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Understanding personal finances, gaining complete control over your spends and savings help build a strong foundation in basic financial planning. (Shutterstock)
Understanding personal finances, gaining complete control over your spends and savings help build a strong foundation in basic financial planning. (Shutterstock)
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How money wise are you?

FQ, or Financial Quotient, is a measure of your ability to own and manage your money. Making simple changes in your savings and investment pattern can go a long way in making your money grow, securing a better future for you and your loved ones.

With a new year just a few days away, people are ambitiously setting goals to improve health by eating better and exercising more. Take this time to also look at your financial health, which has a lasting impact on your overall well-being. To achieve this, you must sharpen your Financial Quotient (FQ), or Financial Intelligence, to understand the true power of money and what it can do for you.

Making simple changes to the way you save and invest can go a long way in making your money grow, securing a better future for you and your loved ones. Understanding personal finances, gaining complete control over your spends and savings help build a strong foundation in basic financial planning, which must be a key focus area for you and your family.

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Understanding personal finances, gaining complete control over your spends and savings help build a strong foundation in basic financial planning.

How money wise are you?

What is FQ?

Financial Quotient (FQ) is a measure of your ability to own and manage your money by understanding how money works. Managing your money right and allocating it in the correct avenues can be the difference between being financially successful and having just about enough to tide through your day-to-day expenses. You need to ensure that you are capable of achieving your financial goals to be truly money wise.

Why Boost your FQ

The first step towards being financially alert is to take control of your money and earnings. The financial plans you draw up for yourself must be in complete harmony with your overall life goals. It is important to take decisions with your mind, and not let emotions rule over money matters. You must have a clear understanding of your financial situation and create a spending model that commensurates with your earnings. Once you have a clear understanding of the model, you must adhere to it as far as possible.

An Age-wise Spending and Savings Guide

We take a detailed look at how different generations spend their money and what they could do differently to be more financially wise. The solutions are different for every age group, depending on the nature of spends and the end purpose that the savings are required for.

• For Gen Z (born between 1997 and 2012), the biggest areas of spending include online education, online shopping, mobile data and streaming services, food delivery and gaming subscriptions.

Where they save and invest: The funds are mostly parked in savings accounts and online saving apps

What they can do differently: The can look at Liquid Funds as emergency funds and Equity Funds to cater to long-term goals of wealth creation and retirement

• For Gen Y (born between 1981 and 1996), the majority outflows include cost of eating out and transportation, frequent vacations, apparel, hefty credit card bills, gym memberships, mobile data and streaming services.

Where they save and invest: The funds are mostly parked in savings accounts, fixed deposits, online apps and digital saving platforms

What they can do differently: The can look at Liquid Funds as emergency funds, Equity Funds to cater to long-term goals of wealth creation and retirement, Debt Funds for short-term expenses like vacations or big ticket expenses and ELSS for effective tax saving

• For Gen X (born between 1965 and 1980), the avenue of spending include food and groceries, children’s education, personal loans, home electronics, a new home and home improvement costs, and new vehicles

Where they save and invest: The funds are mostly parked in savings accounts, real estate, gold, pension and retirement plans, and government-backed investments like PPF, government bonds, etc

What they can do differently: The can look at Equity Funds to cater to long-term goals of wealth creation and retirement, Debt Funds for short-term expenses like vacations or big ticket expenses and ELSS for effective tax saving

• For Baby Boomers (born between 1946 and 1964), the major areas for money outflow include food and groceries, cable TV, healthcare and fixed expenses

Where they save and invest: The funds are mostly parked in savings accounts, fixed deposits, Senior Citizens Savings Scheme (SCSS) and government-backed investments like PPF, government bonds, etc

What they can do differently: The can look at Short-term Debt Funds to earn returns on idle money or opt for Systematic Transfer Plans (STPs)

In conclusion, imbibe good money habits and park your money in the right kind of investments to get the most out of it. Your FQ can be developed to make you understand the power of money and to use it as tool to realise your future life goals.

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