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Path to Financial Fitness

There are a variety of financial products

November 19, 2013 12:20 IST | India Infoline News Service
Introduction

While most of us are aware of the importance of physical health, we are not aware of financial health. In fact financial health is the most overlooked aspect in our lives.

Story

We tend to forget the financial worries are one of the biggest stress factors in our lives. In simple words, to achieve physical fitness it is important to be financially fit. The following ways define the road to financial fitness:

Take a fitness test: By this we mean financial fitness test. Note down all sources of your income on a sheet of paper. Also note down your expenses. If your expenses are less than your earnings the difference can be saved. If it is more, then you are over shooting your income and in a precarious situation. There is some grave mistake and you need to take reigns of financial journey with a lot of control on expenses.

Also you can introspect of the rate of interest you may be paying on your loans, especially Home loan if that is the best rate for you?

Make a plan: if your expenses are more then your income you are really stretching yourself to the breaking point. You have to cut down your expenses consider only bare necessities till the finances ease.

Prioritize your expenses: We all have to spend money on roti, kapda aur makaan. After that make sure you make provision for high interest debt. Aggressively work towards clearing these loans. After this you can consider the foreign trip, expensive electronics, buying a car and also the latest designer jewellery.

Plan your retirement: Traditionally financial advisors ask you to make one third of your saving in short term savings, one third in long term and one third in medium term saving. There are a variety of financial products available in the market to suit different needs. Study each of them carefully so that you have enough money left for retirement and you do not face a situation where you are a burden to your children.

The author is Co-Founder & Director, CreditVidya 


Also read…  There are two sides of the coin to credit cards



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