Given the current times, financial health is as important as physical and mental health. Your financial health impacts your future financial security. Hence, just like you ensure that you stay physically and mentally healthy, it is also critical to make sure that you are financially healthy. One smart way to do this is by adopting effective money habits that help your spend, save and invest optimally.
Here are some simple ways to stay financially healthy in 2022:
- Create a workable budget: The first tip for staying financially fit is to live on a budget. Living on a budget does not imply you cut down your necessary expenses; instead, you spend frugally, and each rupee you spend has an optimal purpose. One effective way to create a budget is by implementing the 50/30/20 budget rule, where you spend 50% of your income on necessities like food, utility bills, rent, education fee, EMIs, insurance premiums, etc. You can spend 30% of your income on your wants, such as buying a gadget, dining out, online subscriptions, etc. After addressing the wants, you must ensure you save 20% of your income. 20% savings each month can accumulate a large corpus in the long term.
- Start a SIP in mutual funds online:The best financial habit you should adopt in 2022 is investing consistently. The perfect way to do this is by starting a SIP (Systematic Investment Plan) in a mutual fund online. In a SIP, a defined sum is deducted from your bank account on a fixed date and invested in a mutual fund online scheme of your choice. SIPs help inculcate the habit of disciplined and sustained savings. Further, investing in mutual funds online through SIPs helps you stay invested for the long term across different market cycles. You can also benefit from the rupee cost averaging, ultimately improving your returns. Further, the sooner you start your SIP, the more you benefit from the power of compounding.
- Eliminate lifestyle expenses:A healthy financial habit that you should adopt in 2022 is to avoid lifestyle expenses, such as buying an expensive gadget only to impress your peers, buying a larger than needed television, etc. With the easy availability of loans, it is easier for people today to be lured into unnecessary expenditure. The objective is to reduce your lifestyle expenses or to eliminate them, such as avoiding dining out every weekend or buying a new phone every six months. Instead, redirect this excess money towards your SIP.
- Invest in health insurance:COVID-19 highlighted the importance and need for health insurance. Without health insurance, you could end up consuming a large portion of your savings to pay for your medical expenses. Hospital bills, medicines, etc., can prove financially burdening unless you pay for them through your health insurance.
- Stay clear of debt:Unnecessary debt is a financial mistake that you should avoid. A loan taken for business needs or to learn a new skill or talent is a good loan. However, swiping credit cards or taking personal loans to fulfill lifestyle expenses is detrimental to your financial health.
By adopting these healthy financial habits in 2022, you will take a step towards a financially secure future. Start budgeting, saving, and investing. Use the Tata Capital Moneyfy App to start your SIP investment in mutual funds online.