How to gain control of your financial matters? Tips to get out of debts.

Finance is one such aspect of our lives that are way too important, yet we fall into circumstances that let us regret later on due to our bad decision. 

We will face various problems which are related to financial matters. No matter how good the financial system is. There will always be bad days and good days. 

How we handle and react to specific problems would define the days to come. Well, that is why choosing the right decision is all that matters. 

Today we are going to dive deep into these delicate financial matters and find out the process which could gain control of our financial dealings. 

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How to gain control of your financial matters? 

When you earn money, you should be able to manage it else it is of no use. 

To start earning might be tough in the beginning, but it gets easier as time goes by. You are used to the process of earning it. Yet you fail to make savings due to bad financial management. 

Here is the hard part. Most of us hardly know the trick of saving money. Spending is what we know at best. 

When it comes to matters related to finance, it is never too late. But you need to take immediate steps to cover up the loss that you have incurred. 

Start investment at a young age 

Save before you spend it. The amount that you save should be at least 20 to 30 percent of what you are earning. 

The reason is quite simple. With time everything is going to be costlier. 10 years from now the value of money would decrease drastically. 

There will be a time when the value of ₹ 100 would be the same as ₹ 10. Imagine living in this condition! Is it sufficient to save 20 percent of what you are earning? 

The amount that you saved should earn a good return too. The advantage of starting an investment at a young age makes a huge difference. 

The reasons are 

  • You could take a higher risk. 
  • Higher risk means attractive returns. 
  • You would get a longer period to stay invested. 
  • A longer period of investment means good returns due to the compounding effect.
  • Early-age investment is cheaper in terms of insurance premiums. 

You may refer to the bank’s official site to see the various customized product available for its customers. Forbes India has listed some of the avenues for effective investment. The author has put it nicely and covers all the popular investment options.

Pay off the debts

Paying off the debts is the best thing you do if you are planning for financial growth. 

Observe your financial inflows and outflows. If you are having loans and advances. It will be hard to earn good interest on your deposits. 

Whatever you earn, would be used to pay off the EMIs and interest expenses. 

Put the main focus on how to liquidate those debts you have. Make a plan if needed and set deadlines to pay off the debts. 

Save more spend less

Having a saving habit is a good initiative toward achieving your financial goals. Whatever amount you earn if you keep a tap on your expenses, you would get a better bank balance.

Spending is easy. Everyone does. The only difference is some people do not spend on useless things which others do without giving it a second thought. Once you spend it, puff! it is gone. 

Health insurance

Health insurance is something very important part of an investment. If you seriously think of good financial management, you need to enrol on a good health insurance plan.

It will avoid income leakage toward paying medical bills which are pretty much high. In fact, all your savings and bank balance would just go down to zero in case you got suddenly sick.

Health insurance is a good contingency kind of plan. Who knows tomorrow! anything can happen when luck does not favour us. Believe me, life is not always the way we plan. Sometimes it would hit hard and this insurance policy would really defend the financial losses one would incur.

Starting a health insurance policy at an early age is recommended. The premium would be cheaper too. Moreover, you would have the choice of opting for a fixed premium too.

Avoid taking loans

Availing of loans and advances is one such area that really hampers the opportunity or capacity to generate one’s future income. 

Bank does not give loans to charity. It is their bread and butter. They would take charges, commissions and fees from you besides paying a certain interest rate that comes with the loan. 

These interest rates may vary from bank to bank and are also linked with particular types of loans. SME loan normally has a higher rate as it bears higher risks. You may see the rate of interest for personal loans in the range of 9 to 12 percent. Excluding loans against FDs, Gold ornaments, Agricultural loans etc.

Think twice before applying for a loan. Try to see the future outcome. If you could compensate the interest that you are going to pay with investment. It is okay to get the loans, but keep it as a last resort whichever is possible.

There are certain loans and advances which you will have to get it anyways. These loans include Home Loan, Car Loan and Education loans. Home loans and education loans are good as they would help you while applying for tax exemptions.

Understand your account and streamline the cash flow

It is important that you know about your savings bank account or current account. 

Understanding your account means knowing what comes in and what goes out in your statement of account. 

For this to know you would need a statement of account. You may get it online or from the bank. Pick a range of months, and go through all the credits and debits in it. 

You would find entries like interest credits every month or quarterly. These are the interest you earn for keeping funds in the bank.

On the debit side, you may see various charges and fees bank levies on your account. These transactions are seen in the narration given below

  • Excess transaction charge (When transaction limit exceeds) 
  • AMC ATM card (Annually) 
  • Transaction charge 
  • Cash handling charge (Whenever you do cash deposit transaction) 
  • SMS charges (Monthly or quarterly) 
  • Penalty for not maintaining a minimum balance. 
  • Cheque bounce charge (Service related) 

Other than the above bank levy commission on the certain transaction such as draft purchase, NEFT, RTGS etc which does not reflect directly in your account statement. 

By understanding your account, you might get benefits. As there are account variants that have free usage on certain transactions. 

Account such as the Corporate Salary Package of SBI has lots of benefits. High-end account products also normally come with freebies. 

Using such type of account may save your income leakage. Not to mention that CSP accounts are for a salaried persons only. 

If you are not salaried then opt for accounts which is a high-end product. Though you might have to maintain a certain amount in the account you would get a better offer. 

Budget your expense

Budgeting is one such thing everyone must be aware of. 

Monthly expenses as well as big expenses in lumpsum should be dealt with extra care. Let us talk about the budget for monthly expenses. 

Plan what you are going to do this month. The first day of the month is good for preparing the list of expenses. 

Write down the expenses you are going to do this month. Be thrifty, it is okay. Here the trick is not to go beyond what you can spend. 

Let us take an example. If you earn ₹ 10000 a month, ₹ 2000 to ₹ 3000 should go to investment. The rest ₹ 7000 is for you to manage your living. 

Out of this ₹ 7000 you need to keep some reserve to avoid touching your invested amount. With the remaining amount after the reserve amount is allocated, you have to arrange your monthly budget. 

How to get rid of debts? 

Being in debt is not a good feeling at all. It is depressing for anyone. No one would want to be in debt but somehow we do. 

So, How would you get rid of being in debt? The saying is easy, but when things materialise it kind of nerve-racking. 

A good plan with discipline is what it takes to get out of debt. Of course with a few sacrifices you have got to make. 

Until your debt is over, you have to be thrifty. Those leftover fund needs to be adjusted with the debts. Debts with the bank are manageable but debts involved with the third party become quite serious. 

Where you would have to negotiate the terms of repaying back which would arise uncertainties. The creditor might ask you to pay in full. 

So, here are the tips to get rid of debt. 

  • If you have high debts in the bank as a loan, increase your EMI amount. 
  • Avoid using credit facilities. For urgency credit card is great but relying totally on them is a blunder mistake. 
  • Debt to someone? Negotiate the term of repayment. Make it simple and quicker liquidation. 
  • Make a timeline to close all the debts. If you have multiple debts, settle first which has the highest interest rate. 
  • Spend less and concentrate more on paying off debts. 

Having control of your financial matters is a must. It would lead you to a happy content life in future. A contingency plan should always be in place as you never know what would happen tomorrow. 

Ensure your property, health and life with good plans. These would protect your savings and investment. Last but not the least, stay away from bogus calls and fraudsters.

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