12 habits to avoid financial crisis

For a cool and calm life it is not necessary to be on top position of a company or become a business tycoon. Most important factor is that how effectively you are managing your resources. If there is a financial crisis or crunch then no one can be happy and a hell of issues crop up in our life – that’s why money is an important resource to plan. Being in a financial institution I was fortunate enough to enjoy company of some very learned and experienced financial wizards. Who always say that financial planning starts from our home and some small changes in our habits and lifestyle gives extraordinary results. Here are few habits to avoid financial crisis which I am also trying to practice:

1. Avoid or limit online shopping and use of credit / debit card
Internet banking revolution has made our life very convenient and electrifying. It gives us freedom to limitless spends. You need not to worry how much is in you pocket and the psychological pressure / impact is not there which we feel while counting and paying the cash. If you wish to reduce your expenses, stop using the cards, shift to cash.
2. Control your emotional or impulse spending
Impulse spending is the biggest budget failure reason for many of us, and a sure way to be in financial crisis. Always think why you are buying before buying anything. You should not buy any thing just because you want to make someone happy or you had a fight or want to impress someone or your friend is having this stuff or just for fun or because you are waiting in a mall.  
3. Avoid paying attention to friends / colleagues spends and their suggestion
These days we are controlled by our social circle. what you are eating? you should buy this…what you wear? our friends / colleagues / relatives put pressure on us by asking and suggesting many things. Avoid flowing in such pressure.
4. Get rid of any kind of addiction
Any type of addiction is harmful for your physical and financial health. Anything which becomes addiction sucks money out from our system. It may be an addiction to partying, alcohol, shopping, travelling, gadgets, clothing…anything.
5. Don’t become a victim of media
Don’t buy just because of attractive and encouraging advertisement. Evaluate according to your need.
6. Make plan and understand the investment concepts
Make plan for every expense – shopping, travelling, picnic, small party, big party, monthly expense etc. Understand the power of small savings and compounding.
7. Make few savings compulsory and automagical
This is on top priority in my list. Make it the first installment you pay on the day of your salary or payment. If possible, make it automatic by giving standing instruction or ECS  or by doing disciplined online transfers.  Never miss this transaction — just make sure it happens, each and every salary / payment day.
8. Track & Evaluate your expense
If you have never tracked your expenses, try it for month as an experiment – track your daily expenses for a month. Then evaluate the spending trends and figure which is necessary and where you can cut down.
9. Invest for your future
I always find people saying – Invest in future. If everyone is reciting this statement then it must have potential. Start saving / investing for future, the early the better. Invest for your retirement, house, child education etc. You can use the below link to calculate your future fund requirement : Retirement planning tool.
10. Keep your Family secure
I am from Life Insurance sector and understand this very well. Always have your emergency fund ready, so that when you require you get the same immediately. Have adequate life insurance, so that your family can get the money when you are not there for them. Go for home and valuable item insurance schemes. Your loans should be always insured.
11. Use envelope system
My wife does this and I bet this is a very effective way of planning and tracking your monthly expense. Keep separate envelopes for all your fixed monthly expenses which you pay in cash – like one for gas, one for groceries, one for eating out, one for vegetables, newspaper, electricity, outing, maid etc. Do this on very first day of your salary or payment day. Whenever any expense exceeds the trend, you will immediately come to know. This may be useful for you and can be used an option for segregation and tracking of expense.
12. Pay bills immediately
Pay all your bills immediately and don’t wait for last day. This will help you in planning your budgets well.


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