Top Ways To Manage Your Business Finances Effectively

 Every new business begins with personal seed money, but it becomes crucial to keep business finances separate from personal finances. The well-managed balance-sheet of a company eliminates any hindrances that could occur with a balance-sheet full of loopholes.

 Maintaining business finances separate from personal finances is important because managing a business involves many dynamic changes and decisions. Some days the business is flourishing and blooming, but other days you may have to make many difficult decisions and borrow credit even when you haven't planned for it. These situations would naturally have an impact on your credit score.

 If you maintain your business credit profile separate from your personal credit profile, it becomes  easier to keep your profiles safe from the ups and downs of either. The success of your business depends on how efficiently you manage your finances.

 Here are a few pointers that will help you manage business finances effectively:

● Don't underestimate the importance of financial projections. You won't know where you're going until you create targets for your business. Having projections in place will help you determine how much effort you will need to contribute in the financial year to grow your turnover. This will also let you have your tax plan in place. You would not want to pay extra when a few investments here and there could help you save up and grow your business at the same time.

● Stay up-to-date on invoicing and managing expenses. It is best to maintain the habit of book-keeping at regular intervals. Whether it is a weekly or monthly plan, ensure that you record all invoices in one place for easy tracking and quick reference, if needed. Stay on top of things and send invoices as soon as you provide your goods and services. Don't forget to do regular follow-ups on the sent invoices to see if they are on track. Similarly, clear invoices as soon as you receive them.

● Keep a separate business bank account. If you mix your business money with your finances, you are merely inviting losses and tax chaos that will mostly be difficult to explain to the authorities. When you keep your business money separate from your personal finances, it becomes easy to gauge your business profits and ensure that your taxes are taken care of.

● Keep track of the personal loans you picked for your business. Every business begins with personal credit, and once your business starts making money, you can repay it quickly. Apart from a director's loan, avoid taking any other personal loans directed towards your business.

● Don't ignore the power of a business credit card. The account of a business owner is never stagnant, somedays it would be full of cash, and on other days, your account might not have enough liquid money, but your expected payments could increase your spending limits. A business credit card will help you ensure uninterrupted business growth with a backup to carry out transaction-specific to your business.

● Pay yourself first. This doesn't mean that you gather all the profits into your pocket because that won't be the appropriate award. The best thing is to assign 10% of the earnings to yourself and redirect the rest to your business. This will keep your business running and not leave you without any earnings. It also provides you a safety shield for your business expenses and keeps your personal costs secure.

● Don't hold off expansion if you feel you are ready. Every expense you make towards your business will contribute to its growth and expansion. If all the factors are in your favor for development, then you should take the step to invest your surplus earnings in the business itself.

● Evaluate your partners with CRIF's business information report. Every time you make a business partnership for products, supplies, etc., it is essential to know all about your partner's credit history. It includes how well your potential partner can handle tricky business situations, credit lines, legal issues, etc. CRIF leverages its presence in numerous countries to extend businesses' support in analyzing their partners in-depth before establishing a business relationship.

 All of these steps will help you manage your business finances and develop your creditworthiness that will reflect on your CRIF Business Credit Score.

5 Ways To Break Bad Credit

Not all credit scores are excellent and everyone’s score is not perfect all the time. There is always a scope for some errors that can lead to a few bumps in the road. Your credit score is a quantifier for how responsibly you have maintained your credit and repaid them. Now, if you have made a few mistakes like missing loan EMIs or credit card dues, then rebuilding your CRIF credit score should be the first thing on your mind.

 Before you devise a whole plan on how to increase your score, you might first want to address bad credit habits that you could have developed. It’s time to replace them with good credit habits and build a healthy credit score.

 Related Reads:  7 QUICK TIPS TO INCREASE YOUR CREDIT SCORE

 Here’s a list of habits that could be considered bad for your credit health:

● Forgetting the importance of keeping a regular check on your credit score

● Opting for minimum payment options or not paying EMIs and dues altogether

● Taking your credit card statement lightly and not going through it thoroughly

● Over-utilizing your credit cards

● Closing credit card accounts without evaluating their impact on your credit report

 If you have made any of these mistakes, your credit score will see its impact but don’t worry. You can always change these habits and get your credit score back on track by developing good habits and filling your credit history with positive information such as the ones listed below:

 ● Monitor your credit continuously

If a bank checks your credit score, your score will see a drop since it counts as a hard inquiry but not when you check your score. Don’t forget to keep a close eye on your credit score, especially before planning a significant expense.

