The Indian middle class plays a crucial role in India’s growth and development. However, many middle class families in India are unable to get any financial peace due to unplanned spending. In this article, I will list down 14 smart financial tips for middle class people to get financial peace.
Money indeed plays a very important role in everyday life. If you search the Internet, you will find a large number of articles on this topic. “Financial tips for middle class people”.
If you want to know some financial tips for middle class people, then you’ve landed on the right page. You will find here a collection of the very best financial tips that middle class people in India need to know.
You do not have to put them all into practice immediately. But, you should develop the habit of incorporating them into your life to ensure financial peace at all times.
Table of Contents
14 Smart Financial Tips for Middle Class People
For most of the middle class people, getting rich quick will always be just a dream. But some financial tips can help middle class people live a comfortable financial life.
Here is a list of best financial tips for middle class people in India.
1. Make monthly budget
2. Build an emergency fund
3. Buy term life insurance
4. Buy health insurance
5. Start saving money
6. Start investing money
7. Learn the basics of investing
8. Identify your money goals
9. Find additional sources of income
10. Improve your skills
11. Do not fall in EMI trap
12. Avoid unnecessary shopping
13. Use a credit card wisely
14. Enjoy life too
Some financial tips for middle class people in India.
#1. Make monthly budget
Budgeting is important no matter what your income. To get started, always make a note of everything you spend. Just do it for one month. This way, you will come to know where your money is going.
Using this data, you can make a budget for the next month. Trust me, you can control your expenses if you plan with a budget. Try it, because only you can make yourself disciplined.
#2. Build an emergency fund
Having an emergency fund is very important. It is an essential corpus that you must keep aside for a rainy day. This fund can be a lifesaver when some unexpected happen in life.
To build an emergency fund, just set aside a certain amount every month in a separate bank account. As per financial experts, the emergency fund amount should cover up to six months of living expenses.
#3. Buy term life insurance
Life is unpredictable. The emergencies in life never knock your door before coming. Therefore, do insure yourself adequately to ensure that your family is financially secure if you are not around.
Term life insurance provides financial support to your family in the event of an unforeseen situation. It is the simplest and most affordable form of life insurance. Therefore, buy a term life insurance policy to secure your family’s future.
#4. Buy health insurance
Don’t stop with just term life insurance cover. Medical emergencies are also unpredictable. Therefore, you must buy health insurance for you and your family. Trust me, one medical emergency can eat your entire savings and derail your finances.
With rising medical expenses, health insurance is a basic requirement for every individual to protect their savings. I pray that you don’t have to face any illness but you must have a backup for a safe future.
#5. Start saving money
Remember, saving money is not a natural habit. You have to make it one by paying yourself first. Pay yourself first means save first every time you are paid before spending. Follow the rule: Income – Saving = Expenditure.
You must start this habit from your very first earning. A good idea to start is to think of this saving as a monthly expense. You should use the balance money to spend wherever you want. In a month or two, you will be on the way to meeting your financial goals.
#6. Start investing money
Don’t just stop at saving money. The next step is to invest it. Start investing at an early age can give you a big advantage. By starting to invest early, you allow your money more time to grow. This is an effective and easiest way to build massive wealth that meets your future goals.
We know money has time value and it grows with time. The power of compounding helps your money grow exponentially. And there’s no better time to start investing today. Also remember, investing in the right avenues is equally important.
#7. Learn the basics of investing
Before you begin investing, it is wise to learn the basics of investing. Here, the investing basics are your understanding of investing. The more you know, the better decisions you will make about investing.
You should know the basic types of investments. Also know some terms like compounding, short term, and long term investment, etc. Know your risk appetite. Learn about the best ways to grow your money. Also, learn how to save tax. This will help you make better decisions about your money.
#8. Identify your money goals
You should know what your financial goals are. Also, identify when and how much amount would you require for these goals. Setting specific goals is an important step in achieving your financial dreams.
You should set goals like marriage, child education, buying a car and home, starting a business, special vacation, retirement planning, etc. This will motivate you to save and invest money accordingly to meet your goals.
#9. Find additional sources of income
This is one of the important financial tips for middle class people in India. More sources of income mean more income to grow rich. With multiple streams of income, you can do more with your money. Therefore, try to look for more opportunities for extra earning to achieve your financial goals.
