5 Baby Steps for Financial Success
Start Your SIP in Mutual Funds.
Baby steps also referred to basic steps or starting steps of life or towards any particular goal or career.
In this post I will share the baby steps for financial success, Everyone in this world wants to get financial success & financial freedom but many end up letting their bad habits of spending money which leads them towards financial disaster.
So, today I will share the 5 Baby Steps for Financial Success which a person must make his/her priorities when it comes to personal finances, financial freedom or financial success
5 Baby Steps for Financial Success
Let’s start with our Baby Steps for Financial Success:
1: Pay Yourself First The very first baby step is that you need to pay yourself first whenever you receive your pay cheque/salary. This is because you do hard work all the time not just to pay all your creditors first, you are only supposed to pay yourself first.
This sounds little difficult to some but if you start you will the Power of Paying Yourself First. 😀
How To Start? Well, Start by Paying 10% of your salary to yourself every month, you can put this money in any of the Recurring Deposit Account or any high yield account or in any equity mutual fund or even in direct equity.
Start with 10% for First Year, 20% for Second and Take it to At least 50% in 5 years.
2: Make an Emergency Fund This is another baby step for financial success, An Emergency Fund always boost up your confidence to take wiser financial decisions in life and helps you in greater financial success, it also acts as a backup in financial crisis.
How Much Emergency Fund? You must have at least 6 months of your monthly expense as an Emergency Fund. For Example: If your monthly expense is 20,000 then you must have at least Rs. 1,20,000 as your Emergency fund and put this money in any saving account or liquid fund as you might need it in emergency.
3: BUY a Term Insurance Yes you need it first before all other insurance plans, Term Insurance is pure protection plan that helps you to financially protect your family in case of any mishappening.
How Much Protection? You must have atleast 25 times of your annual income if you are under 35 years of age, and 15 times if you are above 35 years.
4: BUY a Medical/Health Insurance Yes you need this too in case of any unavoidable disease or accident a Medical Insurance Protects you from all the Financial Expenses of Hospital & Treatment. You must have atleast Medical Cover of Rs. 5 Lakh.
5: Invest In Direct Equities Start Investing in Direct Equities only after you have gone through all the baby steps discussed above. Also Invest only that part of money that you don’t need anymore for atleast 5-10 years.
Which Stocks To Invest In? Well, don’t ever dare to rely on tips or buying any stock that you just heard on news or from friend. Invest in Equities only after going through the basics of Value Investing which I will try share in my upcoming posts.
Well, These were the 5 Baby Steps for Success if you follow you will definitely feel & have the confidence of being financially free and financially strong.
That’s all for today, if you have any thing to share or any query then you can tweet me @gurpreet_saluja.
Regards,
Gurpreet Saluja
Hi, I’m Managing Director at Gurpreet Saluja Financial Services where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.
