Unfortunately, in India, personal finance is not taught in most high schools and colleges as a common subject for everyone. The lack of basic knowledge about saving and budgeting leaves many young adults clueless when they start earning. Young adults are clueless on how to save, budget, apply for credit and when to apply and how to stay out of debt.
1. Learn Self-Control
2. Budgeting
3. Guard your Health
4. Build an Emergency Fund
5. Plan for Retirement
6. Invest in Short & Long Term Investments
7. Know your Taxes
1. Learn Self-Control
It will be a lot easier if you learnt how to postpone gratification. Understand the difference between your need and want. Yes, you can effortlessly buy a luxury want with your credit card but mind you, you'd be still paying for that item at the month-end. It is always wiser to save up the money for that purchase. If you want to keep credit cards for convenience and the reward they offer, make sure to pay the balance in full when the bill arrives and don't carry cards that you can't keep track of. This tip is crucial for creating a healthy credit history.
2. Budgeting
It is crucial that your expenses aren't exceeding your income. The best way to do this is by tracking where your money goes and be mindful about it. Keeping your monthly recurring expenses at a minimum you'd be able to save some big bucks over time. If you don't waste your money on a posh apartment now, you might be able to afford a nice house or condo before you know it. If you don't learn to manage your finances others will find a way to manage it for you at an exuberant commission by financial planners.
3. Guard your Health
Our life is uncertain. We don't know where we'll end up this afternoon. What will you do when you have to go to the emergency room? You don't want to spend thousands and thousands for every single visit for a minor injury like a broken bone. Without health insurance, your savings get eroded in no time at an emergency like this. Be smart and research the plan that suits your medical needs and premium. Start living a healthy lifestyle like exercising for at least 30 mins, eating lots of fruits and vegetables, not consuming alcohol excessively, not smoking and even not drive recklessly.
4. Build an Emergency Fund
One of personal finance's repeated mantras is "Pay yourself first." No matter how much you owe in your student loans or credit card debts and no matter how low your salary may seem, it's wise to save some amount monthly as an emergency fund.
If you get into the habit of saving money and treating it as a non-negotiable monthly 'expense' you'll build a corpus in no time. You'll have vacation money, retirement money and even money for a down payment on a house.
5. Plan for Retirement
Prepare for your retirement well in advance, I would recommend from a year after you secured a job depending on your age. Because of the way compound interest works, the sooner you start, the less principal you'll need to invest.
6. Invest in Short and Long term funds
Short term investments allow you to achieve your financial goals within a short span of time with a lower risk. If your goal is to preserve capital and are happy with moderate returns invest in short term funds such as Treasury bills, Recurring deposits, post office time deposits, Fixed deposits, large-cap mutual funds. If you have a greater risk appetite, your goal is capital appreciation and want higher returns, you can select long term funds such as Stocks, equity mutual funds.
7.Know your Taxes
Yes Hamee! I agree! We were never taught financial discipline at young age.
good tips ranjani!!keep it coming ..i really wish highschoolers were taught about basic of financing.
stocks and how to start could be a good one to look from you !