Tips For Better Financial Health

Families have limited income and their spending is rising alarmingly. What we all are doing is running pillar to post to pay bills. It seems like we just live to pay bills.With globalization people have become so restless that we are migrating from remote places to towns and then to cities and to metros. From places with less items to spend to with more items to spend places. The availability of IT and the option to work from home have helped some earn a little more extra money to afford costly living. We have two choices: either minimize expense or maximize income. In both the cases we need some basic financial rules.

 

There are a few simple and basic family finance tips for a small sized middle class family residing in main cities of Nepal that depends on one or two persons’ earning:

• Emphasize on saving, try to make it to 50% plus of your annual earning. If your earning is flexible then take 5-7 years average.

• Invest your savings into diversified sectors, maybe to more than 5 portfolios, but not more than 50 % in any single portfolio.

• Always get life and properties insured.

• Always maintain liquidity to meet up at least 3 months’ expenses.

• Never pledge a house where your family lives in.

• Keep full and complete account of family transactions and share the same with adult members. Let your growing children know your family financial status to make them realistic in spending and expectations.

• Never borrow money just to lend that to others unless there is special reason to do so.

• Spend at least 25% of spending amount for personal development (your own or spouse or children).

• Use debit cards instead of credit cards which will help avoid unnecessary shopping or spending.

• Keep business account and home accounts separate.

• Invest a reasonably affordable time and budget on recreational, social, political or spiritual activities.

• Don't buy things you don't need, otherwise you may have to sell those in future.

• Save what you can without sacrificing your family’s needs and priorities.

• Give preference to reinvestment than to luxury items.

• Keep watch on spending habits of family members, and if you notice any unusual spending discuss about that with them.