Basic Rules of Financial Wellness

     

Financial wellness refers to the state of being in control of your financial situation, which

includes making sound financial decisions, building healthy financial habits, and preparing for

the future. Here are some basic rules of financial wellness:

1. Create a Budget

•  Track your income and expenses to understand where your money is going.
• Categorize expenses into needs (essentials like housing, food, utilities) and wants (luxuries or non-essentials).
•  Set realistic limits for each category to avoid overspending.

2. Build an Emergency Fund

• Save at least three to six months worth of living expenses for unexpected events (e.g. medical emergencies, job loss).
•  Keep this fund in an easily accessible savings account.

3. Manage Debt Wisely

• Avoid high-interest debt (e.g., credit card debt).
• Pay off existing debt as quickly as possible, focusing on high-interest debts first.
• Avoid accumulating new debt unless necessary, and use credit responsibly.

4. Save for Retirement

• Start saving for retirement as early as possible, even if it is a small amount.
• Take advantage of employer-sponsored retirement plans and must consider investing in NPS (National Pension Scheme).
• Increase your contributions over time, especially as your income grows.

5. Set Financial Goals

• Define short-term, medium-term, and long-term financial goals (e.g., buying a home, paying off student loans, investing for Children Higher Education & Marriage).
• Break these goals into actionable steps and prioritize them based on importance and urgency.

6. Live Below Your Means

• Spend less than you earn and save the difference.
• Avoid lifestyle inflation as your income increases, and instead, use extra funds to improve savings or pay off debt.

7. Diversify Your Investments

• Don’t put all your money in one investment. Diversifying helps reduce risk.
• Consider a mix of Mutual Funds, Stocks, Bonds, and other assets based on your risk tolerance and financial goals.

8. Monitor Your Credit

• Regularly check your credit report for any errors or fraudulent activity.
• Maintain a good credit score by paying bills on time, keeping credit card balances low, and avoiding unnecessary credit applications.

9. Protect Yourself with Insurance

• Ensure you have adequate insurance (health, life, auto, home, etc.) to protect yourself and your family from financial hardships due to unforeseen events.
• Regularly review your coverage to make sure it aligns with your current needs.

10. Educate Yourself

• Continuously learn about personal finance, investing, and money management.
• Stay informed about changes in tax laws, financial products, and market conditions that could affect your financial situation.

11. Plan for Taxes

• Understand your tax situation and try to optimize your tax strategy.
• Take advantage of tax-advantaged accounts and deductions available to you.

12. Seek Professional Advice When Needed

• If you’re unsure about certain financial decisions, consult a Personal Finance Professional, Tax Professional, or other experts.
• Regularly review your financial decisions to ensure they are aligned with your goals.

By following these basic rules, you can build a solid foundation for financial wellness and secure

a stable financial future.

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Getting rich is one thing, staying rich is another.

 

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Investment lessons you should teach to your children

Investment is something that believed to be a topic of discussion only for adults. Children have nothing to do with investment and savings. But personally I believe that there are many things to learn for our children from our experience.

There are few points I am going to mention that will help your kids to learn the importance of saving money and value of money.

1.         Value of waiting for better option : I have noticed that kids these days are very impatient and not willing to wait for anything. Like in investment, sometimes we need to wait for the right time to come for withdrawal, we need to teach our children that they need to wait for the right time to buy a better toy from different shop or wait for the toy to be available in store rather than buying anything available right now.

2.         Save small money to buy big things : If your kid wants to buy an expensive thing like a game or toy, you should teach your kids to save money for it. Ask them to use you as a bank to save their money. Give them a time frame as a target. Promise them that if he/she will not be able to achieve the target, that is fine. You will pay the rest of the amount for appreciating their efforts.

3.         Teach them how they can earn things by doing some work : If your kid want something which is important for him or her, teach them how to earn. Ask them to help you with some of your work you do at home. Start with small things like cleaning toy box. Or help you organize his/her room. You can try helping hand in gardening or anything as small as brushing teeth every morning.

4.         Collecting coins in piggy bank : Tell your kid that you are ready to pay 10/- in exchange of 7/- of coins. Ask them to collect all the change money earn some returns on it.

The practices I have mentioned above will help you and your kids not only for saving money but also help you to build strong relationship. It will teach them to be patient and wait for better opportunities. It will teach them to earn something in exchange of efforts.

Make sure these practices should target efforts but not the end result. If you will target result it may demoralize your kid. They should know that it is important to try rather than to achieve. It is important to participate than to win.

Stay Healthy & Happy investing.

For all your investment needs, call WealthMaster.in Team @ +91-9810582989 or email at wealthmaster.in@gmail.com

Disclaimers:

The views expressed in the blog are those of the authors and do not necessarily reflect the official policy or position of any other agency, organization, employer or company.

Insurance is the subject matter of solicitation.

Mutual Funds investments are subject to market risks. Please read the offer documents carefully before investing.

Please let us know in the comment box, how you feel about our blogs.

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Share Market - An Addiction..

Do you know that share trading is also an addiction?



Yes, that's true. There are people who are in serious addiction of share market. They mostly do intra-day trading.

There is a difference between investment and trading. If you are buying shares for your long-term goals and planning to hold the shares for reasonable amount of time to gain a good returns, you are an investor.

But there are people who buy and sell multiple shares within a day. They are called traders. Trading in shares is also a full time job for some people which is very normal today. People buy and sell shares on a daily basis for very small profit and they actually earn money by doing this. But this work requires a lot of research and time. You can do it only if you don't do anything else.

There are another category of people who has their job, family and other works to do daily but they invest most of their time and money wasting on this. Because most of their time goes on doing something they are not good in, they end up losing their money.

