We like to think that money doesn’t buy happiness – but who can deny that it is needed in ample amounts for a comfortable life? Each of us has a set of dreams for ourselves and our loved ones, and we need to have money to fulfill them all. This requires the right planning, saving, investment, and above all, the right tools and knowledge to streamline one’s money so that one may use it efficiently.
We list three ways in which you can streamline your finances in the year 2022 for better monetary outcomes and meeting your goals:
#1 Remove or reduce debt dramatically
If you constantly feel a monetary pinch despite having a stable income and not too many unnecessary expenses, it probably means that a sizeable part of your income is diverted towards repaying debt. This is a common phenomenon that most upwardly mobile people face. They have debt due to the purchase of homes and cars, and they also incur some private debt to fulfill lifelong dreams like taking foreign holidays, buying expensive gadgets, or even buying designer clothing.
However, debt can cut down one’s expendable income dramatically. The more you repay per month in terms of EMIs, the lower the income left in your hands to spend on other things. This year, aim to either eliminate debt entirely, or reduce it to the extent that your financial worries ease considerably. You can do this by taking a short-term loan from a personal loan app, to consolidate the debt. Instant personal loan apps offer quick short-term loans that you can use to bring all previous debt under one, i.e. the personal loan, and pay a single EMI instead of multiple EMIs. Thus, financial management becomes much simpler.
#2 Simplify your investments portfolio
As a person with a growing family and with increasing demands on your income, you have wisely started creating an investments portfolio that will make your money work for you even when you don’t. But you might find that while you have a variety of investments that cover various asset classes, the portfolio is beginning to get a bit muddled with over-diversification. It is certainly important to diversify the portfolio to reduce risk and increase gains, but over-diversifying beyond a realistic point can restrict the growth potential of the entire portfolio. You don’t want to be left holding a bunch of investments of which only a few can help you realize future goals. When it comes to investment, streamline your money by doing less instead of more. You can diversify to the maximum with about 20 to 25 stocks which account for about 90% of the portfolio’s diversification. Simplifying the portfolio becomes easier when you note down present and future goals and the options best suited to achieve them – let go of the rest to declutter the portfolio and energize your money. An experienced investments manager can help you in asset rebalance. Meanwhile, you can reduce the number of savings accounts and credit cards you hold.
#3 Make separate savings funds for different goals.
Streamlining one’s finances is essentially an exercise in getting all your financial ducks in one row. Your present and future goals may be varied in scope and scale. But they may be adequately met with the simple act of setting aside money for each goal. Instead of having one savings fund for a generic ‘future needs’ goal, why not divide the savings into different buckets for each goal? One bucket could be a ‘travel savings fund’, another could be a ‘higher studies savings fund’, and yet another could be an ‘emergency expenses fund’. Contribute to each based on the size of the dream, but there is no need to maintain separate bank accounts for each. As long as you save money regularly and have a list of your goals and how much money each need, you can review the residual funds in your account and keep on track.
Reduce the burden on your income by…
- Cutting down on expenses
- Cooking at home rather than ordering takeout frequently
- Carpooling to work
- Automating bill payments
- Using short term loans for immediate needs
(ThePrint ValueAd Initiative content is a paid-for, sponsored article. Journalists of ThePrint are not involved in reporting or writing it.)
Also read: Quit high gas fees for good with Quitriam Finance