Is it even possible to stack up savings, repay your debts and still have enough money to have fun? Well, read this article to find out!
The current generation has moved on from its predecessor’s two-fold need of saving money for the future and repaying debts by adding another ingredient to the recipe – spending on entertainment, travel and fulfilling experiences. Achieving this, however, is obviously easier said than done. In fact, one might even wonder if it’s even possible.
Well, while it’s certainly a difficult task to get even, say, two of these aspects under control, it doesn’t mean you can’t achieve perfect harmony between all three aspects.
Ok, How Do I Start?
Ah, we thought you’d never ask. The first step towards realising this goal has to be introspection. You need to analyse your current scenario and establish a starting point. When it comes to savings, see how much you’ve managed to save so far. Also look into whether your existing savings plan is realistic or not.
Once you do that, move on to your debts. Get an overview of all your outstanding amounts from your existing Loans and Credit Cards. How do you do this? Simple – get your FREE Experian credit report.
Once you have a fair idea of how your repayment scene is going to be for the next few years, shed some light on what kind of entertainment you consume and how your spending pattern has been of late.
Now, you’ve taken your first step towards aligning your financial planets. As you take the next step, your role is to now give these three elements a habitat where they can co-exist, and we’re here to tell you how!
Additional Reading: Money Management Tips For Millennials
Part 1: Stick To A Realistic Savings Plan
In order to create an environment that’s conducive to savings, debt repayment, and entertainment expenses, you need to ensure that you have a savings plan that doesn’t hurt the latter two aspects. For instance, let’s say you earn about Rs. 1 lakh a month and have monthly EMIs of about Rs. 25,000 to pay off. Let’s also assume that your respite from your routine is to travel every weekend – for which you spend about Rs. 10,000 every month.
Now, before deciding how much you want to save up every month, factor in the two above amounts, i.e, Rs. 25,000 and Rs. 10,000 by deducting them from your income of Rs. 1,00,000. Now, you’re left with Rs. 65, 000. Depending on where you live, your day-to-day expenses need to be considered and only then can you arrive at a savings amount that’s comfortable. If this is not planned out and you go ahead and choose a high savings amount, you’ll find yourself cutting back on other aspects of your life.
Part 2: Don’t Take More Credit Than You Can Manage
Credit Cards, Personal Loans, Car Loans, Home Loans; these are all very powerful financial tools that bring a lot of convenience your way. However, you need to know how to time your credit decisions so that you don’t end up having too much debt on your plate. Space out your credit applications and prioritise what type of credit you need most. Once you do this, choose repayment tenures and loan EMIs that won’t hurt your savings on a monthly basis. Not factoring in the above elements will either hurt your savings plan or force you to cut down on entertainment.
Additional Reading: How To Use Home Loan EMI Calculator
Part 3: Find Your Calling
Today, there are a number of things one could do to feel refreshed, entertained and alive. Find out the one thing your heart wants you to do that makes life worth living; it can be art, music, travel, exercise – basically whatever defines you out of your workspace. Find your calling and don’t just look at it as something you do to pass time on the weekends. As important as it is for us to invest money for retirement, it is equally important to make your present life wholesome by expressing the other side of you that not many see. Your creative outlet needs a certain amount of investment – if you’re into travel, do it wholeheartedly. Like photography? Get good equipment and spend on exploring the world. This goes for anything – whatever you love doing, do it with conviction.
Additional Reading: Financing Your Travel – The Smart Way
Now what happens if you choose to drift from one passion to another? Chances are you won’t be able to seriously channelise monetary funds into any of them, and this will hurt your savings and make your EMIs look more intimidating than they are.
Nail these three aspects, and there’s no stopping you!