The financial decisions that you make in your day-to-day life impact your finances. Some financial decisions are minor while some of them are major. Minor decisions will not impact your finances significantly such as buying a new dress but some major decisions will impact your finances like buying a new house. Here in this article, we discuss the five major financial decisions that impact your life.
The financial decisions that you take will affect you in the long run. It is difficult to tell which will have a major impact and which will not because every individual’s earnings, properties, cash in hand are different. Below are the common biggest financial decisions which will impact your life.
- Closing your Education Loan
- Buying Your First Home
- Planning Your Wedding and Honeymoon
- Planning for Your First Child
- Budgeting to Live Within Your Means
1. Closing your Education Loan
Repayment of education loans is a very important part of your financial management as this is the first step where you start your journey into the financial world. If you repay the loan on time you will start building your credit score smartly but if you do not repay your loan it will drop your credit score. It remains a black mark on your profile and you will not be eligible to get new loans. Since you have started earning it becomes a tough challenge to pay an education loan and earn living expenses. The facility of EMI will help you to repay your debts. You can pay off loans early to reduce the burden of interest rates.
Tip– You should plan early to pay off your loan. While you are a student make plans to start repaying your loan. Do savings and put that money to work for paying your debt.
Click here to know How to pay for your education without getting into too much debt?
2. Buying your first home
Buying your first home is an expensive deal as you have already started to pay your student loan. If you have bank balances, paying your home loan will be easy. If you do not have bank balances paying loans from your salary, managing your day to day expenses and then again clearing your previous debts will be a difficult challenge. Real estate properties prices are high in UAE and buying a home is the biggest financial decision. Taking a home loan and making the payment on time is a challenging task. Unable to manage finances many people drop down in the middle of the loan tenure.
Tip– Minimise your unnecessary expenses, minimise your credit card expenses and do not take additional loans. Make part payments so that your principal and interest will reduce.
3. Planning your wedding
Once your home loan is paid out or near to payoff, the next biggest financial decision is planning for your wedding. The wedding expenses that you incur are huge. Marriage is an event for life and everyone wants to have a lavish wedding.
The average expenses for a wedding in Dubai can range from Dh 300,000 to Dh 500,000. The western expatriate couples in the UAE spend Dh 200,000 on their wedding.
Tip– Book your destination wedding resorts and venues early. Planning early can reduce your expenses. Wedding planners can guide you with the best offers and deals. Shopping for weddings with deals can reduce your financial burden.
Click here to know How long your emergency funds can save you?
4. Planning for your first child
The expenses for your wedding and first child may come back to back. These days, the expenses for baby delivery is high in the hospitals. If you have medical and life insurance you can get a bit of relief to meet your hospital expenses. You should start planning for your child’s early education. Making funds ready for the growing kid will be the biggest financial decision as the journey of your life will be on the fast track from here on. Start investing for your child’s higher education.
Tip– Invest early in your child’s future. Start investing in a child’s future plans and policies. As your child grows the fund investments also grow over a period of time. This amount can become handy when you need them.
5. Budgeting to live within your means
Managing to live comfortably within your income from an early age can make you able to control unnecessary expenses. Living within your income can be a tough challenge as you have to sacrifice many things in life especially if you have a low salary and have any additional debts. It is hard to resist spending money when your friends, colleagues and family members spend money to live it up. It is best to think of your family and your income size and live within your means. This practice will help you to control unwanted expenses and increase your savings.
Tip– Prepare a budget and spend your money according to the budget. Practicing the save and earn concept will make the way for living within your means.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
