Looking For Financial Security? Here’s What To Avoid

By Sanesh Mathew | December 21, 2017

Do you want to become financially secure? Here are a few habits to avoid if you want to comfortably attain financial security.

Looking For Financial Security? Here’s What To Avoid

Do you want to become financially secure? It isn’t a daunting task, trust us. You just need to practice some sound money habits and plan your finances properly to reach there. Well, we aren’t going to tell you how to plan your finances or what money habits you must develop. But we are going to tell you what habits you must avoid when you’re looking to attain financial security. Here you go!

Additional Reading: Financial Planning Ideas To Make Your Money Grow

Over-spending

Pretty obvious, we know. But it’s important to take your spending seriously. It’s time to forget that Prada, Gucci and Tommy Hilfiger exist! (Unless your Credit Card gets you a great deal on your purchases, of course.) It might make more sense to save or invest this money and grow your wealth instead.

Additional Reading: Don’t Just Save, Invest

Things like treating yourself to a quick dose of retail therapy to beat your boredom also qualify as over-spending. Though these expenses may seem harmless, they tend to add up and ultimately affect your financial bottom line. If you are serious about saving money for your financial security, you have to identify your spending triggers and work on them. That’s where tracking your expenditure and creating a budget becomes a necessity.

Estimate your costs and live economically. That’s the key to financial security. We all know that that living on a budget requires a lot of planning and effort, but it is worth it if you are aiming for financial independence. Budgeting allows you to keep track of your expenses, provided you factor in all your expenses, even the unexpected costs, while estimating your expenditure. Remember that your budget and how well you stick to it has a direct impact on your debt ratio.

With proper budgeting, you will be able to save enough money every month to invest in profitable investment products. Keep investing to grow your wealth and financially secure your future.

Additional Reading: How To Balance Your Income And Expenditure?

Not Diversifying Your Investments

Want to become financially secure? Invest across assets based on your risk appetite. As the saying goes – don’t put all your eggs in one basket. If you’re going to keep all your money in a bank account, you’re not giving it the opportunity to grow. While it is wise to put some of your money in a Savings Account, it is wiser to invest across different avenues. There are a variety of investment options out there – Fixed Deposits, Mutual Funds, ULIPs, property, gold, etc. Putting your money across such avenues according to your risk appetite is ideal for growing your money and securing your future financially.

Additional Reading: Different Types of Asset Classes

Tax-Saving Investment Options Under Section 80C

Diversification also helps you reach your long-term financial goals easily, while minimising the risks (it does not guarantee against risks or losses). You need to keep in mind that risks cannot be completely eliminated no matter how diversified your portfolio may be. However, you are more likely to get decent returns by investing in different assets.

Not thinking about your family

If you’re aiming towards financial security, then you need to plan for your family too. A Life Insurance and Health Insurance policy is a must and will help secure your family in case something were to happen to you. An emergency fund isn’t a bad idea either.

An emergency fund is usually a sum of money that you put aside for the unforeseen circumstances like loss of job, an accident or a medical emergency. These things come unannounced and you need to be financially prepared for such times beforehand. Ideally, your emergency fund should consist of at least six months of expenses for you and your family.

Additional Reading: How To Build An Emergency Fund?

Next, you should opt for a comprehensive Health Insurance cover for you and your family members. A Life Insurance cover provides your dependents (spouse, children and parents) with much-needed financial security if something were to happen to you. The insurance money that they’ll receive will help them to take care of their needs and lead a comfortable life. Now, you wouldn’t want your loved ones to face financial struggles after your death, would you?

Additional Reading: FAQs On Health Insurance In India

Get-rich-quick schemes

Anything from bets to gambling to investing in unregulated products to trusting unauthorised investment companies falls under this category. Never heard of a particular product or company? Steer clear of them. They may apply pressure, offer discounts or even promise to make you rich overnight. They may even be armed with credible websites and materials, but no matter how much they coax you, you shouldn’t give in to fraudulent schemes.

Some of us are may be easily drawn in by get-rich-quick schemes because we all want to become rich as fast as possible. It is this mentality of ours that fraudsters cunningly take advantage of. We end up destroying our finances by trusting and investing in such schemes. So, although investments are a great idea, you need to be aware of where you are investing. Don’t blindly invest, please!

Additional Reading: Want To Be Rich? Focus On These 5 Money Goals

The bottom line

Always remember that it takes a great deal of proper financial planning to attain financial security. Break free from the financially-harmful actions mentioned above and you will be able to unlock a wealthier and happier life (at least financially).

Need a little help to kick-start those investments? We’ve got you covered.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.
Category: Investments Tax savers

About Sanesh Mathew

A talkative sleepyhead, Sanesh, enjoys watching horror movies, listening to music, reading all things related to personal finance and wandering aimlessly (walking meditation, he calls it!). He refers to himself as a 'simple human being with a rather chaotic mind'.

Leave a Reply

Your email address will not be published.