Keeping a close eye on your credit score will help you iron out the creases that could affect your credit applications. Right from a minute glitch in your KYC details to multiple hard inquiries you have not authorized, ensure that your credit report is clean and rightfully informed.

Checking your credit score regularly will help you track how positively or negatively different factors affect it. This analysis will help you identify the steps to address the potential issues and fix them in time.

● Learn how to read your credit card bill

Get into the habit of going through your bills thoroughly. If you are using your credit card, it becomes your duty to take a close look at the expenses, especially if you are an active credit card user.

Any credit card is susceptible to fraudulent attacks and not checking your statement every month could make you miss such unauthorized activities. If and when you find any such transactions, you should immediately file a dispute to fix it and ensure that it doesn’t impact your credit score.

● Keep your credit utilization low

Your credit utilization is the second most crucial factor in determining your credit score. It tells you how much credit you are using out of your entire available credit limit.

If you utilize over 40% of your available credit limit, you could appear as a credit hungry individual to the banks and financial institutions. To ensure that your credit utilization is in check, keep your credit card expenses to a minimum and take only the required loan amount.

● Avoid closing your credit card account

If you are not a frequent credit card user and are planning to close an account, it might make sense but having old accounts on your credit report adds length to your credit history, which is good for your credit score. In addition to that, it adds to your available credit limit that increases your spending limit and keeps your credit utilization ratio in check.

However, if you plan to keep an inactive credit card open, banks often tend to close them if they are not used for a specific period. So use your card for a couple of purchases now and then to keep it active and contribute to your credit history.

● Build a positive payment history

Your payment history is the basis on which your entire credit report stands, so even one missed payment can bring your credit score down. To add to that, these negative entries stay on your credit report for an extended period. However, if you have missed just one payment, it is not too late to correct your mistake! It usually takes 30 days for a bank to report a missed payment to the credit bureaus. So you can always pay and avoid a negative entry on your report.

Once you start working, your expenses increase, and it is bound to affect your repayments but what’s important is to keep your dues at a minimum and stay regular with your payments.

It is always best to set reminders for your repayments or enable auto pay options for these to avoid any missed payments.

If you stay vigilant and closely monitor your credit report, you can always stay one step ahead in determining what is going right and wrong in it. All you have to do is inculcate these good credit habits and get rid of any bad credit habits that could affect your CRIF Credit Score.

5 Parameters to help you choose the right Credit Card for your needs!

 People opt for a credit card in order to have some extra buying capacity available whenever required. But this decision and your spending’s with it can make or break your credit profile. The payment landscape in India was largely dependent on the limit of a debit card for a very long time. However, the situation has evolved over a period of time where more and more millennials are relying on credit cards to make big and small purchases.

One thing that every credit card holder must bear in mind is that they need to be extremely disciplined with their credit card expenses. In simple words, they need to be aware of the fact that this will be an additional expense every month apart from other expenses that they usually pay for by a debit card.

A rising credit card is never good for your credit score and your overall credit profile as reflected in your credit report. Every negative entry on it can hamper your loan application evaluation process drastically.

Related Read:5 Major Ways Credit Cards Affect Your Credit Score 

Basically, the most important quality of a responsible credit card holder is discipline. Now, let’s take a look at the types of credit cards that an individual can avail in order to enjoy that extra buying cushion!

-        Basic Credit Cards: Best for new cardholders! They offer a minimum credit limit based on the income of the applicant.

-        Secured Credit Cards: If you are often left asking yourself “why is my credit score still low”, then using secured credit cards is a great way to turn the tables. The applicant will have to pay the amount equal to the credit limit in advance and make transactions for that amount through the cycle.

-        Credit Cards without an annual fee: Many banks offer these credit cards to their loyal account holders or extend it during a special offer season. Most suitable for those who do not use their credit cards often.

