Are you in track of your financial goals?
After a lot of analysis on ones financial situation goals are set, so it is very important to keep them in track. To see if you are in track of your finances, check out the below points.
To check out if you are in track of your finances, make sure the below mentioned points are adequately covered.
Emergency fund: First of all get out of your debts. If living with any kinds of debts, paying it off will be of the smartest financial moves before looking into other prospects. An appropriate emergency fund is the starting point of one's financial planning. If you do not have an emergency fund, it is always advisable to start one immediately for unforeseen casualties. People with elderly parents without health insurance, or suddenly losing job or helping a family member in dire need; should keep a certain amount at home or liquid fund or short term debt fund. It is advised by financial planners to have a liquid margin of at least 3 months take away salary as emergency fund. In this way during emergencies one does not have to break FD's or dip into their investments.
Insurance cover: Protecting ourselves and the ones we love is in our nature. So having the proper insurances is a main priority. With sky touching medical expenses, health insurances cover is very important. Having an appropriate insurance protection will prevent one from financial disasters. Compared to medical insurance, life insurance is secondary but it shouldn't be missed. Among the many varieties to choose from, financial planners recommend sticking with, pure protection plans, i.e term plans. "Instead of money-back or endowment or whole life policy products which are basically investment type, one should go for term insurance which is mainly security product" says Suresh Sadagopan, a Mumbai-based financial planner. Keeping that in mind, choose appropriate insurance coverage and secure yourself.
Investments: Investing in proper asset classes in considered to be one of the good financial habits. "People already investing should re-check their portfolio not in a gap of 6 months or a year but at least once in 3 years" adds Sadagopan. For starters, choose wisely what suits you the best from the various types of investment vehicles that are available. If investing for short term goals like buying a house or a car or marriage in 2-3 years equity oriented products are not appropriate as it in volatile in nature and no one knows what will happen to a equity fund in 2 to 3 years. Debt funds should be considered for short term investments; whereas for long term equity funds are the ideal option. Investing certain amount in equity mutual funds through SIP, is a good way to start.
Retirement planning: Many people think they are not old enough to start planning for retirement yet and decide to start doing it in a more peak time of their career. Nobody can be more wrong, retirement planning is one of the most significant goals. People do not take it seriously; thinks that their children will take care of them but being financially independent even after your retirement will give you peace of mind. If you think you'll start saving for retirement at 40-45, think again. Starting at 45, to reach the desired retirement goal, you need to save a big chunk of your salary; but if it is started in the early years, it will be so much easier to reach the goal. If needed drop\compromise some of your short term goals like an expensive watch, to have a proper and peaceful after retirement life.