I believe every aspect of personal finance is equally important. They work in conjunction. Yes, it can be overwhelming, but if you’re a beginner in this area, there are more than a handful of things you must keep in mind—at least to get the right results.
However, but since you have asked, here are 10 crucial personal finance tips that I wish someone gave to me a decade back when I started my first job:
i. Your salary is not sufficient
It’s imperative to have multiple sources of income. Because your salary, regardless how high it is, is not sufficient to survive and plan your future. So come up with better and different ways that will add more weight to your bank account.
ii. You must think about your retirement at the earliest
Many people undermine the importance of retirement planning (I was one of them!). But here’s a thing: you must start thinking about how you’re going you to survive after turning 50 at the earliest. You must set aside a plan and fund for when you’re retired. The late you start, the bigger the problem will be as you approach your 40s and 50s.
iii. Never undermine the medical cost
Medical treatments can (and will) take up a big part of your finance. Be it your own check-ups and treatments or your family’s. So, when planning your finance, do not undermine this aspect. Always set aside some amount of medical cost.
iv. Find ways to legally save on taxes
There are many legit ways you can save on taxes. So don’t try to avoid paying taxes (like many do). Don’t take any illegal means either. Just try to find out ways how you can save some money on your taxable amount. Consult an expert for this.
v. Stop saving in a bank
Yes, saving your money in the bank could possibly be a big mistake. Instead of just leaving your money lie like that, make it work. Put that money from your savings account to mutual funds and FD, and other avenues.
vi. You don’t need to purchase high-risk, high-reward assets
Avoid investing money in high-risk high-reward assets—unless you know what you’re doing. You don’t really need to take any such untowardly risks. See, if you’re in your 20s, you don’t need to take such risks to make money. You have got a long way to go. Remember, there are many ways to make big without even taking such risks.
vii. Have a well-defined budget for everything
Budget management may not necessarily be one of your top priorities, but it’s extremely important. So instead of forming a habit where you spend as you go, have a well-defined budget for everything, right from your daily cost to leisure expense. This will prevent you from overspending. And the amount you save, you can put it in other avenues.
viii. Evaluate your wealth every month
When you evaluate your financial health every once in a while, you stay informed; and when you stay informed, you’re likely to make right decisions regarding your expense and savings. So do spend some time every month to evaluate your wealth. And see if everything is going right or not.
ix. Real estate is one of the best investment avenues
Yes, even till this day, real estate stands as one of the best investment avenues. Even better than gold, whose value relative to inflation has been lost since 1981. So if you can, purchase apartments and lands! Aside from increasing in value and making you rich in the long-term, you can also put them on rent (using services like OYO and Airbnb) and enjoy decent return every month.
x. Avoid the burden of loans
Don’t take loans. Avoid it for as long as you can. Avoid the techniques of taking home loans to save on taxes. Have a clear credit history. Because if you take a loan, the burden will fall on your shoulder for decades, which will often restrict you from enjoying more income from various resources. Whatever extra money you’re making, you will then have to spend it on the repayment of the loan.
xi. Don’t be an impulsive buyer
This is the handiest tips I got recently— even more relevant today when every brand on digital channels are trying to sell you something. If you aren’t cautious enough, you can end up purchasing things that you don’t even require. So get a control on your impulse buying habit. Avoid buying irrelevant stuffs online.
These are 10 (+1) tips about personal finance a newbie must remember. Of course, there are plenty more aspects that you would need to focus on to get good results. But for the starters, start with the mentioned tips. Good luck!
1. How do bots and market whales function in stocks and Bitcoin market?
Well, both of these function to make the most of asset market by edging the small investors on every front. Whales are ultra-wealthy investors who hold a large number of stocks or cryptocurrencies. With their purchasing or selling decision, they can literally change the scope of the market, either creating a positive perception or triggering Fear, Uncertainty, and Doubt (FUD) among the investors.
On the other hand, bots are computer programs, integrated with the inbuilt code of the exchange, that trade on the behalf of individuals. They are super quick and efficient, ensuring the person using it is always ahead in the market – ahead of everyone – in bidding and making the right decisions.
So one is big, other is fast. All the burdens then fall on the medium and small-scale investors who are not only fighting against the uncertainty of the market but also the play of whales and bots.
Remember, trading (stock, crypto, or any asset) is a game where the impatient and less smart pass the money to those who are more patient and smarter. These whales (backed by experts and smart bots) are the more patient and smarter ones. They are constantly trying to beat the small and new investors. If you want to make more money in trading, you must stay ahead of them all the time.