Within the first few years of entering the work force, you'd be excited about earning and becoming a contributing member to your family and will enjoy the financial freedom that comes along with it. Although the urge to take the vacation or buy that brand new smartphone will always remain your top priority, it is important that you begin saving and invest to create a corpus for the future. Here's how you can progress to achieve your financial goals. (Image: Reuters)
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Have a clear financial goal | If you have an objective, it will help in giving you a direction towards saving and investing part of your income to achieve whatever you wish for. These goals could include wealth creation, education plans, wedding plans, funds for purchasing a car or a house, or that overseas vacation. The early you start, the more compounding benefits would you reap from your investments. (Image: Reuters)
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Keep a check on your spending | While having fun with your money will give you temporary satisfaction, it shouldn't be your top priority. With a certain degree of fiscal prudence, you could end up achieving you goal earlier than expected. The key is balance. Excessive socialising can end up draining your finances – or even worse, put you on the never-ending hamster-wheel of credit card debt. (Image: Reuters)
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Build your credit score | A credit score comes in handy for a loan in the future. Raking up a credit score shows one’s credit worthiness. Individually, this can be done by making sure you pay off credit dues on time. (Image: Reuters)
Use your credit card wisely | Apart from providing instant credit and building a credit history, credit cards can help in saving money. Ensure disciplined spending through your credit card where you can pay the complete outstanding amount by the due date, without disrupting your finances. (Image: Reuters)
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Hold off buying depreciating assets | The early 20’s in one’s career is all about self-discovery, so as to understand where one’s long-term career goals would lie. This is a volatile period, marked by frequent job and industry changes, and voluntary salary cuts are not uncommon. This makes it the best to postpone the purchase of an expensive vehicle to a time when one is more settled in their career. (Image: Reuters)
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Do not buy a house too early | Unless you have cash at hand, which should be extremely rare, a home can be a very expensive asset to acquire. Taking on a home loan early on can result in a degree of financial leverage that can hurt you, and even impede your progress towards other financial goals. (Image: Reuters)
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Get a life insurance policy | A life insurance policy is meant to protect dependents financially in case of an unfortunate eventuality. Term Insurance should be a must-have product in the financial plan. It is more economical to buy such an insurance at an early age, it will be quite economical and the premium would remain same throughout the policy term. (Image: Reuters)
Create an emergency fund | You should ensure that you have around 3-6 months of you salary stashed away in the event of a job loss. For example, if your monthly expenses are Rs 30,000, you should keep at least Rs 90,000 in your bank to meet contingency requirements, if any, in future. (Image: Reuters)
