ASK A PHYSICAL THERAPIST
- 25 Mar - 31 Mar, 2023
Pay yourself first is the very first rule of personal finance. That means keeping aside a certain percentage of your monthly income before it’s consumed. Remember the 50/20/30 per cent saving rule wherein 50 per cent of your income should go towards basic living expense needs, 20 per cent to savings for your short, medium and the long-term goals and the rest 30 per cent towards wants which are not essentials. You also need to set aside a welfare fund for emergencies. This should be sufficient to meet your three to six months’ worth of household expenses. Life cover is another essential and crucial requirement one must plan for. Ideally, one should have a life cover which is eight to 10 times your annual income. Remember, there is no ‘one size fits all’ approach to financial planning. Every individual’s finances need amendments depending on the risk profile and situations. Start off by being prudent and strategically allocating your finances. However, over time it is essential to review and make changes in your plan to enjoy healthy saving.
To begin with, we as adults need to set an example to generation next on how to save money, how to budget our purchases and on spending habits. Kids observe every time we swipe our credit/debit card and purchase a shopping cart of products. However, they may sometimes fail to understand where the money comes from and the value of the products purchased. It is important for the parents to make them understand how this card works and how it gets uploaded with cash so we can make our purchases. Another way to teach children financial planning is to give them two money boxes – one to use for savings and the other for earnings to be used to make purchases. Another way you can help them learn the art of finance is by asking them to create two lists – of what they want and what they need. The two lists will help them understand the difference between wants and needs and will go a huge way in making them realise the value of products and of money while also teaching them valuable lessons in financial planning.