Do you know how much money you can save by budgeting, cooking your food or finding the right deals? Jump in to find out.
When you’re 21 or in your early twenties and start ‘adulting’, you have time on your side but not much money, isn’t it?
You’ve got responsibilities, but still, you have time to travel, decide what’s important to you, choose (or not) a life partner, and decide where to live.
You can even take charge of your finances from such a young age if you start forming healthy financial habits. Trust us, it’s a lot easier than you think!
These early years are your foundation and if you master the financial skills now, you’ll thank yourself in your 30s, 40s, 50s and beyond.
Your money will take a long time to grow, but if you start putting it aside now, it’ll have a big impact by the time you retire.
So you’ve decided to put your finances in place, but are confused about where and how to start?
We at Jar are here to guide you with 7 such financial tips you should follow if you’re young:
Managing your money isn't rocket science and you don’t need to be an expert in it. You just need to have dedication.
The first step is, of course, to start saving. Create a savings account. It’s a major step towards achieving financial freedom.
Make financial goals and find ways to achieve them. You don’t have any big goals in mind currently, make an emergency fund and start putting money in it. You never know when you might need it.
As soon as you receive your salary, categorize it under different heads and put aside at least 10% of it as savings.
You can also save a bigger proportion; the bigger the better. But not in your bank account, where you won’t get any return, but some liquid investment like Digital Gold, Mutual Funds, FDs, etc. Invest your savings in one of these instruments for the long term and watch the magic of compounding.
You should create a budget and keep an account of your expenditures and savings. Note down every single expense and make it a habit.
Managing your money might seem hard at first, but the quicker you begin to organize your finances, the better your future will be.
Your future depends on how you utilize the money you save or have as excess funds. This money can make you financially independent.
Investing your money is an excellent way to channel additional funds or savings and fight inflation.
The sooner you begin to invest, the better. Investing can be a bridge between where you are currently and where you want to be. Yes.
Therefore, building your first investment portfolio from a young age is an achievement in itself. It's your first move towards wealth accumulation, after all.
Constructing a portfolio means spreading your investment between asset classes such as equities, debt, and cash. It is called the allocation of assets.
Ideally, your investment horizon should be around 10-15 years. Once your portfolio is built, you just need to revisit and rebalance it every 6 months to keep the portfolio away from risks by predicting fluctuations and movements in the market.
Everything will be more expensive each year due to inflation. You won't spend your money to bridge the inflation gap if you don't invest. If not, perhaps you can't retire as you like.
Determine your risk appetite and invest in an instrument that suits your needs.
Once you start saving and maintaining your budget, you’ll realize what you own and what you owe.
Divide your spendings into fixed or variable, needs or wants, inevitable or avoidable. This way, you’ll have a full list with you. Create a hierarchy and prioritize them.
You must realize that your resources are finite but your wants are unlimited. That’s where you need to maintain a balance.
The sooner you grasp this, the better your drive to avoidable expenditures can be controlled.
Bonus tips: You should learn to cook if you don’t already. You can save a lot of money if you cook your own food which is delicious and nutritious.
Live with flatmates if you live somewhere other than your home. This will split up a lot of expenses.
Don’t purchase a car unless you live in a city that requires it totally. Travel on a two-wheeler or take public transport to commute.
Do you know the most costly form of debt is a Credit card? Use it repeatedly and even before you realize that, you end up in a financial trap.
Make it a point only for emergencies to use your credit card.
You might think of a lot of financial goals. Like a car or the latest smartphone or higher education. You need money in all these instances.
But where is it going to come from? No, not debt. Savings is the way to go!
You can stay away from falling into the violent debt trap by strategizing your debt payment well. You just need to know how much you owe to whom.
Block your time to pay them off. If you have a lot of debt, first start paying the most costly one.
Always consider debt as your last option. Make down payments for purchases as much as possible. Further, you should avoid tax-efficient loans like personal loans.
You can think of saving and building a corpus to achieve your objectives. Thus, preventing being trapped in debt.
You must earn something before you start to worry about what to do with your money. Right?
When we talk about skills, we're looking at the bigger picture. We're not just focusing on just one job but your whole career.
Because let's face it, your first job won't be your last one and you probably won't even enjoy it. However, you should have the zest to do your best.
If you crack the code of modern-day trends and acquire the necessary abilities, the world will truly be your oyster.
Your potential earnings will increase and you'll become more employable if you add a variety of skills to your resume.
The more marketable skills you can bring to an employer's table, the better your advantage over other candidates, the higher your value in your industry, and the more negotiating power you'll have when discussing your wage or salary.
After getting a marketable skill, now is where you should learn the importance of negotiation.
A Salary.com survey indicated that only 37% of respondents always discuss salary – while an incredible 18% never.
Worse, in their performance review, 44% indicate that they didn't even bring up the subject.
The main reason not to ask for more? Fear.
And we get it: salary negotiations can be scary. But you know what's scarier? Not doing it.
So whether you're a man or a woman, in your first or fifth job, it's time to learn how to negotiate.
A smart shopper is something more than a deal seeker. Once you master the technique of finding a deal, you have to be a smart shopper and decide whether you want the item before you purchase it.
You shouldn't buy stuff on an impulse. Wait for 24 hours before buying anything non-essential. Think about whether you really need it and will use it.
Try to find a good deal on everything - food, clothes, furnishings, so on. You'll save a lot of money over your life if you search for a deal.
You should shop with a plan before you purchase. One of the easiest methods to save money is to make a list and adhere to it.
It's a simple habit that requires only a few minutes before every journey.
With a precise list before you, you can save time and money by reinforcing your impulse expenses.
In the end, we'd advise you to consult an expert before making significant money decisions.
Managing your money isn't a big task if you make it a habit. Inculcate this habit in your daily routine.
Follow the above-mentioned tips to kickstart your savings and investment journey and grow your wealth. Take advantage of your young age and make yourself an asset.