Signs That You Are Good With Money

Try to answer the following questions for yourself by choosing one out of the two categories-

• Are you still driving around in an old or unsafe car since you can’t afford repairs or a new car, or can you upgrade your car for a safer one at the drop of a hat?

• Are you constantly worried about being behind on bills, or are you looking forward to an upcoming holiday that you have fully paid for?

• Are you always counting the days until payday, or are you content with your current financial situation?

You know, as a vicenarian, I used to believe that it is absolutely normal not to know how good or bad we are with money. But then this pandemic situation happened, and it was like a wake-up call. It actually made me realise that now is the time to become aware of my current financial situation and work out how I can master building a financial future while making myself more comfortable in the present.

So I am sharing a list of signs that’ll help you judge how good you are with money, see how many of them apply to you-

Living with your means is a critical part of staying in the black and growing your wealth. So first, you have to figure out what your means are.

Once you have an idea of how much you earn and how much you spend, simple arithmetic will reveal what you can or cannot afford.

You can afford housing and utilities, food, transportation, college fees, and other essential needs every month without going into debt.

You don’t worry about whether you can afford lunch with coworkers or about purchasing the latest smartphone or camera you’ve been eyeing.

You can cover all your necessities, afford things you want, not just the ones you need, and still stash away funds for your future or emergencies.

Possibly you haven’t started putting money away yet, but considering what you want your retirement to be like and how much it would cost is itself a good start.

You’ve foreseen, priced out, and already started planning on how to afford an asset in a few months or a year from now.

You keep a check on your credit score and try improving it since it helps the lenders decide whether they’ll lend you money for major purchases, such as a car or a home.

You avoid bad debts, such as credit card debt and high-interest rates, since they don’t help you build wealth or assets.

You are ahead of the game if you have regular conversations about your financial reality and future with your partner.

Wealthy people value continued self-education and read to learn more about the world. As the saying goes, “The more we learn, the more we discover how much we do not know.”

Rather than putting all your savings in the bank, you invest your money since it has the potential for growth far more than what you’d see in a traditional savings account.

So how many of them apply to you? If they all do, then pat yourself on the back for being an incredible financial manager!

5 Easy Steps To (Re)Build An Emergency Fund

An emergency fund is a protective cover in the event of an unexpected financial blow. It helps you carry on with life and meet your obligatory expenses such as expenses for food and medical treatment, rent, basic repairs and maintenance, school/college fees, monthly instalments of loans, insurance premiums, and anything you feel is indispensable without disturbing your savings, opting for last-minute, unplanned loans, overutilizing your credit/debit cards, or selling and mortgaging your existing assets.

So here are five easy steps to build an emergency fund-

To create an emergency fund, you may first need to factor in obligatory expenses that are necessary. However, there’s no standard definition for what qualifies as obligatory. For instance, affording support staff such as domestic help or chauffeurs may be mandatory to some; many may find gym membership impossible to forego even in times of financial distress.

The bottom line remains that no matter what your set of obligatory expenses are, you need to reserve enough funds to meet them.

Initially, you need to set a reasonable goal for your emergency fund, perhaps ₹50,000, which can cover a wide range of your obligatory expenses or unavoidable emergencies like — a car repair, last-minute travel plan, some out-of-pocket health insurance costs, etc.

Create separate savings account for your emergency fund, and begin with direct, regular deposits, no matter how small the amount is. Add any overtime pay, bonuses, gift cash from relatives/friends and the refunds you receive into this account.

Next, rework your budget and cut your expenses as much as you can. Use cash instead of credit and pay down your credit cards. Develop the habit of making a list for grocery shopping to avoid impulse purchases, and it’s better to cook at home rather than eat out.

Here’s a complete list of Ways to Cut Your Expenses.

With a disciplined approach, your fund will begin to grow. And over time, you will be tempted to buy something for yourself or a loved one. Be careful; do not sabotage your goal — and your future — by spending your stash impulsively.

It is crucial that you continue to be disciplined. Repeat to yourself that you only want to access this money in case of a “true emergency”.

Finally, it’s better that you learn the importance of keeping the emergency fund intact. Every time you withdraw some money, make a habit of rebuilding your emergency savings for the next thing to come. It’ll surely help you to relieve financial stress in times of future emergencies.

Enjoyed the post? I’d love to read your views in the comments section! 🙂

5 Reasons Why You Need An Emergency Fund

The one thing that the ongoing pandemic has taught us is that an emergency can strike at any time, and you can not do anything about it other than being prepared. A crisis such as a natural disaster or a health condition that keeps you off from work, or even an economic downturn causing job losses and salary cuts might not be under your control but ensuring that you have enough funds to steer through is indeed under your control.

So how do you go about your life and meet your essential expenses in times like these?

Well, the answer is simple- build an emergency fund that could help you sail through. Read on for five reasons you should have an emergency fund.

If you have one source of income, it is necessary to have a solid emergency fund. This can help you get through an illness that keeps you from working or an unexpected job loss.

If you are single, start working on building up your emergency fund as quickly as possible. It's better to have 3-6 months of expenses in your emergency fund. If you are married, you must have at least a year's worth of expenses in your emergency fund. You can gradually build up a larger emergency fund to ensure the extra financial cushion.

Repairs and upkeep are an inevitable part of owning a house. Home repairs can be expensive, so it's better to set up funds to cover remodelling and most repairs, like plumbing or replacing an air conditioner.

The emergency fund can help you handle such costs and make owning your home a bit less stressful.

It is expensive to travel home these days, and the costs go up if you are travelling last minute for an emergency. An emergency fund helps cover the cost of last-minute tickets to go home or visit other family members in case of a medical emergency or a funeral.

Medical issues and routine checkups can be costly, and insurance companies may not pay everything you expect them to pay. You may also run out of your sick leaves and end up taking additional days off without pay.

An emergency fund can help you deal with such costs and make it easier to get through these challenging times.

An emergency fund can help you reach long-term financial goals like owning a home or a car, a world tour or Europe trip or even starting a business without dipping into those savings when unexpected expenses crop up. This can prevent you from taking a step backwards with these financial goals.

Just think of your emergency fund as an insurance policy that helps you protect your savings against unexpected expenses.

Enjoyed this post? I'd love to read your views in the comments section!🙂