Commit Yourself to "Fiscal" Fitness

Most people realize that the best way to stay in shape is to develop an appropriate fitness regimen and then stick with it. If you start a fitness program and then drop out, you never give yourself a chance to become physically conditioned. In the long run, regular workouts pay off. So too with fiscal conditioning. To achieve fiscal fitness and the security that goes along with it, it is necessary to adhere to a regular program of sound financial practices. The sooner you begin the better. Here are some tips to help you “shape up” your finances:

1. Set short-, medium-, and long-term financial goals. Set one-, three-, and ten-year goals and evaluate your progress yearly. Make adjustments, as appropriate, to achieve long-term financial success. Have an Asset-Allocation for each goal in sync with your Risk tolerance and Time-horizon of goals

2. Look for a savings “edge.” Invest in a PPF, TAX-SAVING MUTUAL FUNDS (ELSS) irrespective of any employer provided benefits like EPF, gratuity or any other plan for which you qualify that offers tax-free retirement savings.

3. “Pump up” your savings. Before spending your paycheck, put savings first. Earmark a set amount (say 20%)out of each paycheck for the future. Like regular repetitions at the gym, this habit will build financial muscle that can help support you for the long term. Adopt this formula for savings: Income-savings= expenses

4. Trim high interest rates and finance charges. Just as you trim excess fat from your diet, look out for credit cards and loans with low rates. Pay off your credit card balances monthly to avoid high interest charges. Prioritize DEBTs as good & bad and Payoff bad debts (Credit cards, personal loans etc.)

5. Schedule periodic insurance and Wealth checkups. You most likely visit your doctor for regular medical exams. You should also have a qualified financial planner review and update your insurance needs periodically due to changes personal and professional life transitions. WEALTH CARE IS AS IMPORTANT AS HEALTH CARE.

6. Monitor your progress regularly. To get in top physical shape, you know it’s important to chart your progress. It is also essential to monitor your financial progress regularly and to meet, at least yearly, with a qualified financial Planner. This can help ensure you are on track.

7. Have a contingency fund. One should maintain a contingency fund of 4to 6 months of cash outflows (Emi’s, household expenses, insurance premiums dependent’s expenses etc) to meet any emergencies. Irrespective of Employer provided Medical insurance, have your own medical insurance and disability insurance cover.

By committing yourself to solid financial practices now, you will be taking those first essential steps toward achieving fiscal fitness. Before long, you may be able to “fit into” the future of your dreams.

Source: MDRT