But this addiction is same as other addictions. A smoker knows what he is doing will harm him in long run, but still can't control. Most of the intra-day traders end up with making loss. And you need to understand that intra-day trading gives you an option to buy and sell high amount of shares with very less money. So the profit and loss will be very high in intra-day.

I do not say intra-day trading is bad or investing in share market is bad option, but it's not a part time job seriously.

If you are looking for investment in shares, first invest some time in researching.

If you are looking for a comparatively less risky investment option with equity returns, go for Mutual Funds.

But again, do not just go for any fund but consult your financial adviser to select correct funds for you.

It is important to let the experts work for you.

Stay Invested for your financial independence!!!

Disclaimers:

The views expressed in the blog are those of the authors and do not necessarily reflect the official policy or position of any other agency, organization, employer or company.

Insurance is the subject matter of solicitation.

Mutual Funds investments are subject to market risks. Please read the offer documents carefully before investing.

For all your investment needs, call WealthMaster.in Team @ +91-9810582989 or email at wealthmaster.in@gmail.com

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Do I need Insurance?

Do I need Insurance?

You must have asked this question to yourself many times, whenever you meet any insurance adviser or you see a commercial on your television. Somewhere in our mind we do have this confusion. If you are also one of them with this question in mind, well this article may help you decide.

Lets list few questions related to insurance that normally confuse us.

• ·         Do I need Insurance?
• ·         How much Insurance cover do I need?
• ·         Which plan should I go for?
• ·         Which company should I choose?
• ·         How can I get Insurance?

Now let’s see the answers of all these questions step by step.

First of all, Insurance has two parts.

• ·         Life Insurance
• ·         Non-Life Insurance (General Insurance)

We are here discussing life insurance related issues. Technically, when a nominee gets paid by the insurance company after the death of the insured person, it is known as life insurance.

Any insurance cover, which does not pay only after the death of the insured, is known as Non-life or General Insurance. Like car insurance, health insurance, fire or earthquake insurance.

So, in the life insurance policies, my family will receive a lump sum amount in case I am not there. But the most importance point is to understand, why we need a life insurance cover.

Life insurance policies cover the financial loss to a family in case of the death of an earning family member. If you have financially dependent members in your family and they are not able to maintain the same lifestyle after you are not there, you need a life insurance cover.

This answers the first question, whether you need a life insurance cover or not.

The next question which comes in mind is, “How much insurance cover”.

Well technically there is no formula to calculate the actual need of the life insurance cover. It depends on the requirement of your family members and your income.

Let’s understand this with examples:

• Raghav has a family of five members. Father, Mother, Wife, one baby and himself. He earns 20000/- a month and able to maintain an average lifestyle. All other family members are dependent to him financially. In this case Raghav will need a good amount of insurance cover so that the insurance amount may help his family to stand on their own after him. I would say he needs at least 25 to 30 Lacs of insurance cover.
• Sanjay has the same number of family members and he earns the same amount of money 20000/- a month. But his father was in a government job and getting a pension of 15000/- a month. His wife is also working as a school teacher and earns 10000/- a month. So in this case, the family members are not fully dependent on Sanjay financially. But his own earnings help his family to maintain a good lifestyle. I this case Sanjay may choose to have a lesser amount of Insurance. Let’s say 10 to 15 Lacs. As he knows his family is already standing on their own and insurance cover will not be the only source of money after him.

Most importantly, if you have enough savings or secure assets which are sufficient to look after your family after you, well you do not need insurance.

I hope I have answered your second question now you can easily decide how much insurance you need.

Which plan should you go for?

Selection of insurance plan fully depends on your future plans. All insurance plans have the same concepts of insuring the earning member of the family and paying the nominee in case of any miss happening. But all plans have different feature to cover your future plans.

Your financial adviser may guide you better on selection of plan as it varies individual to individual.

I personally believe that Term Insurance is the only insurance which fulfills the real insurance need. It offers very low premium with very high insurance cover. You can pay 2-4k annual premium against 20-30 lacs of insurance cover. Actual premium may vary according to your age, income and insurance cover.

Targeted insurance plans are also good option like, child plans or pension plans. But all other option comes after term insurance. If you have a family to look after and you want to make sure they should live a good life even after you are not there, go for term insurance first.  

Which company should you choose?

All the private and government insurance companies operating in India are regulated by a government regulatory body known as IRDAI. IRDAI stands for Insurance Regulatory and Development Authority of India.

All insurance companies operate according the terms and conditions regulated by IRDAI and any insurance plan offered by insurance company is fully checked and approved by IRDAI.

Technically it does not matter which insurance company you have chosen. But insurance is a part of service industry. So, it is very important to check the history of the level of service provided by the companies. It is advisable to go for big brands. If you have heard about any settled claim in your relatives or friends, you can also choose the same company as you already have the service experience. 

I am listing few well known brands below:

Government: LIC of India is the only government undertaking company in life insurance industry. Has a good reputation and have good number of branches even in rural areas in India.

Private: HDFC Standard Life, ICICI Prudential, SBI Life, Max Newyork Life, Bajaj Allianz, Kotak Life, TATA AIG, Birla SunLife and there is a long list.

How can you get insured?

It’s very simple, just call your financial adviser or walk up to any insurance office. All you need is an address proof, photograph and date of birth proof. In case your insurance cover is more than 10 lacs, you may need a copy of your income proof like copy of salary slip or your Income Tax return copy.

Do not forget to discuss your future goals with your adviser and answer all his questions related to your financial status. It will help him to choose the right product for you.

Thank you.

Disclaimer: Insurance is the subject matter of solicitation.

For all your financial needs, call Mr Sanjeev Chawla +91-9810582989.

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