Good & Bad financial habits


Review Portfolio

You need to keep track of current investments. Get rid of those investments which are giving negative returns. Your returns should match with the financial goals. Reviewing portfolio helps in assessing any additional investment requirements.

Maintain a Budget

As the Finance Minister prepares budget for the whole nation, you need to maintain a monthly budget to know the expenditure and income. You need to monitor monthly spending to avoid unnecessary expenses.
50-20-30 rule should be followed, which is fixed costs – investments- flexible spending.

Create An Emergency Fund

Emergency fund is designed to cover a financial shortfall when an unexpected expense crops up. It might be job loss, illness or accident which creates a situation where your regular source of earning comes to halt.
Maintain minimum 6 months worth income as emergency fund is a good Financial habit.

Have An Exit Strategy

You invest to reach your financial goals. You need to have an exit strategy for every investment as too long investments will lead to disappointment. In case of equity investment stop- loss should be around 20%.

Pay Your Bills On Time

It is advisable to pay your bills well in advance to avoid huge payments at a later date. Delay in payments would have negative impact on your credit score.

Be A Disciplined Investor

Opt for automatic transfer of funds. You need to direct around 30% of your income towards investments.



Rolling Over Credit Card Debt

When you miss a credit card payment, the creditor adds late fee which causes to lose extra money. Late credit card payments damages credit score. Always pay off the entire outstanding as quickly as possible.

Overspending On Luxuries

Allocate a specific amount in monthly budget for refreshments, eating out, movies, trips, etc. You shouldn’t use more than 30% of the monthly budget for luxuries.

Neglecting Product Maintenance

Product maintenance can save you a lot of money on repair and replacement cost. Maintenance work on your car, AC, house reduces the cost of replacement.

Using Credit Card For Reward

Avoid unnecessary credit card purchases for earning reward point. You need to avoid credit card purchases that will create monthly payments for many years. Differentiate the products which can be brought through credit card and which cannot be.

Using EMI Options For Credit Card Dues

You will end up paying more than actual cost of the product which includes interest for EMI scheme and processing charges. Too many EMI schemes impacts the credit score.

Ignoring Credit Score

Every financial transaction of an individual is in record and is reflects in the credit score. Credit score is critical for availing loans. A person with good credit score has chances of getting loan at good rate of interest.
A credit score of 750 and above is considered good credit score.

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