Outlook Money
Life is full of unexpected challenges that lead to financial strain, Without emergency savings, even smaller setbacks lead to huge financial problems. In this case, one should aim to save for at least 3 to 6 months of living expenses in a separate account primarily for savings.
Relying on loans for everyday expenses often leads to unwanted debts and this hinders the ability to build wealth. Limiting loans to only essential purchases and focusing on paying off the debts can help achieve long-term financial goals.
Spending without control can put a strain on the budget. If there is no track as to where the money is going, one can find it difficult to reach the long-term saving goals. Therefore, tracking daily expenses can help cut down unnecessary expenditures.
Without the right type of insurance, unforeseen medical conditions, incidents or other unwanted situations can drain funds. Therefore, one should review the insurance on a regular basis and choose the type of insurance that is required.
Focusing all investments on a single asset class heightens risk, especially if market conditions shift. A decline in one investment could affect the whole portfolio. So, one must diversify the investments across various sectors like stocks, bonds, real estate, and even commodities.
Compiled by Syed Muskan