Try these simple steps and let your Money works for you

It's the high time for lovebirds and for employees,as they have to save tax and show tax proof. So as to save tax, we try to find easy and hassle free solutions and those who provide us and support us in doing that seems to be the "True Friend".

But this "True Friend" supporting you is fulfilling either of the three objectives: 

1) Providing you the best solution in economical wise;

2) Helping you in achieving your financial goals; and 

3) He/She might just meeting his/her targets

More often than not this "True Friend" is fulfilling his/her targets by using your hard-earned money. So what should we do? By being financial aware. But millennial's (including me) have found new ways to find excuses such as:

1) I don't have sufficient money

2) I am not aware about the products and their maths

3) I don't want to read Terms and Conditions

Below are 4 simple steps to achieve financial goals, save tax in an efficient way and live tension free:

1) Prepare your monthly budget - We all know most of our fixed expenses like rent, electricity, maid, transport etc. which roughly makes 70% of our expenses, so by deducting them from our salary we know roughly how much we save monthly. Also, list down are there any future fixed expenses which are going to come, like gift for our loved ones, premium for our policies etc.

2) Emergency Fund: Now you know roughly how much you can save, so first thing is to save for any emergency by following either steps:

a) 6 months monthly expense, if you are not planning to quit job

b) 1 year monthly expense, if you are planning for start-up - Best of luck!

How and Where to Save - Either make a Sweep in RD or put them in liquid funds (if you know about them), so that every month some amount of money is being saved and you are achieving your goal....Yes, we are doing it!!!!

3) Term Insurance: Now that "True Friend", might not be our friend but a friend of our parents, who want us to buy LIC/ULIP, sorry "True Uncle", we will not be deceived now, because we know that these policies costs much compared to normal Term Insurance policy.

a) Why to buy - Because we don't our loved ones to suffer financially, when we are not with them. 

b) How much to buy - Buy atleast 15-20 times of your annual salary depending on your age and savings.

c) Criteria - Buy policies of those companies which have good "Claims Settlement Ratio", include "Critical Illness" component and "Waiver of Premium" (Please check my previous posts to know why).

d) Which One - As our generation is tech friendly, we can use different websites to know which policy is better and also they help you in reading that "Terms and Conditions"

e) Where - Buy online, we millennial's love buying most of the things online and also they offer discounts - we Indians crave for discounts.

4) Saving for our future - Now most people will say, we are not left with money post completing 2 and 3rd step, but as we find some rupees in our jeans or books, similarly we can find money to be invested for our future.

a) Fancy Stories - We always hear people telling fancy stories saying we have earned huge money in that particular stock or our families "True Love" of giving money to people in our cities/towns - Just ask few questions to them:

What is their total return?

How much tension they take if someone doesn't pay that money - Which is happening mostly now

b) Where to Invest - Friends simple way to do it is to start a SIP (its like a EMI), as it generates good return compared to PF, NPS and PPF

c) How to Do It - Most of the bank accounts offer SIP through that particular amount...Again Online :)

d) Which fund to Invest - There are so many MFs, how should I chose - so buy a Multicap fund / ELSS and sit for atleast 5-10 years, so let money works for you - You can check my previous posts comparing returns of last 10 years of various Mutual Fund Category.

e) Don't Make it Complex - People think we will be diversifying by investing in 5-10 Mutual Funds, you are not right Mam/Sir - Top 5 ELSS funds have most of the common stocks, so you are increasing your exposure and if you dont believe me, listen to any business channel, they will say, market is coming very concentrated (HRITHIK stocks) - Please check my previous posts, I have done most of the task for you.

4) Medical Insurance - We all think why to buy Medical Insurance, as our Companies are providing it for free, but reality check coming - When we mostly need it (post 60), it is not available, as we will not be working -So buy a medical insurance.

a) Planning/Thinking Process - Before buying any medical insurance, think are you newly married couples planning to have a family and want Medical Companies to pay for the Hospital Bill; planning to get married within a year; should we buy a individual policies or a cover policy for a family.

b) In my view, buy a Cover policy for whole family including parents or a combined family for couple and combined policy for parents because we need atleast 10-15 lac Medical cover for our parents, and we need atleast 5-10 lacs for ourselves (Dont forget, we have medical cover from Company also)

c) Criteria - Buy policies by looking at from when are they covering your hospitalization (Before hospitalization days and post hospitalization days), what room you can avail while hospitalized, which are the diseases being covered, what type of medicines are they covering (Homeopathy or not?), how much hospitals are being covered under their policy (Please check your town/city hospitals) and how much they are paying for ambulance

d) Where to Buy - Compare policies at various websites and buy online (Craving discounts again!!)

Now if you have followed above steps, you are covered in following ways:

1) From any emergency that may come.

2) You have covered your family from financial shock, if you are not there.

3) You are on your path to achieve your financial goals.

4) You have covered from expensive bills of hospitals.

There are much we can do if we have more money left for investments, but I don't want you to have overburden of all the stuff in one go, as you might forget.

Yess, we have done it and we will do it (Will Smith Rocks!). Please also share with friends including "True Friend".

#financialplanning #stocks #retirementplanning #financialfreedom #terminsurance #medicalinsurance #emergencyfund #SIP #longterminvesting