Mistakes are stepping stones for success, because, mistakes will make us learn valuable lessons, when we realize and correct them. Similarly, financial mistakes can be rectified by realizing committed financial mistakes and there of not committing them again. This objective approach towards personal finance when applied with a few simple regular exercises can help us in re-building our finances
So, when we realize that a little adjustment in our behavior can amend our approach to personal finance and save us from the consequences of our past financial mistakes, why not give it a try? Honestly, it is never too late to start all over. Imagine a liability free life that guarantees one the much needed good night’s sleep.
So what’s the action plan for someone who eventually realizes and accepts his/her past mistakes? Here you go-
Budget your expenses:
Understanding one’s cash flows is a challenging task. It requires one to understand his/her inflows (income) and expenses. In general, people ignore to capture their expenses and demarcate their savings leading to over-spending. In order to determine the savings, it will be a wise step to first calculate the expenses and then compare with income instead of going the other way round. One should also maintain surplus cash to deal with unexpected expenses.
Avoid credit cards:
Possessing a credit card has become as easy as opening a bank account. In some cases credit cards are offered during the opening of a new bank account. If we get lured by the offering, then we are introducing ourselves to liability. So, if one can manage his/her expenses, then there’s no need of a credit card.
Avoid unnecessary assets:
It is common that we accumulate assets which are unnecessary to us. For example, most of us acquire second home by taking extra loans thinking it would help them avail an asset and therefore tax benefits on their income. However, when there is no inflow, tax benefit cannot be applied on EMI payments that one is liable to pay the bank irrespective of anything.
Fight your fears :
To build wealth, one has to invest in equity based investments. Traditional investment schemes may offer negligible returns that may not withstand the market inflation in days to come. So, to help money grow, invest it in equity based investments according to your risk capacity. One should remember that our incomes are not going to grow with the rising inflation and the only way to ensure that our investments at least stay above inflation is by way of investing in the equity based investments.
We can re-build wealth by rectifying committed financial mistakes and following simple regular exercises. So, get started with keeping a steady check on monthly or bi-monthly expenses, staying away from instant gratification of a loan or credit card offer. For more objective assessment of personal financial state, a personal financial advisor is always a great contact to get in touch with.