-        Cashback Credit Cards: Individuals who shop often could use some cashback from time to time. These cards also offer fuel cashback which is beneficial for those who commute to and fro.

-        Travel Credit Cards: A traveler moving across different countries cannot be concerned about exchange rates and conversions each time. A traveler’s credit card offers travel insurance, global acceptance, and better conversion rates.

-        Premium Credit Cards: These cards are offered to selected few users. It provides premium access to golf clubs, airport lounges, and several other benefits. Apart from that these cards come with a high credit limit.

-        Business Credit Cards: Entrepreneurs need to make big transactions without worrying about the daily transaction limits, which is where a business credit card comes in handy. They have high limits and extended only to those businesses that have proven their creditworthiness. Using a business credit card diligently under 30% without missing on the repayments can also positively contribute to your business credit score which can help you secure business loans.

But before assessing which credit card will be the best fit for you, it is important to evaluate these parameters first:

-        Spending habits: Every card has a different set of benefits and credit limits that are tailored for different spending habits. So, it is very important to identify the purpose of using a credit card.

-        If you are a shopper, then going for a credit card with a good reward program would suit you best. It could also be beneficial to consider the limit offered in comparison to your monthly income.

-        If you want to build your credit score, then go for a credit card with a low credit limit and no annual charges. This will ensure that you don’t burden yourself with large credit card dues and build your credit score peacefully.

-        If you want a credit card to be used only in cases of emergencies, then go for a card without any extra benefits or charges. Go for a basic credit card that can serve you in times of absolute need.

-        Interest rates: The interest rates can vary depending on 2 factors, one is the type of card and the other is the type of cardholder. There are banks that levy a flat interest rate on all credit cards. But make sure you evaluate this aspect in great detail to ensure you don’t end up paying a large interest rate. Another aspect to consider is the interest-free period if any.

-        Incentives: Credit card issuing companies are constantly on the lookout for new customers and to attract new customers, banks keep coming up with a few exclusive sets of incentives that would be extended to only those applicants who would apply in the given time period. It could be anything from an interest-free EMI to cashback and reward points. Do consider these while applying for a credit card.

-        Fees and charges: Some banks charge an additional joining fee for premium cards that have a higher credit limit. On the other hand, there are cards that levy no charges at all. So make your decision keeping in mind the fees in combination with the kind of spending limit you carry.

-        Credit limit: Last, but definitely not least, your credit limit is a very important parameter to consider. If your income is much lesser than your credit limit, then you will have to be extra cautious about your spending spree with the credit card. A higher limit attracts higher expenses but you should always set a limit for yourself depending on dues you can clear each month. Make sure you don’t have a rising pile of credit card debt.

Always keep in mind that every credit card transaction of yours gets recorded by the bank and reported to Credit Information Companies like CRIF that calculates your Credit Score. It is important to keep a special eye on the loan EMIs you pay through your credit card and your overall credit card dues to be cleared each month.

Never forget to keep a constant check on your Personal Credit Score to ensure that only the right credit entries are recorded by your bureau.

6 Ways to Build Your Credit Score with a Credit Card

People often suggest that any individual with a regular income should opt for a credit card to begin their credit history. It helps you take smaller loans on easy EMIs to add variety to your credit mix. The aim is to have maximum good credit on your credit history without displaying a credit hungry behavior. Now, if you do have a credit score below 750, then here is the way to build it over a period. The good news is that a low score is not permanent. A credit card is a great tool to use in times of emergencies and if used wisely, increase your credit score.

Build your credit score with a credit card

• Choose the right type of credit card:

Banks often offer several co-branded gift cards and cards that have specific incentives. While they might appear to be very attractive at the time, do evaluate your decision. Choose the best option as per your credit card usage. Instead of increasing your exposure and going for multiple credit cards, go for one or two of the most suitable options. Limit your credit exposure and keep your score in check regularly perform a credit check to keep a tab on your credit score.

• Consider your credit utilisation ratio before making spends:

Multiple credit cards do give you the freedom to spend the added credit limits. But remember that you should not display credit hungry behaviour. Even if you have a higher combined credit limit, make sure that you always maintain a credit utilisation of 30%-40%. It may look like a small ratio, but it is important to take this ratio seriously. Another thing to note is having multiple credit cards requires you to be more vigilant because it opens more opportunities for fraudster to commit identity fraud using any of your cards!