There are things you can do on the side of your office job. This could be an online business, a part-time job, investment in equities, private tuitions, a passive income stream, renting out a property or vehicle, etc. Multiple ways of income will make you rich.
Also Read: 10 Ways to earn money online in India
Also Read: 10 Best websites to make money online as freelancer
#10. Improve your skills
Improve your skills to stay competitive in the workplace. Do not blame luck every time. If you want job security, you must increase your value in the job market. You need to focus on your growth.
Start doing something that increases your value. Work hard and learn new skills in your area of expertise. Also, find some ways to offer more value to the marketplace. Make learning a part of your daily agenda.
Also read: 12 Best job sites in India to find new jobs
#11. Do not fall in EMI trap
Almost all banks and credit card companies are offering to convert your payments into EMI. You can instantly convert your credit card purchases into EMI. Even some financial companies are issuing an EMI card with a pre-approved EMI limit.
Beware! Don’t fall into the trap of EMI. When you buy a product on EMI, you end up paying a huge amount of interest. Many lenders/retailers offer No Cost EMI. This is also a marketing gimmick. In such cases, the interest cost in some way goes into your purchase price.
#12. Avoid unnecessary shopping
Don’t buy things on impulse. Avoid going out for shopping just because a sale is going on. Make a list of the things you need and go shopping with that list. Then buy the stuff from that list only.
Always buy what you need. Avoid buying things/stuffs that are not on your list. If you find anything that you need then apply a second thought before buying it. A penny saved is a penny earned. Trust me, your life will be much more satisfying.
#13. Use a credit card wisely
Own a credit card and make it your friend not enemy. If you use your credit card wisely it can save you a lot of money. For instance, when you pay with a credit card you could get up to 50 interest-free days. From starting of the month to the bill date.
Many credit cards come with different reward programs that will accrue points, discounts, or other benefits. Usually, the rewards on a credit card are higher than a debit card. Therefore, there is no harm in using a credit card if you pay your monthly dues on time.
#14. Enjoy life too
We only live once, so live a good life. There is no doubt you must earn and save money for the future. But never forget spending on the things you love to do. It’s always good to spend some of your money on things that will make you happy.
So don’t just cut out all expenses at the cost of your happiness as long as you can afford it. Enjoy your life. Always spend quality time with the family. For instance, go for a dinner or memorable holiday vacation with the family.
Also Read: List of Banks in India
Also Read: How to invest in Direct Mutual Funds in India?
Bonus: Some extra financial tips for middle class people
1. If you want to become rich then learn about personal finance. Read some personal books like “Rich Dad Poor Dad” written by Robert T. Kiyosaki.
2. Be happy with what you earn but never satisfied. Try to increase your income every year.
3. Don’t hesitate to start investing with little money. SIP is a tool that can turn your small amounts into a big one in the long term.
4. It is always better to diversify my investments. Invest your money in multiple investment avenues such as mutual funds, FD, RD, PPF, NSC, NPS, Bonds, and equity market
5. Don’t invest directly in stocks if you do not know the equity market.
6. Invest money into mutual funds through SIP (Systematic Investment Plan).
7. Don’t invest in Ponzi financial schemes. Please don’t be greedy and fall in such traps.
8. If you are unable to identify your financial goals and invest accordingly then consult a fee-only financial planner.
9. Plan your retirement. Never be dependent on your children for monetary support post your retirement.
10. You should never compromise on your child’s education. Education is the strongest weapon that one can hold.
11. Always inculcate the habit of savings in your children. This will help the child to understand the value of money.
12. A high salary doesn’t make you rich. Therefore, teach your children the skills to become entrepreneurs.
13. Never compete with others on matters of spending. Buy things as per necessity not what your relative, colleague, or neighbor have.
14. Don’t waste your time on social media or the internet instead use that time for productive activities.
15. Last but not the least, change your middle-class mindset. It is very important to improve your financial health.
Final Thoughts
These are 14 smart financial tips for middle class people to get financial peace. You don’t need a degree in finance to manage your finances. Trust me, start with one step at a time and they will work for you.
Learn about personal finance and improve your knowledge. With time and practice, you can improve your financial health. I hope this post adds value to your existing financial planning and awareness.
14 Smart Financial Tips for Middle Class People to get financial peace
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