Now that we have convinced you how important financial health is, let’s look at some result-oriented tips and strategies to help you boost it. We understand that it can be a bit overwhelming, however, with careful planning, you will find it manageable.
How to Achieve Positive Financial Health
1. Set a Budget, Spread the Cost. Monitor Regularly
Begin by listing your expenses and categorise them into essential and avoidable expenses. To estimate expenses such as rent, electricity, telephone, etc., you may look at averages over the year. After assessing your needs and wants, set a monthly budget. Review it regularly and revise, if required. Try not to spend more than your budget.
But what if you have to spend on capital expenditures like purchasing a new air conditioner, television set, bike, laptop, etc.? These are large expenses and are sure to blow your budget. But, thankfully there are ways out. Think EMIs. Make such purchases easily by spreading the cost into Equated Monthly Instalments (EMI). That way you can make your dream purchases while staying within budget.
Platforms like PaySense offer flexible and affordable EMI plans to help you make your online and offline purchases.
2. Improve Your Credit Score
A good credit score plays a key role in maintaining good financial health. Your credit score reflects your creditworthiness which determines your ability to get a loan from bank. The interest rate on the loan may also depend on your score.
You can build a good credit score by repaying your loans and credit card bills in a timely manner. People in their 20s usually do not have a credit history. A smart way to build a good credit history is by taking small loans and repaying them timely. This way, you add positive activity to your credit history and thereby improve your credit score. The earlier you build your credit history, the easier it will be to get loans in the future.
3. Start Investing Early
It is never too early to start saving and investing for your future. It will ensure good financial well-being for yourself and your family over a long term period. Early investments help you enjoy the power of compounding. Compounding involves reinvesting your earnings from investment and earning out of it. So the longer the earnings are reinvested, the greater will be the value of your investments. Like most things financial, the key here is to start early.
4. Build an Emergency Fund
For positive financial health, it is important to have an emergency fund. During emergency situations such as medical illness, accidents, having adequate funds will let you preserve peace of mind. At any point of time, you should be able to manage unforeseen expenses from your savings instead of having to liquidate your retirement funds or desperately reach out to friends and relatives.
5. Become Financially Literate
Financial literacy is of utmost importance for financial well-being. Only when you understand the basic concepts of savings, investments and compound interest, you can make good returns on your earnings. Rookie mistakes can cost you dearly, and dent your financial aspirations. Therefore, you must make every effort to educate yourself. Again, earlier the better. To make this interesting, form a small group of interested friends with whom you can share learnings and discuss.
Follow these simple tips to gain peace of mind and early financial independence.
At PaySense, we understand the importance of financial health. Our way of helping you achieve financial wellness is by making access to credit super convenient and quick.
Apply for Loans of upto ₹5 Lakhs easily using your phone or laptop, and pay back on low EMIs