• Plan and forecast your card expenses:

Having a credit card can often push you to spend freely but it is very important to keep in mind your ability to pay back on the dues. It is always better to spend less than what you can afford to ensure timely repayment of your dues. Even before opting for easy EMIs, consider if any consumer durable loan or personal loan would be apt. All-in-all, evaluate every decision you make with your credit card because it is all going to reflect on your credit report. Also, keep some credit limit aside to use in case of emergencies.

• Opt for cards with 0% interest rate:

Keep a close eye on the type of interest rates offered on your credit cards. Several credit cards offer easy loans on 0% interest rates. Cards with the clause of having ‘zero percent interest rates’ don’t have any hidden charges, so there are no monthly interest rates or loan interest rates charged on them. These cards can save a lot of your money and help you build your credit score easily.

• Stay on the lookout for promotional offers on credit cards:

Banks keep putting out offers on credit cards which can be anything from shopping apparels to holiday packages especially around the holidays. Availing these offers can help you save money and create a good credit footprint so long as you make timely payments of your credit card dues.

• Always pay the full amount due:

Banks do give you the freedom to make a minimum payment, but it is very easy to get carried away with the reduced responsibility. Once in a while, it is okay to make the minimum payment, but you must keep in mind that the pending amount due is often added to the next amount due along with penalties. In addition to that, every month there is an additional amount to be paid back which will keep increasing every time you choose to pay the minimum amount. Paying the complete amount due each month adds creditworthiness and responsible borrowers to your credit information report analysis.

To build a healthy credit portfolio, it is important to inculcate good credit practices, even if you consider using credit cards. This will reflect positively on your credit report. Every borrower must keep in mind that to build a positive credit footprint. To know which of the above ways you must implement to have a good credit report, you can start by checking your CRIF Personal Credit Score with CRIF Solutions India.

What to do if my loan is denied?

Sujata planned to buy an expensive mobile phone. She went on for months conducting her research to find just the right phone and find out the exchange price for her existing mobile phone. Right when she decided that this is the weekend, she will go to make her purchase, she decided to apply for the loan. She was told that the amount would get disbursed into her account within days and that it would not be a big deal.But, when she called her personal banker to apply for the loan, she got a response that it was rejected.

Isn’t it infuriating when you have made your plan to make a purchase and your loan gets denied? As much as it seems like a huge loss, there is nothing personal or permanent about it. There are perfectly logical reasons behind the denied loan, and you can rectify it with a carefully designed plan.But before you start making a plan, it is important to first identify the reason behind the loan application getting denied.

Related Read:How I Raised My Credit Score by 250 Points

Why would your loan be denied?

There can be two primary factors that affect the approval and denial of your loan application. It can either be problems with your credit history or with the income. There are a few more factors that could have an impact. Let us look at these:

1. Credit: Your credit history plays an important role in determining your credit score. These two aspects are the base of evaluating your loan application and lenders may categorize your profile as risky if they see any significantly negative entries or any red flags related to your credit history while performing a credit check on your account. Below is a list of negative entries that can break your loan application:

• Delinquent payments
• High credit card balances
• More than required credit inquiries
• A relatively new credit history

Every lender sets a minimum credit score limit and if you fall below that mark, your loan application can be denied. If your loan application is denied due to this reason, you are legally entitled to a free credit report and a letter explaining the reasons behind your loan being denied.

So get access to your CRIF credit report and go through it thoroughly to come up with ways to tackle the issue at hand. But, if you do not receive these details with the loan denial, then make sure you make a request and get hold of them.

 2. Income: If your income levels do not match the lender’s minimum requirement for the loan amount, the lender can reject your loan application. Most lenders do not publish the information listing minimum income for loan eligibility which makes it hard to know if you have reached the income levels that are high enough to garner loan approval.

Another sub-section under the criteria of income is the debt-to-income ratio. If you have more debt than is suitable for your income, then your chances of receiving new credit gets slimmer. Every lender sets their debt-to-income ratio limit, but many lenders prefer a debt-to-income ratio of 40% or lower.

