Planning finances is very important in order to spend the latter and riper years of your life in a stable and comfortable manner. This financial planning needs to come at a time when you are earning and are doing so in a stable way. A stable financial planning is very much required. Here, we discuss the five golden rules of finance which will help us in our future needs and endeavors.
Finances – The Golden Rules
1. Have a plan
Having a plan is very important for doing anything in life. This is a golden rule which can eliminate any financial sin. A plan acts as a framework through one’s financial journey and will help one get back on track even if he or she suffers several dents or mishaps during an investment. A plan helps to avoid the panic of a financial crisis. Try to calculate your existing worth and identify the needs for which you will require money in the future. Include various crisis and changes in inflation in your calculations. Connect your investment to your goal and try to invest. Remember Warren Buffet is what he is because he is a great investor.
2. Secure your family
Do not let your intent to invest make you forget to cover your risks. Securing your family and finances by creating an insurance portfolio is very important. A number of people buy insurance to save themselves from taxes but it is important not to mix up your insurance and investments. The basic of one’s insurance pyramids should comprise of protection plans. They include death, health issues, medical problems, accidents, income loss due to instability, etc. The amount of cover one takes depends on their life stage, age, income, and requirements. Consider the insurance policies which may help you to reach your goals as well.
3. Do not ignore taxes
Taxes are like death, they will never go away. While rules may come and go, taxation will not. Only the rate of taxation will differ from time to time. It affects every aspect of one’s finance starting from income and allowances to investments. So never ignore your taxes. Try to look at taxes as a way of reducing your losses and improving your gains. Try to consult a professional from time to time. Planning your tax saving expenses at the beginning of the financial year by calculating exemptions is very important.
4. Assess your investments
Creating all these plans and portfolios will all go to waste if you do not monitor and assess your investments regularly. A regular checking and assessment will help you mark your progress towards your goals and may help you to update your goals. You can make your goals better or take corrective measures depending on the situation.
5. Be aware.
A good financial plan not only involves investing and monitoring the progress but it also involves being aware of the current market scenario and not to lose your hard earned money to identity thefts, frauds, and ignorance. The more unstable the market is, the more this rule holds good.