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Who doesn’t wish to have the cushion of wealth to fulfill all their wishes without having to think twice? Whether you want to build a retirement home or wish to provide your child with the best education, money plays an important role in bringing your dreams to reality. Most people have a preconceived notion that a higher income is key to financial independence.

Although a greater income is an essential part of a financial savings plan, you need to use the money you earn wisely to achieve your dreams and gain financial freedom. Thorough financial planning is vital to building a secure financial future, and it goes beyond simply earning and spending less.

Listed below are a few simple tips on drawing a plan for money management:

• Identify Your Financial Goals:
  The first step to drawing a financial savings plan successfully is to define clear life goals. Like you have to enter a destination on maps to guide you while driving, you need to channelize your money in the right direction.
• Whether it is to tour the world, provide for your child’s marriage or buy a house, jot down your life’s goals. Having a list of financial goals will enable you to decipher your financial needs, the amount you need to save, and the expenses you need to cut down. Make sure you set down SMART goals, i.e., specific, measurable, adjustable, realistic, and time-bound.
• Prepare a Budget:
  Budgeting is crucial to wise money management. Make a note of your monthly income, fixed expenses like electricity bills, and variable expenses such as money spent on entertainment. A fair idea about your current financial health will enable you to enhance your savings by spending less. After identifying these factors, create a monthly budget and stick to it. Don’t forget to put aside some money for emergencies in your plan.
• Protect Yourself and Your Family Against Financial Risks:
  Health and financial emergencies don’t come with a warning. This makes insurance an important component of your financial savings plan. Whether you are young or old, getting a life insurance cover ensures your loved ones are free of financial burden in your absence. Experts suggest that the sum assured should be at least 10 times your yearly income. Add adequate health cover to the plan to prevent the adverse impact of rising healthcare costs on your finances.
• Make Your Money Work for You:
  Use the money sitting idly in your bank account wisely by investing it. There are various avenues including equity shares, debt instruments, mutual funds, SIPs, etc. that you can explore to create wealth. Depending on your goals, you can distribute your money across investment options to ensure optimal returns. For instance, you can choose to invest in equity stocks if you have a high-risk appetite, whereas SIPs are great if you want to reduce the risk of market fluctuations. Insurance plus savings plans like ULIP are also an ideal way to increase your wealth.
• Plan for Retirement:
  Financial planning for retirement is now more important than ever. Thanks to the longer life expectancy, rise in sedentary lifestyle-related ailments, and increased risk of chronic diseases. Also, who doesn’t wish to live freely once they retire, making retirement planning an important aspect of your savings plan? Apart from investing in the markets, you can consider guaranteed future plans, annuity, and endowment savings plans to secure your future. These plans provide you with returns in the form of a lump sum payout or a regular income after you retire.

Following these basic tips will assist you in drawing a financial savings plan. This financial plan would act as a guide for you to oversee your expenses, incomes and investments so as to manage your money better. Nowadays, with tools like a financial planning calculator available online, you can not only manage money well but also take steps towards financial independence. Visit PNB MetLife to know more about Long Term Savings, Term Insurance & Term Plan.

Disclaimer:

The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.

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