What’s a life without dreams and goals. They not only inspire us to do better but achieving them also gives us a unique sense of fulfilment. Unfortunately, dreams come with a price tag these days. Whether you want to go on a vacation, buy a fancy car or get your hands on the luxury bag that you have been eying for so long. It all costs money and sometimes, lots of it. Given your day-to-day expenses, indulging yourself may seem like a distant dream.
The good news is that you can achieve your goals without comprising on your financial independence. All you need is a strategic plan to keep your finances in order. As important as it is to have a plan, it is equally essential to start early in life. It will ensure a healthy investment portfolio and financial security at a later stage.
Here is how you can carve out a plan for yourself:
List your financial goals
The best place to start is by listing down your financial goals. It could be to buy a house 10 years down the line or buy an expensive gift for your mom’s next birthday. This list will give you a realistic idea of the amount that you need to save up. You may factor-in other variables like your expected income and inflation for a more accurate amount.Of course, this list may change with your life stage. For instance, marriage and children may bring about some changes in your priorities. It is advisable to revisit this list at least once every year to make the necessary corrections.
As a young professional, you may find it difficult to save in the initial months. You may be more inclined towards splurging on things that you had always wanted to own. Referring to your list of goals may help you in this process. It will put your heart and mind into the right place. It will become easier to compromise once you know it is for a better future. The list will also tell you how much you need to save each month. The best way to save is by putting aside your monthly savings in a different bank account and spending what is left.
Prepare a monthly budget
Spending without a budget is like searching for a location without GPS. You wouldn’t know which way to go. Budgeting is a simple exercise of creating a plan to spend your money. You can create different buckets for different expenses like bills, food, entertainment and shopping. Preparing a budget in advance will tell you exactly where you are going wrong. For instance, you may be spending way too much on take-outs without realizing it. It may take 3-4 iterations to reach the perfect budget for your lifestyle and needs. However, a budget will help you in avoiding any unnecessary expenses. In fact, saving will also become easier if you have a budget in place.
Invest your savings
‘Money grows money’ and it is the simplest mantra you can follow to build a bigger fortune. Saving alone is not going to grow your money. To reap more benefits, you must invest your savings in different investment instruments like bonds, mutual funds, securities and stocks. It is suggested to spread your money across several instruments to minimize the risk. You may choose these options depending upon your short-term and long-term needs.
Save for an Emergency
Financial emergencies can strike you at the most unexpected times. If you are unprepared, these situations can wipe out a considerable amount of your savings. It is always better to have an emergency fund to manage such circumstances independently. The thumb-rule is to save 3-6 months of your monthly income in this emergency fund.
With the right financial plan, you can achieve your goals and do much more. These tips can help you in building a healthy bank account and living the life of your dreams.