The best part about being with parents, be it your childhood or your teens or when you begin your career, is that they are always there to support and guide you with their experience and advice. Parents always try their best to ensure that you have a secure life and never have to be financially dependent on anyone, even if it is a credit card! I`m sure our parents would have given us numerous tips on life and finances, but there are a few tips which have helped us out in tough times and will be passed on to generations. So, here are five Money tips which our parents told us, which were right:
1. Save your money for tough times
The term “Savings” must have been used by our parents endlessly, and it does make us realize that even a meagre sum, when saved, can help you out when in need. Savings began with putting money in piggy banks, and moved on to opening a bank account post which the next way was to invest some money every year in a Public Provident Fund, wherein your money generates return as well instead of lying idle in your bank account. Cutting down expenses by way of avoiding spending on lifestyle as per the current trends was another way of saving money. Systematic Investment Plan is one of the best ways at present to not just save your money, but to also get a return on it.
2. Invest wisely for the long term
You might remember you father teaching you the nuances of the investment world. As a youngster, you could take some risk and invest in equity. A proper study of the market would definitely give you a good return on certain stocks in the long run. Another investment would be on property – purchasing a land or a house. The value of property never falls and this is one of the ways to secure your future. It is always advised to do your research on the markets, stocks, companies, etc., before you invest.
3. Have a life insurance policy
You must have seen an LIC policy in your house, and no matter what happened, this policy would always remain. It is a way of securing and safeguarding the future of your family or dependents in case of your untimely death. It ensures your family does not have to depend on others financially. The best time to get yourself a policy is when you are young and are qualified for it. It helps in saving on your tax as well. This is a kind of forced savings that will help you achieve your long-term goals. It also ensures that your family is free of debt and can tide over in times of the unpredictable.
4. Do not use your credit card for things you cannot pay for
Credit cards have literally taken over our lives and we make all our payments through this mode of payment. Credit cards give us a credit limit with a credit period and this helps in clearing off payments easily. However, if payments are not cleared within the due date, you could be charged a high amount of interest. Having a credit card develops an urge within us to buy things we desire irrespective of the price tag. However, we must remember that this can lead us to a debt crisis. A credit card must be used cautiously.
5. Creating a monthly budget
As kid we have always seen our parents creating a budget for the month and ensuring the essentials and daily requirements are fulfilled within this budget. Budgeting helps you to allocate your funds every single month to savings, bills as well as entertainment. This lets you understand your spending habits and cut down on the unnecessary splurging of money. Creating a budget and adhering to it is one of the best ways to save your money.
There are a lot of tips on money that would have been given to us by our parents, but these five tips are some of the essentials that are useful and helpful. It is never too late to start saving – even saving Rs.500- Rs.1000 a month will definitely help you down the line. Always ensure that you save about a third of your salary. Credit cards might ease off your short-term worries, however ensure that your credit card bills do not get out of control. It is necessary to remember to clear off all your debts and stay debt-free. This ensures you have peace of mind and has a positive impact on your life as well. In short, these basic tips passed on by our parents will definitely help us lead a life without worries and stress. So, reduce the expenses, and increase your savings!