Welcome, October! Diwali is just around the corner. You might have some travel plans this month. Why not we together create a plan? Not a travel plan, but a monthly investment plan! Here are five guidelines for creating a monthly investment plan and sticking to it:
Take Note of Your Current Financial Position
To start something, you should first assess where you stand. Similarly, to create a monthly investment plan, you should examine your income, savings, and expenses.
If one’s standard of living is growing faster than income, then there’s a need to either increase income or decrease expenses. It will also help you prioritise which expenses are necessary and which ones you can cut down. Failing to do this can derail one’s financial well-being.
Account for Festive Expenses
With the onset of festivals such as Dussehra and Diwali, it is better to draw up a festival budget where you can list down all your necessary spending needs and thus make provisions for your investments to be made in advance.
Drawing up a budget will help you stay clear regarding how much to spend and how much to save.
Decide your Goals
As a golden rule of thumb, one should spend what is left after saving, not the other way around. This helps in practising financial discipline, as spending money on material things that provide instant gratification is effortless. Also, this ensures you do not compromise your savings and investment decisions.
After the necessary investments have been made, you are free to spend whatever is left over for the month without much thought!
Do Not Postpone or Redeem Investments
One mistake to avoid is to not postpone or redeem your investments for spending if you have a financial crunch. This is the most devastating mistake you can make to harm your financial health.
By doing so, instead of striving to keep your ongoing investments live, you are liquidating your existing corpus, which was not even the purpose in the first place. Forget about making a financial plan. You are deteriorating your current financial condition by doing this!
Ensure to Keep a Buffer
It is suggested that you should keep a buffer this festive season. This can be possible if you have a secondary or a passive income source or some past savings. This will act as a cushion for your ongoing investments.
Not only this, you will get some extra leeway to spend on the festivities. So both your investments and spending needs will be taken care of if you maintain a buffer or an extra layer of safety.
These are the five necessary steps that you can follow to make a monthly financial plan and follow it diligently. It will help you enjoy the festive season without much strain on your finances!