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Ramalingam K

Personal finance is of important to all of us and we all need to know, understand and follow the Rules of Personal Finance to be financially successful in life. Many may feel that one could learn the rules by experimentation; however in my opinion it could prove very costly. We all need finances as far as we live, so it is best to know, understand and follow these rules to lead a financially healthy life.

a) Don't You Work For Money…? Does Money Works For You?

"Every penny saved leads to a penny earned", and I am sure we would never like to just depend on our salary for a lifetime. Similarly saving and investing money would mean that the earnings can be utilized for a better lifestyle and a comfortable retired life. It could also mean that we could retire early and do the things that we always wanted out of the profits of our investment.

This is not to suggest that we should not enjoy once in a while probably in a restaurant or to watch a movie. It only means that we need to use our common sense and look at few major expenses in the earlier month and look for ways to reduce it. One such expense could be personal debt or other unwanted expenses.

We may think that it is easier to pay off personal debt in easy monthly installments; however I would say that it is better to save money and then buy anything. Look out for gimmicks like 0% interest; it is mostly on those goods that are overpriced, so ask the retailer how much you would have to pay if you paid in full and you would be surprised to know you would be paying a much lower price.

b) Be selective and keep the company of those that care for personal finance:

It has been rightly said that we are influenced by the company we keep and this applies to your personal finance too. We need to keep the company of relatives, friends or co-workers who use their money and savings to make money and also to keep their finances in control. If they do not, then it is best to look for others who follow the rules of personal finance as their attitude could influence you too.

Our neighbors also play a role on whether you follow the rules of personal finance. Our neighbors influence the size of the house, cost of furniture and size of TV that we have. Having costly neighbors' means we could go to a more amicable locality where they follow the rules of keeping finances in control and also to invest money to make more money.

It is always best not to mix with those that have extremes of income and it is advisable to spend more time with those who are following the successful financial rules.

c) Make it a rule to keep finances under control:

None of us can enjoy become financially independent and enjoy a higher lifestyle just by being casual about personal finances rules; we need to keep finances in our control.

The best rule to personal finances means being prepared for financial contingencies. This means being prepared and taking life insurance, disability insurance, auto insurance and health insurance. Purchases of any item are also to be planned well in advance.

It is advisable that one makes a balance sheet for his family on an annual basis to judge how well one is financially progressing.

Keeping finances in control also means paying bills on time and your inability means that you should find someone trustworthy that could help. Financial trouble in most people's life is caused by trauma like a health problem, an emotional problem like loss of a near and dear one or divorce or financial problem like losing a job, some unexpected expenses and cut in pay.

Being prepared for all these eventualities with sufficient emergency reserve will help you sail the boat safely in any climate.

d) The last rule is trying to accelerate all these rules for personal finance:

These first 3 rules can be fulfilled only by taking steps to fulfill and accelerate these rules. Savings can be increased by taking steps to advance and progress in one’s career that means fulfilling the first rule of making more savings to become financially independent and enjoy a better standard of life. One could increase the money one saves by lowering the amount one spends on few of the highest expenses. Next it is best to spend time with those that are financially shrewd and systematically building their wealth in their lifetime.

Surely all this could definitely bring about healthy personal finance planning.


The author is Ramalingam K, an MBA (Finance) and Certified Financial Planner.He is the Founder and Director of Holistic Investment Planners (http://www.holisticinvestment.in/) a firm that offers Financial Planning and Wealth Management.He can be reached at ramalingam@holisticinvestment.in.