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The three pillars of smart personal finance planning are saving, borrowing and investing.
- Always try and save 25%-30% of your income except if you are a retired senior citizen.
- You should always borrow within your limits. This will keep your financial cost low (personal loans/credit cards are high cost funds – best used only in emergencies) and will help you save money for future needs.
- The best investment option is to build your assets first and then indulge in expenses such as car.
Personal Finance Planning: Work, Earn, Save
Financial independence could be a point to consider – all major members of family, wherever possible, should earn/work. Do not wait for the best opportunity. Rather, do your best now in whatever you do. Earn more to save more because cutting expenses is difficult. If you are in your productive years, it’s advisable to leave the comfort zone and work hard to save for retirement days.
Personal Finance Planning: Be Disciplined
Another important component in personal finance planning equation is not to finance your child without any limits. Let him/her learn to be self-sufficient as early as possible. In case your children want to pursue higher studies, make them borrow and pay for their education rather than funding them completely. You save for your future years. This is not only more tax efficient for them, but also ensures that you save for your future years. Moreover, it brings in a sense of financial discipline and independence to every member of the family.