If you have started thinking about savings from the initial year of your job, then you are on the right path and moving towards a bright future. Saving and financial planning are nearly as essential as doing well in one’s job. It is interesting to note that on average four to five million new professionals below 25 years of age join the workforce every year.
Three steps how you can save your money
Record Your Expenses
To save something you have to be a good manager, along with that you have to write down all important expenses. Saving money does not make you a miser person, it simply reflects your extraordinary management skills.
In starting time, initiate the step with a small amount that can be even as little as Rs 1000 from your first salary. And consider it as a start-up in terms of investments. Ideally, it should be at least 10-15 per cent of the take-home pay. Slowly enhance it to the maximum you can afford. Moreover, written records will assist you to avoid extra spending for the next months.
Cut Spending and Invest More
As in starting of your job, you will live life as bachelors, so your cuttings are in your hand. And it’s an age to try something risky. So, a bank deposit is generally regarded as safe whereas shares are considered risky. The younger you are, the greater the capacity to withstand risk. Stocks and mutual funds provide good returns but the risks can be overcome if one invests systematically and for the long term. These savings will be going to help when you expand your family.
Going for ideas like the opening of a PPF (Public Provident Fund) account at the earliest can be a smart step. Because it is considered to be among the most tax-efficient instruments in India. The minimum deposit is Rs 500 every year and interest earned on deposits is not taxable.
Make Right Priorities While Spending Money
Setting goals is vital in life, and recognising which priority is beneficial for the long term is very crucial. Notably, after your expenses and income, your goals are to be expected to have the biggest impact on how you administer your savings. Be sure to remember long-term goals—it’s crucial that planning for retirement doesn’t take a back seat to shorter-term needs.
Additionally, start setting up an Emergency Fund by putting aside a small portion of your salary every month. This should go into your fixed deposit, preferably in a Recurring Deposit. This should accumulate enough money to cover your routine expenses and lifestyle for at least four to six months in the event of a family emergency or loss. Health is very important in contemporary times, particularly the coronavirus. By taking an insurance plan will go towards a safe and healthy future.
