1. Buy just enough insurance — today.
Insurances are the bodyguard of your wealth, most of us do not realise this. It is not only about your life, and your health. Majority of insurance products are more about wealth, they are fundamentally designed to protect your wealth during a crisis. Life & health insurances are more important than vehicle insurance.
Takeaway: Buy Term Insurance & health insurance ASAP.
2. Be prepared for an emergency.
In an emergency, good financial health is key to dealing with the crisis. Whether it's a job loss, a medical emergency, unexpected expense at home, a car accident or unexpected travel, all of these uncertain events affect your bank balance. Apart from these, COVID like crisis could put you into the cash crunch situation.
Takeaway: Keep at least 6 months of your regular expenses aside as an emergency fund.
3. Save as much as you reasonably can.
Saving is not about compromising on things you like or living completely frugally. It is more about realising your future needs. Once you are aware of the future goals and the amount you need to reach them, then it automatically finds its way into your budget. Your mind starts balancing present & future needs.
Takeaway: Save & invest before you spend.
4. Remember that “no debt” is equal to investment.
In many academic entrance exams, there is a thing called negative marking. You get punished for wrong answers by losing rewards earned by the right answers. Think of debt as a negative marking in your financial journey. Every unnecessary debt takes away part of your future income.
Takeaway: Be reasonable about taking loans and increasing EMIs.
5. Invest mindfully.
We buy a smartphone after extensive research & watching hundreds of reviews on YouTube, but when it comes to financing, we just go with the gut feeling and casual ideas shared in the news or by friends. You get the gist, treat every product, including finance product equally before putting in your hard-earned money. Consult experts if you are not confident about investments and risks.
Takeaway: Read documents and policies carefully to understand the risk. Do thorough research on your own and consult experts, if required.
Very nice article on Basics of Personal Finance.