me peace of mind.