Youngminds-digital

 Inflation reduces the value of money, which means that with the same amount of money, you can purchase lesser amount of goods and services than before. This happens due to a general increase in prices of goods and services. For example, at an inflation rate of 6 percent per annum, an item that costs Rs.100/- now will cost Rs.106/- next year. The below chart shows how the value of Rs. 1,00,000 will reduce over a period of time(5 years, 10 years, 15 years and 20 years), assuming average inflation rate of  6%. Individuals have little controls over inflation. However, there are ways to reduce the adverse impact of inflation on personal finances by: Prioritize spending and cutting unnecessary expenses. Diversifying your investments wisely in assets, which provides better returns than rate of inflation over the long term. Focus on long-tern investments that have historically performed well during inflation, such as equities, mutual funds, gold etc. Over the long term, it has been s...

One should manage income and expenses by creating a budget tracking spending, and making informed financial decisions. WAYS TO MANAGE INCOME AND EXPENSES: Create a Budget : Prepare a budget by outlining all sources of income(eg. salary, bonuses, rental income etc) and all categories of expenses(eg utilities bills, food expenses, entertainment). One must allocate a certain percentage of income to savings and investments regularly and be disciplined about it. Prioritize Expenses: After preparing a budget, one should prioritize expenses so as to cover basic needs first. After that, one should think of wants and desires . Unnecessary or impulse based spending should be left if budget permits. Build an Emergency Fund : Allocate money for an emergency fund to cover unexpected expenses or financial setbacks. Invest for the Future: Set aside a specific portion of your income for investments, to meet your long-term financial goals. Financial goals are targets to achieve specific financial objec...

   What is Saving? Saving  means setting aside of a certain portion of income to meet future financial requirements. Saving is what remains from income after expenses, which can be calculated as income minus expenses. Saving = Income - Expenses Saving is important for securing an individual's financial well-being, achieve long-term goals and financial security. It also provides a sense of peace of mind. It is often stated that: "Don't save what is left after spending, spend what is left after saving." Wrong Approach:  Income - Expense = Saving. Correct Approach:  Income - Savings = Expense. Why We Save? There is no right time to start saving, the earlier we start the better. Some key reasons why saving is important: Saving enable us to build an emergency fund to cover unexpected expenses, such as medical  emergencies, business loss, etc. To meet financial goals such as buying a new house, to meet cost of higher education of children, planning for retirement...