6 Tasks to Complete Before You Start Investing

Before you begin, be aware of how much money you are willing and able to invest. To define your personal finance goals, start by creating a budget for yourself, making sure that it’s practical and simple to adhere to.
Then take note of all your income i.e. your salary, any side gigs, rent from an owned property, interest payments etc. Next, evaluate how you manage your monthly expenses - include everything from utility bills and rent to mortgage and EMI payments. Then, set aside some money to spend on your recreational activities. At this point, you will be able estimate the amount you can invest.

Pay off your debts as much as possible to start allocating money towards your investments. Try to clear off high-interest debt first as the interest will otherwise eat into your investment gains. Be prudent when taking on new debt, by borrowing only what you strictly need, and following a disciplined payment structure. Keep your expenses under control to avoid credit card debt and try paying off the entire amount due every month, instead of just the minimum. 

It’s important to be prepared for anything life throws at you. From medical emergencies and accidents to sudden job loss, you may incur unforeseen expenses at different points in your life. Building an emergency corpus by setting aside money every month will give you a safety net to manage such expenses. Emergency funds, ideally, should be liquid funds and equivalent to 6-12 months of your expenses. While this takes time to build, ensure you have at least 6 months’ worth of expenses saved up before investing your money.

Investing and financial planning will be truly successful only when they help you live the way you want. For this, you need to know what you want and then plan your investments to build towards those dreams. Write down your short-term and long-term financial goals along with a target date to achieve them. This could include everything from buying a car or a house, to studying abroad for an advanced qualification. 

There is a wealth of information online on every aspect of investment, from time horizons to the different categories of instruments. Explore these resources to get a robust basic understanding of the subject. By itself, this may not be enough to help you make investment decisions, but it will help you ask the right questions at the right time and make timely decisions. 

Consult a qualified financial expert to help you navigate your investment journey. Share your budget, your debt situation, your concerns and your financial goals with them. Based on your research, resolve any doubts and understand how to plan for financial goals and where to start investing. A financial advisor will continually review and evaluate your investments and financial planning needs to ensure that you achieve your short- and long-term financial goals.