Golden Rules to manage Personal Finance
1. Split your Term Insurance
Your should split your Term Insurance for two reason . Top most reason is flexibility in Decreasing thecover later , So in case you need cover of 60 lacs , you can divide the cover into 30:30 or 20:40 and thenin future whenever you need that your insurance requirement has gone down , you can just stop one of the policy .
2. Invest in Tax Saving Products for long term goals
Most of the people still invest in Tax saving funds for their shot term financial Goals . The fact that themoney invested there will get locked for long term should be taken in positive way and hence youshould invest in these for your Long term goals , so that you don’t feel bad about the lock in periodbecause you anyways need money after many years for those goals . For example Child Education ,Retirement , Holidays abroad after many years . For short term goals like Buying , saving for some shortterm commitment should not be taken care by Tax saving Instruments , You should use Fixed Deposit ,Fixed Maturity Plans , Debt Funds , Balanced funds and Non Tax saving Equity Funds (Risky) for Shortterm goals . Once you think like this , the lock in period will not matter to you at all
3. Investing in GOLD ETF’s instead of physical GOLD
Why do you want to invest in Physical Gold ? The biggest reason is for Daughter’s Marriage andJewellery , But the underlying reason always is capital appreciation . So why not always invest in GoldETF’s [ Understand what is ETF ] and whenever you need Physical gold , sell the ETF’s , take the moneyand Buy the Physical Gold at that time . Most of the people invest in Gold physically for Daughterseducation , But the better way would be to invest in ETF’s and when time comes you buy the physicalgold by selling the ETF’s . That is a better way because its more flexible , safe and easy route .
4. Use your LTA , HRA and Medical Reimbursement
I am amazed to see that many Salaried Employees especially youngsters do not care to take the benefitof LTA , Medical reimbursements and HRA , just because of laziness . So make sure you take advantagesof these , even if you partly use these things you will save couple of thousands in Tax . All you have to dois , save the bills , take the xerox and walk couple of steps to your Finance department and submit them, don’t you think its worth if its can save you couple of thousands in tax saving .
5. Control your Credit taking Habit
Most of the people take Debt more than they can afford or deserve . Criteria for giving credit is mainlyhow much you earn . The company never knows your expenses and your future goals, your risk appetiteyour future plans . People earning 5 lacs per annam take debt of 30 lacs for Home , unnecessarypersonal loans for buying LCD’s , going vacation and other non-priorities in life . This can have ill-effectslater . Also companies are now keeping an eye on your credit taking behaviour and it affects your credit