If this is the reason, then plan to clear your existing debt and increase your credit score before applying for a new loan. It will help your chances of getting new credit.

Getting loan with bad credit

Having a bad credit score will not stop you from taking on new credit so to say but it will definitely reduce your chances to acquire a big amount of credit. It also depends on how bad your personal or business credit score is. If you are a serial defaulter, then there are chances that lenders choose to reject your loan application till you take serious steps to make it better.

You can also find a co-applicant with a good credit history to help you take a loan. However, that is an option with only a few lenders. On boarding a co-applicant can definitely help you bag a loan and at lower interest rates as well, but it is their equal responsibility to ensure that the loan is repaid on time. So, remember that you cannot default on it.

Get started by checking your CRIF Credit Score before applying for a loan and make sure you have the complete information.

4 Practical Benefits of a Good Business Credit Score

A business credit score is akin to your personal credit score - just as a personal score is a measure of personal creditworthiness, a business credit score is a measure of your company’s creditworthiness. A business information report is used to calculate a score that the financers refer to make business lending decisions. Since businesses require huge capital, lenders seek to minimize risk as much as possible. Since a business credit report is a decent indicator of business credibility considering the various financial aspects it lists of an organization, it forms an inherent portion of credit risk management in banks & lending institutes and helps them calculate their risk. Recognizing the importance of a business credit score, let us ponder upon a few apparent benefits that a company can gain by maintaining a good credit score.

1. A Quick Pass to Qualify for A Loan

The best advantage of having a good business credit score is that you will get a premium treatment from the lender who will be more than delighted to extend a loan to your company. On the other hand, you can really struggle with a loan if you have a credit score of less than 700. Lenders are naturally hesitant to pass a loan to someone with an unstable or poor credit history, even though your current situation might seem better. It is a great sigh of relief when you get through the difficult process of credit approval with much ease. Any score above 750 is deemed as a good credit score for business loan.

2. Secure Better Deals

With a good credit score, you will not only get a loan, but you will also be in a position to negotiate and get it at a good interest rate. Better interest rates can save you a decent amount of money which you can pass over to your customers to win more clients or simply put the excess back into the business.

3. Separates Business with Personal Finances

Business credit helps you to separate and clearly define business and personal financial obligations. You can obtain a business loan without the need for a personal guarantee and your company debts will be reported only on your company’s credit information report. This reduces your personal liability and shields your personal assets. Alternatively, your personal spending patterns have no effect on the business credit score. Of course, your personal credit report still holds weight as the proprietor of a business. When you apply for a loan, lenders may want to review your personal credit score for added credit risk assessment along with your business’s credit report.

4. Build a Strong List of Suppliers

Strong business credit will not just help you secure loans, it will also get you into the good books of suppliers from whom you seek credit. When your suppliers perform a credit check on you, they get to clearly see the financial stability in your business and your positive track record of timely repayment. This makes them more comfortable in extending credit to you.

What can reduce your personal loan burden?

When savings get scanty with increasing monthly expenses, a personal loan can be a wise step to maintain a comfortable lifestyle. But wouldn’t it be nice to reduce the EMI burden and be done with the loan sooner? 

Picking up loans become an important part of your life as you begin to identify a lifestyle that suits you the best, the kind of investments you must make and goals you want to realize over a period. An unruly economic condition often comes in the way of maintaining a stable financial balance, like inflation pumping up daily expenses. In addition to these, we set aside chunks to invest for long term goals which can range between 5-15 years in duration and face low too high in risk exposure. In such a situation, it gets difficult to keep up with the usual expenses. This is where debt steps in! It’s a friendly partner that can set up everything it takes to keep you happy but at the cost of returning it back with interest.

Related Reads: Will settling a debt affect my credit score?

Amidst maintaining a lifestyle, paying off debt and planning for bigger goals in the future, you must plan to reduce the burden of repaying the loan EMIs!

Here are 6 ways to reduce loan EMI burden

1)      Clear your credit: There are two approaches you can take to clear your debts. You can either stack them up according to decreasing interest rates, or according to increasing amounts due. So you can either decide to pay off the loans that have higher interest rates or you can choose to pay off the smaller loans first & keep the biggest loan for the last.

