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10 Super Tips to Achieve Financial Success

dateKnowledge Centre Team dateSeptember 18, 2021 views214 Views
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Struggling to manage your finances? We understand that making financial decisions isn't easy. Various governing factors such as budgeting, debt, credit, savings, spending, interest rates affect our financial decisions. It's important to know these factors to avoid any future financial crisis.

Everyone has different views and ways of handling their finances or investing their money. People usually get confused during investment as there are different methods with different risks. There are numerous reasons of why you should have a proper financial planning and here are ten super tips to make your financial planning a complete success.

Ten Tips to Attain Financial Success

1. Budget Strategy

Start by creating a budget strategy. Try to follow the budget strategy strictly. A budget counts as the first step towards achieving financial success. A budget enables you to track your money, spending, and earnings. A Budget strategy majorly supports saving goals. You can use various online budgeting apps to accomplish your budget strategy.

2. Financial Calendar

Remember to maintain a financial calendar with notes of your finances. Keep tabs on the flow of money, including spending, investing, or receiving money. A financial calendar must include reminders for important financial tasks, such as paying quarterly taxes, paying bank instalments, or checking your credit report. This would help you to associate dates with your finances.

3. Net Worth

Net worth is the sum of all your assets minus the sum of all your debts. For example, you have Rs 1,00,000 in the bank, a car worth Rs 5,00,000, and Rs 5,00,000 of credit card debt. Your assets are worth Rs 6,00,000, and your debts are 5,00,000. So, your total net worth is Rs 1,00,000.

Always try to improve your net worth. Monitoring and organizing your net worth is an essential asset for achieving financial success.

4. Control your Impulse Purchase Habit

Impulse purchases may lead to empty bank balances. To control impulse purchases, decide a purchasing limit and keep a record of the purchase. Before spending money, prioritize your needs and try to delay unnecessary purchases.

5. Know your Debt and Interest Rates

List down the total amounts of everything you owe, including monthly payments, instalments or any loan payback lengths. Plan your consecutive steps to clear the debts and update the list every month. Use the Interest rates to determine which debts to pay off first and which credit cards to avoid. Interest rates give you a better understanding of debt functions which in turn affect your finances.

6. Handle your Debt and Learn Credit

There are two main finance strategies to handle debts. Either you start by paying off the debt with the highest interest rate or you can start by paying the smallest debts which clears your debts faster. Utilize your credits wisely and avoid debts. Using credits irresponsibly results in an increase in debt which causes a financial crisis.

7. Manage your Credit Score

The credit utilization rate is a measure of the amount of available credit you're using. For example, if you're able to borrow up to Rs 1,00,000 on a credit card and your balance is Rs 50,000, then your credit utilization rate would be 50%.

A high credit utilization rate affects your credit score negatively. Try not to increase your credit utilization rate by more than 30%. Remember that your credit score has a massive impact on financial capabilities. Don't forget to check your credit score and report regularly.

8. Buy a Savings Plan

A crucial part of achieving financial success is to develop a savings plan. Start with a lenient savings plan and follow it without cheating. Calculate your savings and fix an amount you plan to save every month. Then increase this amount steadily or at least try to maintain it.

Create a separate bank account for savings rather than using your current bank account. Some banks offer interest on the amount of savings deposited in the bank account. Explore and choose the most suitable savings plan.

9. Investing Options

There are numerous investment options such as gold investment, real estate investment trusts (REIT), life insurance policies, and mortgage utilities. Conduct well research and understand the options available, also study each investment method's pros and cons beforehand.

Investing in your retirement plan is another critical financial tip. If you get a chance, contribute to an employer-sponsored retirement savings program. An important money management tip to remember an asset puts money into your pocket while a liability draws money out of your pocket.

10. Create and Update your Will

Create a will regardless of how much you own. This is the most neglected financial advice so consider writing a will to protect your loved ones. You can even create your own will with software.

Achieving financial success is a long journey. It requires dedication and firm beliefs in your financial goals. You must focus on your plans, there's no point in comparing yourself with others while managing your finances.

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Frequently Asked Questions (FAQs) Related to Life Insurance Policies

The premium is one of the most important factors to consider before buying a life insurance policy. Many people buy a life insurance policy with a high sum assured but are unable to process the premiums for the entire premium payment tenure. You can get a better idea of the premium outgo with the premium calculator available in the 'Tools and Calculator' section of www.canarahsbclife.com.

Life insurance plans come with several riders which increase the efficiency of the policy for the buyer. For instance, if you have a history of terminal illness in your family it would be advisable to opt for terminal illness rider with your term insurance plan. Riders or add-ons help in customising the standard policy benefits for the requirement of different families. The iSelect term insurance plan comes with a built-in cover for terminal illness, and option for protection against accidental death or disability. You can also opt to cover your spouse's life under the same policy by paying an additional premium.

Life insurance companies calculate the premiums based on several factors such as age, gender and occupation.

Age: It is one of the biggest factors that influence life insurance premiums. Premiums tend to be low when the life insured is younger as the chance of contracting diseases is low. Young people also opt for the best life insurance policies with longer tenures and pay premiums for a longer duration, which makes the policy cheaper for young people.

Gender: The insurance premium for women is generally lower when it comes to life insurance plans. Women live longer and pose a lesser risk of a claim leading to lower premiums for them.

Lifestyle habits: The premiums for people who smoke or drink is always higher due to higher health risks.

Policy term: Policy terms are also taken into consideration by insurers while deciding the premium amount. Life insurance policies with longer tenure are cheaper as compared to short-duration policies.

Mode of purchase: The platform that you use to buy the best life insurance policy also determines how much you will have to pay for the plan. People who buy life insurance policies online have to pay lower premiums as compared to offline policies.

