Expert Suggested Ways To Regain Financial Confidence In Your Middle Age

by | May 12, 2022, 16:49 IST


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Many people in their 40s struggle to get their finances in order. It is the result of bad financial planning or a lack of it over a number of years. Many experts believe that you get a second chance to begin financial planning. "You may establish a significant corpus for retirement and other key financial goals if you handle your money thoughtfully," says Mr. Archit Gupta, Founder and CEO, Clear (Formerly Cleartax), who offers some advice on regaining financial confidence in middle age.

Get A Financial Education
The first step in growing financial confidence is getting a financial education, which is the art of managing your money. It increases your ability to make better financial decisions and gain control over your financial situation. Moreover, you can avoid the financial pitfalls that prevent you from building wealth and achieving your financial goals. You can read books and magazines and go through financial planning websites to gain an education in finances.
Moreover, listening to money podcasts and using investment apps helps one understand different investment options and pick suitable investments to attain financial goals.

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Make A Personal Budget
One must make a personal budget that shows every rupee earned and spent to prepare for financial emergencies. It involves recording your total monthly income and subtracting fixed and variable expenses from it. A personal budget helps you accumulate funds to build an emergency fund. It must have around 6-12 months of living expenses to stay financially fit during an illness or a layoff. Moreover, a personal budget controls spending and prevents you from falling into the loan trap.

Get Rid Of Debt
You have to invest in your middle age to attain vital financial goals. However, you cannot commence investing unless you have repaid all high-interest loans. You must settle costlier debt, such as credit card dues and personal loans, on priority. Moreover, focus on using a salary bonus or a windfall to repay high-interest debt and avoid more loans. One can use techniques such as debt avalanche, which targets debts with the highest interest rates first, to get out of the loan trap in middle age.

Invest To Achieve Long Term Financial Goals
Choose suitable investment options depending on your risk profile. Mutual funds help investors attain diverse financial goals, and you can commence investing even in middle age. You must focus on equity investments as they have the potential to offer inflation-beating returns over time.

Many people prefer investing in equity funds through the systematic investment plan or SIP. It is a facility offered by mutual fund houses where you regularly invest a fixed amount of money in mutual fund schemes. If you invest in equity funds regularly, irrespective of market levels, you can purchase more units when the stock market is down and fewer units when it is high. It averages out the purchase price of units over time, called Rupee Cost Averaging, without timing the stock market.
You must avail of term life insurance if you have dependents to ensure your family's financial goals are met on an untimely demise. Moreover, a health insurance plan covers hospitalisation expenses. Otherwise, you will have to liquidate investments set aside for primary financial goals. Get your finances back on track in middle age and build wealth for the future.

Also Read: Easy Money Moves For Single Mothers To Raise Financially Smart Kids
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