If you decide to ignore building an emergency corpus or not taking a Term insurance, it can have serious implication on your financial health. Take a look at some financial decisions that you should not ignore.
Life is all about making the right decisions at the right time. The choices you make today will have a significant impact on your life ahead. Among these decisions, financial holds the top priority as it will decide the future course of your lifestyle. Therefore, it is crucial that you make prudent financial choices so you don’t have to regret any decision years later.
Let’s take a look at 7 decisions that are best avoided to keep your financial life healthy.
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Not Giving Budget A Priority
A good budget helps you make the right decision on necessary expenses and keeps you away from ones not required. Budgeting would help you in saving money that can be used in accomplishing financial goals and lead a healthy and prosperous financial life. If you postpone the decision of prioritising your budget, it can have a serious impact not only on your financial life but may affect your personal relationship s. There is no right time to start with this incredible decision. You can reap benefits of budgeting even if you begin now. But not doing so certainly is not the way to move ahead.
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Not Giving A Thought To Emergency Fund
Emergencies come unannounced and it is always wise to be prepared to deal with them. An emergency fund can bail you out of any tough financial situation like job loss and keeps your financial planning on track. Creating a corpus for emergencies should be on top of your financial checklist. In case you don’t have an emergency fund, you may end up in debt as you would contemplate borrowing for unavoidable needs. You can create an emergency fund by saving money in Fixed Deposit because liquidating it during an emergency is an easy task. But this doesn’t mean that you break your FDs to splurge on unnecessary things. If you don’t take this crucial decision, it may put you in debt which certainly is not a good situation to be in.
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Buying Things That You Can’t Afford
Some financial decisions have the potential to hurt your finances in the long term. One such decision is buying things which are beyond your affordability. Buying things, like a brand new vehicle when you cannot afford it may strip you off crucial funds that are needed for other more important financial goals. You may also rely on loans to fulfil your desire, while you may not have the required capacity to pay it back. The better way would be to plan for necessary things and invest in instruments that can help you fulfil such desires in a slow and steady manner.
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Spending Through Credit Cards But Not Repaying
Credit cards are a good financial tool if you do not overspend on them for borrowing. People often buy credit cards to tide away shortage of funds. It can be a boon if you use it responsibly and make all the payments before the due date. If you do not pay on time, then it you might end up in debt trap. Credit cards have a billing cycle and grace period within which you must repay credit card dues or pay high er interest. It makes sense to go for a credit card only when you have the capacity to repay it else it can become a huge liability for future.
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Not Planning For Retirement
This is another important decision which should get an attention in the beginning of your career. Retirement is a process that is inevitable and you should be prepared how to deal with it financially. When you retire, a regular flow of income may cease to exist. You will have to depend on the investments that you made in your young days for meeting your regular expenses. If you decide to not plan for retirement now, then you have to compromise on your lifestyle some years down the line.
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Not Buying Important Insurances Like Term and Health
Term Life Insurance comes to your family’s rescue in case of your untimely demise. The policy provides an assured amount to the nominee if the insured person dies during the tenure of the policy. It is wise to go for the policy now as it will not only ensure financial protection for your family, but will also be cheaper premium wise. A Health Insurance cover is also a must in today’s time. With the medical costs on a rise, a health insurance ensures quality healthcare along with affordability. It is best to avail a health insurance plan when you’re young and healthy as premiums are low. If you opt for not going for any of the insurances plan, then you may regret it after a few years because you may end up paying higher premiums depending on your age and health.
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Investing In Instruments Without Any Knowledge
You should not buy financial products which you are not aware of. You should invest in financial products only when it caters to your need and goals. The internet empowers you to do a thorough research through comparing various products. You should not go for a financial product that is strongly advocated by your friends or relatives but is not in-line with your financial goals. If you follow any advice blindly, then you may end up spending money on instruments which are not beneficial for you.
For a healthy financial life, do not ignore your spouse and keep him/her in the loop for crucial financial decisions. Also, do not make a wrong choice of being a guarantor for a friend or a relative as any default by them will also make you responsible for repayments. If you do not have any clue about the investments, then do not take decisions on your own. Take the help of a financial advisor for investing your hard earned money in the right instruments.
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