You have just started earning and are super excited about this monthly amount that is entirely yours to spend. We all have a list of things we want to do with ‘our own money’. Like, buy that expensive gadget, shop for our parents, siblings, buy that expensive gift for the boy/girlfriend and treat our friends. With your first paycheck also comes the first financial advice from your parents – ‘budget your income’ and ‘save for the adverse times’. Let us see below how making a budget and saving for the rainy day along with some other tips might help you live a financially secure and fulfilling life even if you feel your earnings are meager.
MAKE A BUDGET
We know it sounds extremely boring and un-cool! You must be thinking, ‘who makes a budget for the parties I’m going to have!’ ‘Why do I need to keep a record of where and how much I spend?’ Well, you need to if you want the answer to your ‘month-end’ question – ‘where does all my money go?’ May be if you will note down your monthly expenditure in a diary or even in your phone/laptop, whichever is convenient, will help you sort your expenses. It will also help you keep a check on over-expenditure so that you don’t run out of money at the month end. This brings us to our next point – emergency funds.
EMERGENCY FUND
Ever thought what would happen if you were to leave your job for some unavoidable reason? Or if your best-friend/sibling got into trouble and asked you for financial help? Or worse still, you parents had some medical emergency?! If you do not have an amount set aside for emergencies, you will end up making some bad financial decisions when you do need cash in adversity. Make sure you always park your emergency funds in instruments from where you can withdraw your money with ease. It should be at least 3 times of your actual monthly expense.
STEER CLEAR OF DEBTS
Owning a credit card was so exciting, but only until they sent you your first statement. Do you really need to buy a car with so high an EMI? For how long do you want to keep paying off a part of your monthly income to others? One can easily get into a debt trap and fall into the loop of taking debt. Keep the debts only for things that are your need and not wants. If you are already in a debt that’s for a thing “you wanted”, get out of it on priority. The more you delay, the difficult it will become to take off the debt.
FINANCIAL GOALS
Planning that foreign trip in next 6 months? Buying that car in next 3 years? And a house in next ten years? How much are you planning to save for each of these, every month? No clue? Wouldn’t it really help to know the amount of money you need to take out every month for each of these? Goal oriented saving and investment help define financial course of action and ensure that you have enough money when the goal arrives.
INVEST
This one everyone knows about. It is also the most talked about financial action for everyone who earns or has some spare money. We know it sounds boring and a lot of work but it’s no rocket science. All you need to know is a few basic principles that you have to abide by, while making the investment decision. To know about the principle do read https://goo.gl/y4kzmc
