You have always been spoken to about what you should do when it comes to financial planning. But, sometimes it is good to know what you shouldn’t do so that you can be sure of avoiding those very errors. Let us take a look at some of the mistakes you should steer clear of while going ahead with your financial planning:
1) Credit is so not worthy
- Credit cards must be used sparingly and during emergencies only.
- For regular use, it is better if you use cash or a debit card. (this will give you an idea of exactly how much you’re spending and when you should stop)
- Never have more than one credit card, the more you have the more trouble it will spell.
- Never make any settlements or delay payments.
2) Invest right, invest now
- The ideal time to start investing would be the moment you start earning, if you haven’t done that then the best to start would be – now.
- Long term investments yield higher returns.
- Don’t get carried by the market sway, have a balanced approach towards investing.
3) Inflation: A reality check
Although investing in bank deposits may seem risk free, the moment there is inflation you will come to find that your FD returns will hardly yield you anything. Because investing in deposits means the interest rates are not going to vary according to inflation, whereas investing in the stock market is definitely going to give you an advantage.
4) Step with caution in the market
It is your money on the line, when you invest in equity every loss or gain will impact you. That is precisely why you will have to proceed with caution when it comes to investing.
5) Keep away from your PF- until retirement
Your employment provident fund should be kept locked in- it is a form of forced savings for your retirement; irrespective of the fact whether you are saving up otherwise or not. Even if you are switching companies, make sure you switch your provident fund too, never cash on it.
6) Save for your retirement
Apart from your PF, it is always advisable to put aside a significant amount of savings for your retirement. never think you are too young to save for your retirement, the earlier you save, the better. Also, never touch this fund until you actually do retire.
7) Don’t neglect tax or tax saving tools
Whatever investments you make in the stock markets, be aware of the value of tax payable by you. There are also tax saving investments such as the public provident fund or the national savings certificate and so on. Taking into account all of these, this will help you get a better grip on your financials.
8) Thinking of a budget insurance?
Let me tell you right away that it is a bad idea, for you, your family as well as your finances. You might think that paying a low premium will help you save in the present. Correspondingly this means that your insurance cover value will be of less value. The whole point of insurance is to safeguard your family financially after you’re gone, and economizing on your premium is definitely not the way to do it.
Evaluating these checkpoints will definitely help you with your financial planning. There are many other points to take into consideration if you are looking to have a structured plan and go accordingly. The point is, to implement your plan and ensure it works out effectively.