Being Financially Responsible!

To be financially responsible, the core underlying factor is that you need to live within your means which implies your spending should always be less than your earnings.
It also means that you plan for the future without having to worry about it. Here are a few ways in which you can be financially responsible.

1. Wants cannot be greater than your Means
You know exactly how much you earn and how much you can spend. Ensure that you do not borrow to invest or to spend on your wants.

2. If you cannot buy it twice, you probably cannot afford it.
Owning expensive things does give one a satisfaction, maybe a status symbol too, yet if you do not have enough reserves to buy it again, it doesn’t fit the criteria to be bought in the first place.

3. If you don’t need it now, don’t buy it now.
Unless it is an appreciating asset there’s reason for you to buy that materialistic marvel that you’d like to buy and rest it out to gather dust. Buy only those ‘things’ that you need it, like now. Don’t plan too much into the future and no, this advice is not on buying at least a month’s household supplies.

4. Evaluate every purchase by Cost per use
When you buy that latest tech toy, kitchen gadget or apparel, decide if it is worth it by working out its cost per use or wear and analyse if it’s really worth the money.

5. Create a budget
To live within your means, you need to create a budget. An ideal budget should include of the following:

• Household supplies
• Travel (back and forth to work and within city limits)
• Rent / Lease
• Household expenses [Water, Electricity, Maid, Mobile, internet, etc.,]
• Investments [preferably SIPs, Equity, MF, etc.,]
• Savings – A rupee saved is a rupee earned, ensure some amount goes into your savings each month, every month.
• Rewards – Have that dine out, or plan for that quarterly / half yearly outing with family
• Education – Not just for family but for self too. With the advent of online courses, you can learn anything, at very economical prices.
• Medical – A part of your income should definitely go into medical savings
• Miscellaneous – A marginal part should be saved for miscellaneous expenses.

6. Allocate more towards savings
As your income grows, so should your savings. Ensure that every time you get that bonus, that additional profit, you transfer a part of it to your savings.

7. Bills – No point in not meeting the deadlines.
You cannot afford to pay any interest or penalties on past due payments. Ensure that you pay all your bills well within the respective due dates. You can also use auto debit feature in most cases.

8. Invest in the future
No, we don’t just mean buy an insurance policy, we mean that you should not only invest in available tax-free plans but also invest in shares, mutual funds, etc., and more importantly in upgrading your skillset.
Also, invest only that which you can afford to lose – Meaning, any loss arising out of your investments should not affect your day-to-day lifestyle in any way.

9. Learn about taxes
Taxes are real. You’ve no choice but to pay them. But you can plan them. Ensure that you don’t pay more than you are required to and avail all or most of the tax exemption and deduction schemes available on hand.

10. Savings bank account
Ensure that you meet the minimum balance requirements of your bank. No point in paying charges.

11. Don’t borrow
Don’t borrow from friends and family or take loans from banks and financial institutions unless you absolutely need to. Once borrowed, ensure that repayment of such loan becomes your top priority.

12. EMI
There’s nothing easy about an EMI. Don’t get into this trap under a false pretence of affordability. If you can afford it make an outright purchase, if you need, the best you could do is try to avail a No-Cost EMI.

13. Credit Cards
Use them wisely. Yes, they help you in your hour need but know that you don’t need it always. Be smart about its usage.

14. Your account is your account
We often see people cashing out their credit cards, using other peoples’ bank accounts in the pretext of non-filing of IT, emergency, etc. Don’t be a party to such transactions. Keep your accounts clean and limited to your transactions alone.

15. Don’t be a guarantor
Yes, your friend, your family, your colleague needs a loan, a loan which will not be processed unless you back it. This is a recipe for disaster. Avoid it at all costs.

16. Donate for good
Not only does it give you the satisfaction of helping someone but also ensure that you are responsible towards your fellow beings, humans or otherwise. And while at it, ensure that you also get a tax benefit out of it.

These are only some of the ways through which you could be possibly more responsible towards your finances. Ultimately, it’s all about how concerned you are and how aware you want to be.