Here, I want to share some important steps you can take to keep your financial life secure. I have learned these from various sources and from my own experience. I hope you will do even better than me as you read this.

Please note that I am assuming you are an Indian citizen, have a job, and have basic financial knowledge. As always, take what you like and leave the rest.

First phase

In the first phase, I want you to focus on building a strong financial foundation and protecting yourself from unexpected events.

• Take health insurance for you and your family as early as possible.
• Take term insurance if your family depends on you. It will give them financial protection if something happens to you.
• Start saving as early as possible. It is better to begin with low risk methods such as recurring deposits or fixed deposits.
• Try to save at least 20 percent of your income. If you do not have much money, start with 100 rupees. Remember that compounding is powerful.
• Always keep an emergency fund that covers at least six months of your expenses. Keep that money in fixed deposits and maintain a low cost credit card for sudden emergencies.
• Update the beneficiary in all your financial accounts.
• Keep track of your income and expenses. If you track them, you can control them. Start with a simple Excel sheet with Income, Expenses, and Balance columns.

Second phase

In the second phase, I want you to focus on growing your money patiently.

• Try to increase your income over time by improving your skills or by switching jobs.
• Just because your salary increases doesn’t mean you need to spend more. Keep your lifestyle simple and invest the extra.
• Prepare your short-term and long-term goals such as gadgets, car, vacation, home, child expenses, or retirement, and start saving accordingly in different schemes.
• Invest in the stock market directly or through SIPs, and stay invested for a long time.
• Diversify your assets into equity, gold, debt funds, real estate, pension schemes, fixed deposits, and other options. Do this according to your risk tolerance, but do not put all your eggs in one basket.
• Review your investments once a year and rebalance if necessary.
• Avoid unnecessary loans and high interest debt whenever possible.

Third phase

In the third and final phase, I want you to organise your finances and prepare for the long term.

• Make a monthly and yearly budget to understand and analyse your financial life.
• Maintain a list of all your assets and liabilities and update it once a month. Knowing this will help you make financial decisions more easily.
• Think about your retirement and identify how much money you will require for it. You can find the formulas on the web and save accordingly.
• Keep your documents such as insurance papers, loan documents, stock market investments, gold records, and your asset and liability list somewhere safe. Also store the passwords for your banks, stock market, and other accounts securely. Make sure your partner or loved ones can access them if something happens to you.
• Understand how much is enough for you. After that point, you may simply be chasing more.

Things to keep in mind

• Keep learning about personal finance. Start with money management, taxation, inflation, etc. It will help you in the long run.
• Find one or two people you trust and discuss important financial matters with them when needed.
• Don’t be greedy. Help when you can. Kindness transcends.
• The best investment you can make is investing in yourself. Spend money on things that make you happy and help you grow.
• Save money so that you can live your life well, not the other way around.

I hope at some point you will realise that money is only a tool. What really matters is how you live your life. Life is short. Live it well.

Disclaimer

Sometimes I fail to follow what I say, but I never fail to try. Everything I say may be wrong.