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One major personal finance advice I have learnt over several years

I have been reading and following several personal finance blogs since a while now and everything revolves around one thing – savings!

Recently I heard this audio book – Richest Man in Babylon and it emphasis on savings as well. The author says the person who wishes and desires to be rich should save atleast 1/10 of his earnings.

Financial independence starts with savings and that’s the number one thing you should focus on.

Saving money is not a science but its an art of studying your own spending behaviour.

Your money is in your own control and all you have to do is save wherever possible.

Here are ways to save money –

  • Track what you spend. This will enable you to analyse places where you have spend money and avoid places where you can save in the future.
  • As soon as you get your salary save atleast 20 percent of the salary. Invest this money.
  • Check for deals before you buy things.
  • Buy during sale and offers.
  • Only buy things that you need.
  • If you want to make a big purchase wait for 7 days and on the 8th day ask yourself if you still need that thing.
  • Don’t take loan to buy depreciating assets.
  • There are a lot more ways to save money. And you can find a big list if you google this across.

Once you have generated this habit of saving money invest in assets which appeal you the most.My personal advise would be to analyse your risk appetite and then invest.

I am in my late 20’s and for me I would prefer 20% in FD’s, 60% in Equity Mutual Funds and the rest I would keep for my term plan premium. This would be from the 20 to 25 percent of my salary which I have saved.

One can choose the best instruments as per own need and risk taking appatite.

Most personal finance gurus would recommend these financial products – Mutual Funds, Fixed Deposits, Term Plans, PPF, health insurance, Gold and for some real estate as well.

I would recommend you to consult a SEBI registered financial advisor before taking any financial decision or action.

To summarise one should save atleast 20 percent and invest it appropriately for a stable and a rich future.

Comment and share your thought on this.

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