5 Behaviours That Can Threaten Your Financial Security

 

1.You spend every rupee that comes to you

Are you blowing up money that you could save or invest for your future? While we agree that creature comforts are important, you must still endeavour to put aside some savings every month for your future. Think of it this way: Spending more on non-essentials such as shopping, entertainment and dining out means less of that down payment for your new home. Reviewing your monthly budget and looking for ways to cut back on costs can help you start saving right away. Money management apps can make it easier for you to track your cash outflows.

2.Making assumptions about your future

Is there any guarantee that you will have a higher take-home pay as you age and gain more experience? We think not. For example, your salary might increase this year, but your employer may not be keen to give you a raise next time out. There is no right age or income to spend responsibly and save money. If you delay following these healthy financial habits until you earn a certain income or reach a certain age, it might keep you from achieving a secure future.

3.Not saving enough

Your prospects arent good if your savings are well shy of what they should be to maintain your standard of living on a rainy day or during retirement. What if you lose your job and have no financial backing to deal with it? Or do you want to travel around the world in your retirement years? You need to consider the gap between how much you have saved and what you think you'll need for such situations. A good rule of thumb is to save the equivalent of your annual salary by age 30 and to save 10 times your salary if you want to retire by age 60.

4.You keep taking on additional debt

If you are taking on more debt or spending more than 20% of your salary on paying off loans, you are at risk of not having enough money to build an emergency fund or meet other financial obligations. For instance, monthly debt payments can reduce your budget for that vacation you always wanted to take or Diwali presents for your loved ones. Sometimes, debt can be fine for many of us, especially when it accommodates a goal like earning a degree or buying a house. But millennials often have a denial mechanism which leads them to splurge and take on more debt. Whether or not you are a millennial, understand that more debt equals less money to save or invest for your future.

5.You take the impulsive road with investments

Do you have the habit of investing without paying any attention to risk tolerance or other critical factors? Putting your money in what you dont fully understand, buying only whats hot, and chasing the returns with the impulse to make quick money can never be good for you. For example, even stocks of outstanding companies that everyone likes can collapse should earnings not continue to grow as expected. Investing is a serious business. You can make good money, or lose it. So, make sure you take a step back, do your research, and discuss it with your advisor, family or friends.

Quite often, achieving financial security isnt just about making the right decisions. There are too many risks and uncertainties in the world out there that can affect your financial wellness at any time of the day.

Insurance plans can make your journey to financial security a lot smoother, and also reduce the chances of you not reaching your destination at all. For instance, HDFC Life Click2Protect 3D Plus financially protects you against death, disability and disease. Market-linked plans such as HDFC Life Click2Invest ULIP can meet your investment needs and provide your beneficiaries with financial protection. Regardless of the type of insurance policy you buy, as a policyholder, you are eligible for tax benefits.