Some wise people have made a smart new year's resolution for 2008: to manage money better. Are you one of them? We have a checklist of ideas to help you get started. So, whether you take a loan or are planning to invest, keep these thumb rules in mind.
Smart loan mantras
� Borrow money to buy ONLY useful assets, such as a home, a car or to fund your education. It's a strict �no-no� for personal loans, credit card loans and if you plan to take a holiday on equated monthly installments (EMI).
� Your EMI for all loans put together should not exceed more than 40 to 50 per cent of your take-home salary.
� Before opting for a loan, shop around for the cheapest interest rate.
Getting insured?
Buy insurance when you really want to be insured, not when you want to invest or save tax. Your insurance policy should provide financial security to your family, and here's why you must opt for one:
� For protection against medical emergencies. Opt for a mediclaim policy.
� For protection of life or disability. Opt for a term or accident policy.
� For protection of home loan. Opt for a term or mortgage policy.
� To protect your home and valuables. Opt for a home insurance policy.
Insurance plans like endowment, money-back, whole-life or unit linked schemes are not mentioned in the above category, because these are complicated, not to mention rigid; hence they should be preferably avoided. Remember, we are looking for simple, cheap, yet effective insurance plans.
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