Occupation: The nature of your work is an important factor that influences the premium amount. Certain occupations like shipping and mining are considered more dangerous as compared to jobs in services industries. The insurance premium rises with the risk profile.

Processing life insurance claim is a transparent and smooth process with Canara HSBC Oriental Bank of Commerce Life Insurance.

In case of the death of the life insured, the nominee will have to intimate the company by filling a Death Claim Form and sending it to the nearest branch office.

Once the form is received, the claim is registered by the insurer.

After the registration of the claim, the company will send the claims pack along with the related forms such as physician’s statement form and employer certificate that need to be filled.

Along with the duly filled forms a few documents such as original [policy document, death certificate, copy of bank passbook, hospital or treatment records, photo identification and address proof have to be provided.

The claim is processed on the submission of relevant documents. Once the documents are verified, the claim amount is released post all due diligence.

Household expenses rise with age. The cost of children's education increases along with other lifestyle expenses. The iSelect term plan offers an option to increase the cover according to the life stage. If opted, the insurance cover increases by 25% at every 5-year terminal till the 20th policy year.

Even though a life insurance policy is bought to protect your family in your absence, there are chances of the claim being rejected due to several factors.

False information: If the policyholder provides false information or conceals important information while buying the life insurance policy, the insurer has the right to reject the claim after his/her death.

Type of death: Deaths due to suicide in first policy year, intoxication or pre-existing disease is not covered under life insurance plan.

Premium payment: The payment of premiums on time is of utmost important to avail the benefits of life insurance. Life insurance policy may lapse on the failure to pay the premiums

Nominee details: A life insurance company can put the claim on hold if the nominee details have not been filled or not been updated by the policyholder.

Suicide: If the life insured commits suicide within 12 months of buying the life insurance policy, the insurance companies generally pay 80% of the total premiums paid.

Buying the best life insurance plan online is not only safe but a better option. Online life insurance policies have lower premiums and the individual is not required to visit the insurer's branch or a bank. The best life insurance policies online insurance offer higher benefits. Customers should, however, buy online life insurance policies only from credible insurers and should check for SSL certificate on the website to ensure that the website is legitimate.

The cost of life insurance policies varies depending on factors like age, gender and occupation. The average cost of life insurance plans, especially term plans, is very low compared to the amount of coverage offered.

An individual is allowed to have multiple life insurance policies. People opt for more than one life insurance policy to increase the cover or avoid claim rejection. In case of multiple life insurance policies, even if the claim is rejected by one insurer, the beneficiaries may receive the benefit from a different insurer.

Life insurance policies are of different types. In case of unit-linked or endowment policies the policyholder receives the maturity benefit at the end of the policy term. However, in the case of term insurance plans, there are no maturity benefits. The death benefit is only paid out after the death of the life insured.

When you buy a life insurance policy, the insurance company asks for the nominee details. Only the person named as the nominee in the life insurance plan can cash out in case of death of life insured.

A life insurance policy is generally taken for a specified period. After the policy duration of a term plan gets over, the policy simply terminates and ceases to exist. However, in case of unit-linked plans or endowment, you can use the policy as a tool for retirement planning and the accumulated corpus is used by the insurer to pay you monthly amounts for your entire life.

If a policyholder purchases a term plan for 25 years and dies during the policy term, the beneficiary receives the death benefit. In case of iSelect term plan, the policy provides four payment options to the beneficiaries. If the regular payment option is chosen, the policy works as a source of regular income.

It is a popular misconception that life insurance plans are only for accidental deaths. A term life insurance plan like iSelect Smart360 Term Plan also covers terminal disease along with death. A terminal illness cover is important as health insurance pays only for the cost of treatment and hospitalization, but a terminal illness cover pays you a lump-sum amount which takes care of other expenses. On the other hand, unit-linked policies such as Invest 4G cover death and also provide decent returns for other financial goals such as buying a house of child's education.

It is ideal to buy a life insurance plan in your early 20s because it is the time when people have just started with their professional life and so there are lesser responsibilities and financial liabilities to take care of. Also, if you buy the best life insurance plan at this age, you will be paying relatively lower insurance premiums since it’s a due fact that mortality rate in case of young people is low. And that is why life insurance companies offer lesser premium rates to younger people as they think that they are most likely to be fit and healthier with less chances of filing a claim in future.

Once you have cancelled your life insurance policy, you will instantly lose your life insurance cover. Afterwards, your insurance company will get in touch with you and ask for valid reasons regarding the cancellation of your policy. In case you cancel your life insurance policy within the grace period, i.e. 15 to 30 days, depending on your insurer, then insurance company will reimburse the premium amount paid by you. But, no refunds will be paid to you if the policy is cancelled after the grace period.

Yes, you can take life insurance under Married Women’s Property (MWP) Act, 1984 only if you are a married man and a resident of India. Buying a life insurance plan under MWP Act would be helpful in saving your family’s financial well-being when you are not around. As per this policy, only wife and children would be eligible to receive the death benefits. You can also buy a policy if you are a widower or a divorcee. However, in that case, you can give your child’s name as your beneficiary. It is very simple to buy a life plan under MWP Act. All you need to do is to fill up an MWP addendum while purchasing an insurance policy.

Yes, there are different payment options for you to pay premiums. Here’re some of them

    1. Regular premium payment option – This premium payment option allows you to pay premiums equal to your policy term either monthly, quarterly, half yearly or annually.

    2. Single payment option – Through this premium payment option, you can pay the lump-sum amount in one single payment.

    3. Limited payment option -In this premium payment option, you can pay premiums for a specific period of time less than policy term either monthly, quarterly, half yearly or annually, but benefits of insurance can be enjoyed for a longer period of time.

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