1. Is a single bank account enough for all your financial requirements?
If you are closing in on 30 and only have a single bank account, you are missing out on vital things to do to have good financial fitness. Having a single bank account implies many things, including: a) you only have a savings account b) you are not investing money c) you are happy with the paltry interest paid by the bank.
2. Have you opened all your accounts with the same bank?
Many people with multiple accounts try to be loyal to one bank. The reason they cite is that it is easier to track financial details by doing so. However, the reason is not valid because there are apps that allow seamless management of all your accounts across banks. Having accounts in different banks is quite rational because it is difficult to find a bank that best caters to all your investing requirements. Some pay good interests on FDs, while others might have a winner ELSS scheme to offer.
3. Are you trying to pay off your debts as soon as possible?
If your answer to this question is yes, you are following a smart approach. To maintain your financial fitness, you must start by focusing on high-interest debts, like credit card balances or personal loans, as they cost you more over time. Once these are cleared, move on to lower-interest debts, such as home loans or auto loans. This strategy minimises your overall interest payments and helps you become debt-free faster.
4. Are you maintaining a saving money via PPF or NPS?
Having a saving option is a must if you want to live a happy and contented retired life. PPF (Public Provident Fund) and NPS (National Pension Scheme) are two popular choices to consider. While NPS offers you better liquidity, which you might need during a financial emergency, PPF, with its better returns, has an edge if you aim to save for future events.
5. Do you understand the difference between a loan and a line of credit?
Understanding these two concepts is important if you are interested in making investments. While loans are for the simple purpose of meeting a financial need, you can make use of a line of credit to borrow from a pre-approved limit and start a business venture. A line of credit is also a good idea for personal use during a cash crunch.
6. Have you kept an emergency fund for financial urgency?
An emergency fund is a must to deal with urgent financial obligations while going through patchy employment. The fund should be at least 3-6 times your current monthly salary.
7. How is compounding interest good for your financial fitness?
Compound interest grows at a faster rate than simple interest, and all returns on investments are calculated by employing the former. Savings accounts and PPFs are low-risk investments, and equity or equity-linked mutual funds are high-risk investments. However, the higher the risk, the better the returns.
8. Why should you use a credit card for your big-ticket purchases?
Credit cards, when used responsibly, can provide you with great benefits. These benefits include immediate availability of funds, bank discounts on the product, cashback, reward points that can be redeemed as lounge access or fuel rebates, etc.
9. How to maintain a good credit score to get easy loans?
Paying your line of credit borrowings on time is a good way to achieve a high credit score. However, while you use your line of credit, make sure you use a small or moderate percentage of the pre-approved amount.
10. How do you decide which loan to repay first?
You can either use the snowball or the avalanche method to pay off your debts. In the first case, you pay off your lowest loan first and the second, the highest. Whatever method you apply, channel excess funds to that debt and pay it off in time.
If you are looking for safe investment option, then you can consider investing Bajaj Finance Fixed Deposit. With a top-tier AAA rating from financial agencies like CRISIL and ICRA, they offer one of the highest returns, up to 7.75% p.a.
