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Personal finance is your responsibility. 7 steps to begin today!

Whether or not you choose to ignore it, you cannot deny the truth embedded in this statement: Your personal finance is and always will be your responsibility.

When it comes to finance, many people put an impractical blind eye to the fact that finances need to be managed. Personal finance is an ever-growing popular term for adults and teenagers alike, regardless of whether you are earning the money or not. After-all bills have to be paid, family members have to be fed and your lifestyle has to be maintained.

The biggest and most neglected step for many families is teaching their teens how to manage their money. Teenage finance is about educating teens on the value of money. Teach them how to save by showing them how to use their primitive form of book-keeping. This can often be incorporated through the child’s upbringing via piggy-banks, savings accounts, and little chores in exchange for money.

Teenage finance is an important part of your personal finance because, too. When your children learn to save and use money wisely, you are subsequently saved from bailing them out of financial troubles in the future.

1. Ethics and Personal Finance

Personal Ethics and finance go hand-in-hand; if you have a good relationship with yourself, you will be able to save money. You won’t feel the urge to do things that go against your ethics like sign-up for a credit card using someone else’s name.

Personal finance involves taking a few steps toward safeguarding your money. Your money spent should not exceed your money received. In order to prevent this from happening, you should make a crude balance sheet and use it to record all of your transactions.

2. Pay yourself first

A part of all you earn is yours to keep.

What do you do you when receive your salary? You pay your rent, you pay for groceries and utilities. But do you pay yourself? Always pay yourself first. Pay at least 10% of your salary to yourself.

If you pay 10% of your salary to yourself, In 10 months, you will have 1 month of your salary saved., At 20%, it will only take 5 months to reach that milestone. Decide a percentage and build from there.

But, You don’t my position, I can’t save 10%. Okay, I understand. Can you save 1% of your income? Suppose your earn Rs 50000 per month. 1% is Rs. 500. Can you save Rs. 500 ? You definitely can. Start with 1%, increase it to 2% the next month and so on. In one year, you will be saving 10% of your income.

3. Building and emergency fund

In life you never really know when something is going to go wrong, for example, your car breaking down, the washing machine packing up or the need for some improvements to your house. By saving in the way that I know do makes these issues far less stressful to deal with as I have the funds readily available to remedy the situation.

Set up a recurring deposit and start it a modest Rs. 2000 a month. It will not have a major negative impact on your life. After a year, the account will have almost 25000. Increase the amount to Rs 3000 or 5000 next year.

The emergency fund is for “emergencies” only. Amazon sale is not an emergency. Your birthday is not an emergency. It comes on the same date every year. Anything you could plan for in advance is not an emergency.

Eventually you should aim for an emergency to cover 3-6 months of your expenses.

4. Create a budget and stick to it

Budgeting sounds like a boring strategy used by our parents. For a long time, budgeting was considered the way to manage money because it helped people keep track of where their finances were going. But lots of people are choosing not to budget because it seems so needlessly complicated with little or no benefit. But there is a benefit to budgeting; the real trick is finding a budgeting method that works for you. Here is an excellent strategy to help you manage the money in your personal portfolio.

The first thing you need to do is create a budget. Creating a budget does not have to be restrictive, but it should be a guideline to help you manage your income and your expenses each month. The first thing you want to do is list all your expenses on a month-to-month basis. Each month write down how much was received and how much was spent. Make a list of all the things the money was spent on, so you can keep track of your money. The next thing you want to do it list all of your income on a month-to-month basis. Then compare.

You will be amazed at how much we spend on things that are not necessities. Make a list and stick to it. Always try to get the best deal for your money and remember that cheaper does not necessarily mean lower quality. Many people who have trouble saving find that their expenses are very close to their income. So what can you do?

One option you have is to reduce your expenses. This might mean going out with friends a little less or giving up on some luxury that you typically enjoy. Another option you have is to increase your income. Unfortunately, for many people, this is easier said than done. Budgeting, a key part of personal finance is your responsibility. Without it, you are shooting in the dark.

5. Don’t buy things to impress others

You don’t need the latest ‘iPhone’. You don’t need to eat out every weekend and buy branded clothes. Look at your spending and identify what you can cut out.

6. Netflix, Prime Video and Spotify – Do you need all three?

Look at your subscriptions. Analyze what you use regularly and ruthlessly cut down others. Other subscriptions include online storage solutions, magazines etc. Cut out whatever you don’t use. Review your subscriptions periodically, once every 3-6 months.

7. Insurance

Insurance covers your risks. They are not an investing tool. Do you have a term life insurance or a traditional LIC plan? Traditional LIC plans cost much more and have sub-par returns. Buy term insurance and get better coverage.

What about medical insurance? Does it have adequate cover? You can quickly blow through 7-10 lakhs in case of a medical emergency. Ensure that you covered adequately. Do not depend on your office policy. What happens when you are in between jobs? Always buy a personal medical policy. Every member of your family needs to have medical insurance. Remember, insurance, like personal finance is your responsibility.

8. Bonus: Grow your money

Money does not grow on trees. It grows by compounding. Invest your money in Direct Index mutual funds, Set an automatic deduction and forget it. You will be very happy after 15 or so years.

What are direct index mutual funds? These are mutual funds which mimic the indexes like Nifty or Sensex. These have very low overhead and give your almost the same returns as the broad index.


Ultimately, it is your money. Managing your personal finances should be seen as a mandatory part of making money work for you. Learn and apply the basic principles of personal finance outlined above. Personal finance is your responsibility.

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