It is necessary for every individual to create an emergency fund. It is important to note that creating an emergency fund is not an alternative; it is imperative. Tragedy doesn’t proceed with a prior warning; in fact it comes like a storm without any indication.
It is advisable to keep yourself prepared for such situations by investing in an emergency fund. Delaying this fund will only create future problems; the earlier you start planning, the safer you are. While no one can predict a tragedy, you can definitely prevent any financial troubles by creating an emergency fund.
Once you have this emergency fund ready, the next thing you need to start is to plan for a financially secure and stable future. To do so, you have to envision where you would like to be financially in the next twenty years. Based on this, decide on your long term and short term goals. For instance, if you envision yourself starting a company, then your short term goal would be to gain enough experience and save enough funds so that you can achieve this financial goal smoothly.
While you have planned your professional goal, you have to take care and provide for your family: this includes family vacations and your child’s future. Your emergency fund will be sufficient enough to meet short term contingencies. But what about major financial losses? What if you are no more? Will they be able to manage the finances all alone? In such a scenario, a term plan will ensure that your family’s financial future is secure. It will act as an income replacement insurance which will help them take care of your outstanding liabilities and responsibilities.
In addition to this, your social life cannot be ignored either: meeting your friends and colleagues for dinner after work or a weekend getaway with your friends all requires money. The easiest way to fulfill all your desires and obligations is by investing your money regularly. You can opt for ULIPs as they provide high returns with tax benefit. While you are busy planning for your short term financial goals, ULIPs will ensure that your long term financial goals are taken care of by encouraging systematic investments.
You need to plan out your finances to achieve a balance between your expenses and savings so that you cover yourself against all emergencies.