In addition, ensure that you repay your credit card dues & loan EMIs on time to maintain your credit score for personal loan; this will help you avail lower interest rates.

2)      Contact current lenders: There are cases where the lenders can relax you from any change in the interest rates due to repo rate cuts & hikes. Make sure you maintain a relationship with your lending bank and are aware of the policies which can be implemented in your favor. Some banks which perform a credit check also relax interest rates if your credit history is long enough to qualify as a trustworthy borrower.

3)      Extend loan tenure: You can spread the same amount across a longer period which means that you will have to pay a lower loan EMI. This will help you clear more loans faster & then move on to the long-term debts. If you reduce your EMI and attempt to pay more every now & then, you can adjust the interest charged on outstanding debt.

4)      Control your expenses: Now that you have enough debt to take care of, avoid taking on any new debt. Spend only as much as you absolutely need to; no more, no less! Keep up with this approach till you clear most of your loan EMI & credit card dues. Once you clear a few loans and have some amount to spare out of your income, make sure that you begin investing that amount in a mix of financial instruments. This will balance your returns & risk exposure along with bringing you good returns.

5)      Increase EMI amount: If you have a surplus chunk kept on the side, use it to clear off your loans first. Another way to prepay loans is to leverage your increasing income & increasing your EMI accordingly. This will reduce the interest rate you would’ve paid for a longer tenure & increases your chances to boost your credit score.

6)      Review credit periodically: Always be aware of the terms & conditions that is in place with every loan you pick. Keep monitoring your loan EMI deductions and any changes in the policies. It is also advised that you monitor any other change in interest rates to prepare your finances in advance. Check your credit score & credit report to know your credit limit. This will help you maintain your credit utilization ratio within 30%.

One must opt for ways to maintain their lifestyles & achieve their goals but keeping in mind their financial commitments & affordability. Don’t take up any debt that will hamper your other expenses. Lastly, always maintain a surplus or a backup plan to support your needs.

If you are planning to evaluate your accounts & status, start by checking your CRIF credit score!

How to Check Your CRIF Business Credit Score?

A business credit score suggests lenders the likelihood of your repayment to them, promptly. Business credit scores can help banks, financial institutions, vendors, insurance companies and others to evaluate the financial as well as operational risks of working with you. If you have a business credit card for your company, you probably already have a business credit score. Companies and individuals use business credit scores for all kinds of reasons. Here’s what you need to know about business credit scores, and where to find them.

What is a business credit score?

Considering you are familiar with the concept of a personal credit score, a business credit score is also a 3-digit number indicating the creditworthiness of your business as an entity. A Business credit score is calculated from the data contained in your business credit report. In India, the score ranges between 300 and 900 where a score above 700 is considered good. A credit report reflects your creditworthiness and helps the lenders decide the terms, conditions, and interest on which to give you a business loan. CRIF business report consists of information such as nature of the business, address and related parties such as Promoters, Partners, Holding Company etc.

How to check your Business Credit Score on CRIF?

You can perform a CRIF business credit check by logging into CRIF.in and following 3 easy steps:

1. Fill in your details, Identification Proofs, and Address: You will be asked to provide your email ID first; Post which you will be presented with a form requiring the rest of the details such as Full Name, Mobile Number, Date of Birth, Residence Address & Gender. You will also have to submit your identification details such as PAN number, Voter’s ID, Passport Number, Driving License, or any other ID.

2. Review your Report type: Here you are presented with two options of downloading credit report; you can either BUY an instant credit report or you can opt for a FREE credit report. An instant credit report can be ready to download within 5 minutes but will cost you around Rs. 400 whereas a FREE credit report can take up to 3 working days to get ready for your viewing.

3. Authenticate your inquiry: Once you fill in all the details and select your report type, you will be asked to answer a multiple-choice question for identity verification. Upon a successful answer to one of these three questions, you will be presented with your report on your registered email ID.

How is your business credit score calculated?

    4. business credit bureaus in India calculate your business score. These bureaus receive your financial information from sources such as vendors, banks, data-gathering trade associations and business credit card issuers. This information generally is verified through third parties.

Why do you need a business credit score?

