Financial Tips and Hacks That Should Be Common Knowledge?

On February 16, 2025 By newsroom Topic: India Money Advice

Here’s a collection of valuable financial advice and lesser-known hacks to help you manage and grow your money effectively:

Convert Group Health Insurance:
When leaving a job, convert your employer’s group health insurance to an individual policy to carry forward accrued Pre-Existing Disease (PED) waiting periods.
Term Insurance with Loans:
Always buy a pure term insurance plan covering the loan amount and interest for the loan duration. This ensures your family won’t be burdened if something happens to you.
Avoid Mixing Insurance and Investments:
Don’t buy endowment plans, ULIPs, or money-back policies.
Opt for pure insurance (term plans) for protection and use mutual funds or other instruments for investment.

Use Credit Cards Wisely:
Always pay the full balance, not just the minimum due.
Avoid cash withdrawals and EMI options unless absolutely necessary.
Use credit cards to build a credit score by paying off dues immediately.
Why Use Credit Cards:
In the current system, merchants factor in transaction fees for all buyers. Not using a credit card means you subsidize others who do.

Laddering Technique:
Split your corpus into FDs with staggered maturities (e.g., 1, 2, 3, 4, 5 years).
Benefits: Liquidity, better interest rate averaging, and reduced risk of rate fluctuations.
Break FDs into Smaller Parts:
Create multiple FDs instead of one large one.
In emergencies, you can break only the required amount, minimizing penalties.

Home Saver Loans:
Products like SBI Max Gain allow you to park surplus money in an overdraft account linked to your home loan.
Reduces interest on the loan while keeping your money accessible.
Education Loans as Investment:
Only take an education loan if it significantly boosts career prospects.
EMI Trap:
Avoid buying gadgets, vacations, or vehicles on EMIs. Save up and buy outright when possible.

Start Saving, Even If It’s Small:
If undecided where to invest, start with an FD or recurring deposit. Saving consistently is more critical than high returns initially.
Invest Early:
Use SIPs in index funds (e.g., Nifty 50, Sensex) or aggressive equity funds in your 20s.
Compound interest benefits the most when you start early.
Separate Savings and Spending Accounts:
Have at least two bank accounts:
- One for expenses.
- One exclusively for savings and investments.

Banks Are Not Advisors:
Banks aim for profit; their recommendations may not align with your best interests. Do your research.
Beware of Cashback and Rewards Traps:
Don’t let cashbacks or rewards influence purchases. Buy what you need, then enjoy any rewards as a bonus.
ULIPs Are Overpriced:
Investment parts of ULIPs are not governed by SEBI and often have high fees. Stick to mutual funds for better returns and transparency.

Leave Items in Your Cart for 48 Hours:
This helps curb impulse buying and often triggers discount notifications from e-commerce platforms.
Chase Discounts, Not Cashbacks:
Discounts reduce upfront costs, while cashbacks may encourage additional spending.

Avoid Over-Diversification in Mutual Funds:
Too many funds often result in overlap and dilute returns. A couple of good funds are usually sufficient.
Use eNPS Over POP-SP for NPS Accounts:
eNPS avoids unnecessary charges by intermediaries.

Professional Growth:
Upskill regularly to boost earning potential.
Personal Development:
Learn hobbies (e.g., cooking, woodworking) to enhance life skills and reduce external expenses.

Build financial literacy and make informed decisions.
Focus on habits like saving, investing early, and avoiding unnecessary debt.
Use your money as a tool for freedom, security, and enjoyment—not just accumulation.

With these hacks and tips, you can effectively navigate personal finance and build a secure future.