When it comes to planning our finances properly, many individuals tend to get it wrong. If you are someone that wants to keep yourself free from the mental stress of financial pressure, you need to take some important decisions. These decisions have to be taken to guarantee a positive financial future for not only yourself but your entire family as well.
You might have come across terms like financial independence and security. There is a reason why leading financial experts say that achieving them can help you in multiple ways. In this article, we are going to look at the five leading financial decisions that can have an everlasting impact on your life.
List of 5 Financial decisions that have an Everlasting Impact on your Life
-
Using Credit Cards-
You might think that credit cards are a boon to help you tide over small and big financial issues. The only thing that financial experts say is that credit cards provide momentary relief. In the long run, they can result in lots of financial hardships and troubles.
Over a period, credit card debts can get substantially big. Additionally, the piling up of interest rates can bury you in overpayments, late fees, and penalties. Experts state that it is best to get a loan from a private moneylender and overcome all your credit card payments.
-
Investing too little and too late-
By the time a lot of us start investing, we have already crossed the age of forty. What many do not understand is the fact that investing works on long-term compound interest build-up. In other words, the sooner you start investing, the better will you be able to reap the benefits.
By average estimates, you should look to invest 20% of your monthly income. This will allow you to not only grow your wealth but also create a corpus fund for your financial future. Starting early and with a decent sum of money is the best way to go in investing.
-
Not paying attention to Savings-
The third and probably the most important aspect of financial planning is savings. Just like investments, savings also should account for 20% of your monthly income. This is your safety net and protection that can help you tide over some difficult and unforeseen situations.
Most experts also agree, that as compared to investing, savings is a safer option. If you do not understand how stock markets or crypto work, you can always fall back on savings for slow growth and stability. This does not require you to possess a lot of technical or financial know-how.
-
Borrowing and Lending Money-
I am sure that a majority of readers going through this article have at some point or the other borrowed money or lent it to someone. For financial experts, both these practices are unhealthy. This is because they create dependency and allow you to be exploited in certain situations.
Both borrowing and lending should be avoided as much as possible. You need to start living within your means. Additionally, you need to realize that you are doing more harm than good to someone you are lending money to. Try not to encourage this behavior at all times.
-
Taking Important Family and Relationship Decisions-
All of us experience certain definite life events. For example, we decide to get married or divorced, have kids, stay with our parents, and so on. All these relationships and personal decisions affect our finances in a major way. The key is to ensure that they do not.
For example, you need to ensure that you are saving or investing no matter what is happening in and around you. This will ensure that you are safe no matter what goes around you. The key is being disciplined when it comes to your financial planning.
The Bottom Line
The above five decisions will help you attain financial security and independence in your life. Savings, investments, and avoiding credit cards can establish a solid foundation for your financial present and future. It can allow you to enjoy complete peace of mind when others around you are running around and complaining about not having enough retirement funds. If you have any other questions, you would like us to answer, let us know in the comments below.