        When you are starting a new business venture or are looking to expand an existing one, a business credit score for business loan can help you secure the money you require. Good credit scores can enable you to take out business loans at lower rates, or make you eligible for lower insurance premiums. It protects your personal credit score by allowing you to take out business loans without signing a personal guarantee making you liable for any debts your business is unable to repay. Loans apart, a good business credit score is also an indication to your stakeholders, investors and insurance companies, that your company has a good financial standing in the market and signifies stability.

7 Easy Ways to Save Money

[Meta] — An individual needs money at different points in life. Right from planning a vacation to buying a house, all goals require savings to be realized. With the right disciple & patience, savings can be a cakewalk.

We all wish to have a huge savings at all points in time! However, reaching that goal of having enough savings requires a huge amount of patience & discipline. It takes a plan that is adhered to & respected for years at a stretch, so that you can enjoy the multifold benefits of the accumulated wealth in your future! You can realize your goals with this wealth, which can range from travelling the world to buying a house or car. Everyone has a different objective behind their saved corpus, but the plans they make are on similar lines. CRIF High Mark - one of the top credit information companies in India, sheds some light on a few integral parts of saving money that remain constant throughout. Let’s dive into them:

Related Reads: 5 Simple Steps to Create a Successful Monthly Budget

#1: Get rid of your debt

It is a simple calculation; the sooner you clear your debt, the faster you’ll be able to direct a substantial amount towards your savings. So, clear your credit card dues & loan EMIs on or before time so that you can put that amount to secure your future needs.

#2: Set aside a fixed percentage of your income for savings

Building your savings is a serious task & for that you need to be disciplined. Whether you earn Rs. 10,000 or Rs. 1 lakh per month, always dedicate a fixed percentage towards savings. You could explore various financial instruments to invest; anything between stocks, mutual funds & fixed deposits. What’s important is to stick to this percentage under any circumstances. If you have a salary of Rs. 10,000, and you decide to dedicate 20% of your salary to save, then you should put in Rs. 2000 towards savings each month.

#3: Stay away from luxuries you don’t need

There are some luxuries that can be done away with as your other goals & milestones in life take precedence. While some luxuries help you move ahead in life, others could be weighing you down by being an unneeded burden on your finances. Practice due diligence by trying to spend responsibly & keeping as much as you can for your future corpus. If you are single & planning to buy a car, reconsider its requirements against its maintenance cost. Instead, start using carpool services or consider the option when you buy a car. Similarly evaluate your other expenses as well!

#4: Assign goals & milestones to your savings

It is very helpful when you add purpose to all your savings. Setting goals & milestones only helps you gain clarity of the way in which you need to drive your savings. Assigning milestones adds to it for better judgement of the amount you need to save. Always dedicate a particular savings fund to a goal like down payment of a house, retirement funds etc. If you are looking for a loan to fund a new car or a new house, you will require a good credit score to become eligible. Keep in mind that every financial action of yours is either benefiting or hurting your credit score for personal loan.

#5: Record & evaluate your expenses

Get into the habit of maintaining a record of your monthly expenses. So, by doing this, your evaluation process will be faster & more accurate. You will be able to pinpoint exactly what is wrong or right about your monthly expenditures. Take time to sit back & analyze it every month to decide whether a change is needed or not.

#6: Set your priorities

You should be able to highlight your priorities & take a call on your spending habits when necessary. Make savings your priority & be ready to give-up on the momentary moments of happiness for the bigger cause. Try to eat outside as little as possible & go on a spending spree only when needed.

#7: Create a financial plan

The crux of the entire wealth creation game is to make a financial plan. When you begin, you need to clearly identify your goals, expenses, recurring bills & luxuries. Make sure that you do not dedicate all your monthly income to these categories & set aside a good chunk of money for savings. Occassionally perform a credit check so that you don’t lose track of your credit score.

Keeping a sound financial plan in place will not only help you manage your expenses well, it will keep you out of debt & help in planning for the timeline of the credit lines you may plan to pick up like a home loan or a car loan. You will always be able to keep a check on your debts, which means you will have a good credit score!

If you are planning to begin your journey to wealth creation, do so by checking your CRIF Personal Credit Score here.