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Written by Maruti Sridhar•
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Nobody knows it all if you’re talking about finance. There’s always room to learn a little more. So here’s a list of seven of the best tips from parents, bankers, and everyone with the experience to give advice. With the below wisdom, you will finally be able to make smart decisions about savings, reducing expenses, getting a home loan, and everything else finance-related to your family!
In This Article
1. Your Family’s Bank Accounts Must Be At Least Five In Number
Having different accounts for different purposes is a smart move because it makes sure you don’t spend money that’s meant for some other purpose. This offers a better perspective on how much money you can really spend on something you’re about to. It also helps you keep in mind how much more you have to save up to meet your financial objective for a specific account.
Keep one account for regular expenditures such as a child’s tuition fees, rent, or monthly bills. Keep another account for household expenses such as groceries. You’ll also need an account for emergencies such as home repairs or sudden hospitalisation due to illness. Don’t forget to keep one account for retirement and one last account for those fun times such as vacations or buying something new that’s mostly a want than a need.
2. Don’t Forget Inflation When Saving Up For A College Fund
The rate at which the nation experiences inflation varies from the inflation rate of tuition fees. Lately, just in the past three decades, we’ve seen college fees go from quite affordable to something you really won’t have the money for without saving. The nation’s inflation rate might be 4% but the tuition inflation rate might be as high as 10%. Especially if your kid is still at a small age, there’s a lot of inflation to be considered as s/he has years of going to school to come.
3. Begin Investing In Your Child’s Tuition Fees With Just Rs. 1 lakh
The investment world can be quite scary, full of technical jargon, fluctuating rates, and complicated equations. However, experts are of the opinion that it’s better to invest than leave money stagnant in a bank’s savings account. It can be quite the bane to get into an investment without knowing what you’re doing.
Get into the investment game once you’ve properly studied up. Don’t think that following in someone else’s footsteps will get you rich. Follow your own path considering your own objectives.
If you’re a parent of a young one with years to go till college, experts suggest putting your money, even as little as Rs. 1 lakh, into, say, one equity fund. It might be riskier but it’s more rewarding too, which is what you need right now.
4. Make Sure You Have A Financial Plan With Your Loved One
Different strategies work for different couples. What is clear is that you need to have a strategy worked out with your partner. Being unclear on how to spend money and where money is going can lead to quite the amount of stress and might even lead to arguments. Some couples prefer to have a fixed budget in mind, while some couples (where both work) prefer to spend one’s salary and save the other’s. See what works best for you and your partner.
5. Save For Retirement
It’s quite obvious, the sooner you start saving, the less you have to put away each month foryour expenditures after retirement. If you begin at the age of 30, you might have to save only a tenth of what you would have to if you begin at the age of 50. Start saving now!
6. Talk To Your Children About Money
Kids should know the significance of money, what its purpose is, what to spend it on (the difference between needs and wants), and how to save it. They need to learn the importance of hard work. Let them earn their allowance instead of just being handed one. The earlier they get financially educated, the better.
7. Money Is Not The Ultimate Goal
It’s always good to keep your money on your mind and your mind on your money, but don’t lose track of what’s really important in life. Family, being loved, and friendship are just three examples of things more important than money. In every decision you make, remember that your children are looking to follow suit. So, put people and relationships before materialistic possessions. Your kids will likely learn the same.
Keep in mind these seven tips and you’ll find that you’re in a lot better position for the future. Without a good plan in mind, you’re likely to eventually come down to the level of living from pay cheque to pay cheque, which spells disaster for the future. It isn’t too difficult to stand on your feet with just a little forethought and strategy.
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