How to Manage Wealth Effectively?

When you start earning, it can be tempting to indulge in unnecessary spending. While it is essential to pamper yourself every once in a while, spending your wealth without keeping track of where it is going can lead to no savings and wealth creation in the long run. To ensure that you are making the most out of your money, it takes some conscious dedication.

If you are a beginner in learning how to manage your wealth, here are some vital tips to follow:

• Set a realistic budget.
  The first step to managing your wealth effectively is to realise where your money goes. The best way to do this is to keep a financial journal, so you can list all your monthly expenses. Once you write it down, you realise you never really needed those extra pair of shoes or that unnecessarily overpriced coffee at the expensive café. By separating your needs from your wants, you can then move on to setting a followable budget.
  
  Here, you list down what is necessary to spend on – such as utilities, bills, EMI payments, savings account, entertainment kitty, emergency expenses, and the like. Try and make monthly budgets instead of annual ones, as they are easier to follow.
• Get life insurance plans.
  Safeguarding and growing your wealth is crucial, but so is keeping the source of that wealth creation safe – YOU! If it weren’t for you, you would not be able to support your loved ones and add meaning to their lives.
  
  To ensure you stay protected from life’s unforeseen harshness, getting various types of insurance is a must. Insurance, by its very definition, is to protect yourself from financial loss. Here are some types of insurance that are must-haves:
  • Whole life insurance plans for long-term financial coverage (up to 99 years)
  • Savings plan for goal-oriented savings, life insurance, and wealth creation
  • Wealth plan or unit-linked insurance plan for the dual advantage of life insurance and market-linked wealth creation
  • Best health insurance plan for financial support in the event of medical ailments and emergencies.
• Assess your own goals.
  Once you know what your needs are, you can move on to envisioning the goals you would like to tick off in the future. The easiest way to figure out your goals is again, to write them down – on paper or your phone/ laptop. If you cannot put your finger on where you see yourself, try and refer to the path others have taken through research or discussion. Here are some shared life goals you might want to fulfil for yourself:
  • Pursuing higher education
  • Getting married/ starting a family
  • Funding your children’s dreams
  • Travelling around the world
  • Buying your dream home
  • Supporting your parents (especially in their old age)
  Remember, another person’s goals don’t have to be yours – you decide your own timeline.
• Save and invest.
  Once you have a clear idea of where your money needs to go and what dreams you want to fulfill, you can move on to the next step of financial wealthiness. Remember when your mom gave you those extra coins to put in your piggy bank every month? Well, you carry the same philosophy and set aside a specific percentage from your income or earnings for savings. Saving is a lifetime commitment and paves the way for investing.
  
  Without investment, your savings will lose value over time (due to inflation). To ensure your money grows with time, you need to invest in various financial instruments. Investing is 100% flexible, and there are several market-linked and non-linked avenues you can dabble in per your risk appetite.

To sum it up:

Once you have a regular inflow of money, managing it becomes crucial to avoid developing unhealthy spending habits and incurring devastating financial losses in the future. It is best to start as early as possible and not delay. And remember - managing your wealth effectively is not a one-time act but a lifetime process.

Disclaimer:
The aforesaid article presents the view or 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 incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ before making any decision.

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