Family, EMIs & Lifestyle Goals — How to Get It All in Balance

The biggest worry for anyone, especially with a family, is how to balance finances. On one side, you have non-negotiable commitments like medical expenses, loans, and educational expenses. On the other hand, there is the need to take a memorable family trip or buy that dream gadget or appliance. 
The key to making it all work is better financial planning so that every major decision is not a competition between need and wants. This blog will help you do just that. 
 

The First Step to Achieving Financial Balance

Understanding your current financial standing is the first step you need to take to achieve financial balance. To do this, start by mapping all your monthly commitments. The best way to do so is to segregate them into -
●    Fixed costs - Your home loan or rent, any existing EMIs, your SIPs, insurance premiums, educational expenses, utility payments, and so on
●    Variable costs - The amount you generally spend on fuel, groceries, eating out, extracurricular activities for the kids, and travel, to name a few. Don't forget your e-commerce orders, too
Doing so will help paint a clear picture of where your money goes and help you uncover areas where you could tighten up your budget. This exercise will also help you track your debt-to-income ratio, i.e, how much of what you earn goes straight to paying debts. 
As a good practice, always keep it under 40% to 45%. Under 35% is even better. It will give an additional cushion in case you need to borrow funds in case of an emergency. 

Set Clear Lifestyle & Family Goals

The next step is to decide where you want your money to take you. Do this by splitting them into -
●    Short-term goals - Buy a vehicle, a home upgrade, or perhaps a family trip. Everything you need to achieve in the next two to three years gets listed here
●    Long-term goals - Your retirement corpus, a fund for your children's higher education, or even buying your dream home
Listing goals is only half the battle won. To win the other half, you should always prioritise your needs over your wants (exceptions can be made once in a while, of course). That way, you mitigate your chances of derailing your essential financial goals.

How to Handle Financial Emergencies

Now, medical emergencies can happen anytime. For these unexpected expenses, consider using a personal loan instead of relying on credit cards. The interest rates of personal loans start at 19% while the latter range from 30% to 40%. 
If you have a good credit score (750 or above), you can get access to emergency funds via an instant loan app without any hassle (this is where the debt-to-income ratio ties in). That way, you leave your emergency fund and your long-term investments intact and are still in a comfortable position to pay EMIs. 

Conclusion

Balancing family, EMIs & lifestyle Goals is not all that complex. All you need is a good understanding of your balance sheet, a clear set of priorities, and a little restraint toward those impulse spends. A  healthy debt-to-income ratio will ensure that you stay comfortable even if you have to take on additional debt in an emergency. 
And if you ever find yourself in urgent need of funds, consider Hero FinCorp’s personal loan. With a fully digital, paperless application process, you can get quick access to money at your convenience.
Ready to strike the balance? Apply for a Hero FinCorp's personal loan today and move closer to financial peace of mind.

Frequently Asked Questions

How often should I review my finances?

A bi-annual review is more than enough to adjust for any changes in income, expenses, and interest rates, and to plan for upcoming expenses. 

What is an ideal emergency fund size for families?

The ideal emergency fund should be at least 6 months of essential expenses. This should include all your financial obligations as well. That said, if you can afford to add a few months' worth, the more comfortable you will be. 

What expenses are best avoided through personal loans?

The use of personal loans should be limited to emergencies and essential, one-time, meaningful needs. Avoid using them for impulse buys at all costs. 

How can I manage EMIs more comfortably?

The best way to manage EMIs comfortably is to -
●    Match EMI dates with your salary cycle.
●    Avoid juggling multiple loans.
●    Approach the lender to restructure the loan if needed to improve your monthly cash flow.