Few days back I was sitting with a group of young and enthusiastic people who began their journey of future i.e. they just started working. When I asked them the purpose of their visit, one of them said “we are earning well and make good money but we have absolutely no clue as to how to make the best use of the surplus money. Surprised I was, to hear that from a 22 yr. old kid. Times have changed; people have become more aware and like to be well informed so that they can make the most out of their hard earned money. This focus on savings would enable these young people to accomplish their goals and dreams and keep them away from financial nightmares like debt, bankruptcy etc. but only if they channelize it in the right manner. Here are few things that the young people need to take care of so as to lay down a strong foundation for financial success now and decades to follow.
1. Keep a track of where your money is going
The first and the foremost thing that one needs to do is to track where the money is being spent. We know all where the money would come from but we absolutely have no clue where it vanishes. Hence track your spending as it’s not the income that makes your rich, it’s your spending habits that make you rich.
2. Pay yourself first
Often I hear people saying that not enough money is left to save. The sole reason is that we get so much caught in the present needs and wants that we hardly worry about the future. Hence do not save what is left after spending, but spend what is left after saving. Commit to save some % of your income every month before you start paying for your bills and other expenses.
3. Create an Emergency Fund
The biggest drawback of having your savings account as an emergency fund is that the money gets spent without even letting you know and you may not have enough to fight the unforeseen emergencies when they arrive. Remember emergencies don’t knock the door.
4. Set your goals and define their time frame
One of the most important things that one needs to do is to break down their wishlists in specific goals and lay down the time frame as to when you would want to fulfil it. For instance you want to buy a phone or go for a vacation or buy a car; just hold on – sit down- take a paper and pen – write which one do you want to fulfil first- set your priorities – define the timeline- start saving. It’s best to break down the wishlists into small projects and get going.
5. Automate your savings
Saving money is the hardest things to do as it makes you compromise on your pleasures today. So unless it becomes a habit, there are chances you might not follow the plan. Hence it’s best to automate your savings as this would not give you room to re-think about your decisions and eventually one day saving money would become a habit.
In the end I would just say STOP WISHING-START DOING, BEFORE IT GETS TOO LATE.
