4 Things to do before turning 30, for an enviable financial future.

All investment advice essentially boils down to this: invest regularly, and start as early as possible. But this is easier said than done, especially when the earnings in our 20s are so low! However, here are 4 key things you can do now, even when you don't earn all that much, to set yourself up for an absolutely enviable financial future.

Your credit card only accumulates interest when you don't pay it in full. Even the smallest amount outstanding, starts the meter on the interest. The best thing you can do is set up standing instructions to pay the outstanding amount each time. Pay off your balance every month - this way you have all the benefits of a credit card, without paying a single paisa to the bank in interest.

A trap you must avoid is having multiple credit cards - it's much harder to track your expenses when they're spread out over multiple cards. It can also be difficult to keep track of multiple due dates. Instead, stick to just one credit card. This way, all your expenses are in one place, and you know exactly how much you're spending (and when the bill is due!). Also, you accumulate points better when it's just one card.

Another boss move is to only use your credit card for purchases. Withdrawing cash from your credit card is an absolute no no! Lenders charge a cash advance fee of up to 3.5 percent on the amount withdrawn at ATMs. Additionally, credit card ATM withdrawals also attract interest charges right from the day of the transaction till the date of its repayment. There is no credit free period.

However, credit cards are a great way to build your credit score. What is a credit score? In short, it is a measure of how responsible you are with credit. There are four credit bureaus operating in India, and they collect information on your credit and payment behavior - this includes loans, credit cards, and any other form of institutional credit. If you stay within 30-50% of your credit card's limit, and if you pay the credit card in full each month, your credit score improves every single month. You can check this on the OneScore App. The longer you do this, the healthier your credit score.

One of the reasons most of us don't invest in our 20s is that we don't earn enough. This is where investing in a quality education pays for itself multiple times over. Let's do a quick comparison between starting one's work life as a graduate vs passing out of a quality MBA school.

See how big that gap is? This doesn't even account for job changes, which often involve serious salary hikes!

Getting a good education can be one of the most transformative experiences of anyone’s life, even when we put the earning capacity aside. However, with education costs rising steeply, it may not be possible to cover college expenses with savings or scholarships alone. In such cases, it's time to explore student loans.

Most banks have a pre-approved list of accredited universities, making it easier for applicants to decide. These loans come with tax benefits (completely tax-deductible under Sec 80E, as long as the loan is taken from a scheduled bank or approved providers by the Income Tax department) and they help  build your CIBIL score. However, as always, the devil is in the details.

• - Public banks v/s Private banks/NBFCs - this can have implications on taxes.
• - Interest rates: The larger the sum borrowed, the longer the payment period and the higher the interest rate. Do the math - see if you can afford a shorter repayment term (take into account the average earnings post education, not what you think you'll manage to negotiate from Google!). Shorter-term loans appear heavy on the pocket but save you from paying large sums of money over a prolonged period.
• - Processing time: Private banks and NBFC can sanction loans and disburse the amount in roughly 7-8 days. Public banks, though, take roughly 15-18 days to sanction the loan.
• - Moratorium period: is defined as the period during which a borrower is exempted from repaying the loan. You could use it smartly to lower your payouts. Even small repayments during the study period go a long way.
• - Course Flexibility: The category of courses covered range from graduate, post-graduate, diploma, etc., mainly in the non-vocational streams. Some nationalised banks offer education loans for vocational courses on a case-by-case basis. NBFCs on the other hand are comparatively relaxed on the course types and offer education loans to a wider selection of courses across the globe.

Even if your earnings aren't where you want them to be yet, the time to invest is now. Nothing beats starting early. Pick a small number and commit to it. Can you cut back on one weekend outing a month? Or shop for your groceries from a discount store? Or maybe try cooking on the weekends instead of ordering in? There are a number of ways you can create micro savings that add up by month end.

One of the best ways to get into investing is through Systematic Investment Plans as they get you into the habit of saving and investing, without requiring you to become an expert on the market. There is a lot of information on SIPs online, and unfortunately, a lot of it contradicts itself. It is best to consult a financial advisor (particularly one who comes recommended by someone you trust) so you have confidence that you're putting your money in the right place.

But why do it in the first place? The magical power of compounding. Even a small amount invested regularly adds up over the years. For instance, an SIP of Rs 2,000 a month adds up to a corpus of Rs 1,62,000 in 5 years, at a 12% rate of return (subject to market risks!). That's Rs 42,000 over and above your investment. Rather, that is Rs 42,000 you didn't have to earn from your job, your side hustle, or anything - it is money your money earned for you.

Now, the advantage of early investments is that they facilitate an early entry into the world of finance. Because of early investments, you can afford things which others might not at that age. Early investments also help you secure yourself: should an unforeseen, unavoidable expense come up, you have the ability to deal with it. Compare the effect of that on your finances, vs taking expensive loans.

Why do you need an enviable credit score? Because you want access to loans at good rates of interest, when (and if) you need them. Here are some of our best practices.

Understand credit score risk factors:Your credit report will include a list of risk factors that lenders consider when evaluating your creditworthiness. It describes the five most prominent factors that you need to focus on to improve your credit score in the long run. A great place to get your credit reports for free from Experian and CIBIL is the OneScore app. It's free to use (and no ads, no spam!) and completely secure. Check it month on month, so you can see your credit score move, and understand what is creating these movements. Additionally, the OneScore app makes recommendations on tiny actions you can take each month to nudge the score in the right direction.

Pay instalments on time: Keep track of your due dates and ensure that your bank account is sufficiently funded to avoid late charges and interest. Note that if you miss a payment by a couple of days, your lender may not report it to the credit bureau immediately. However, a payment that is 30-days late or more does impact your credit score negatively.

Don’t neglect to pay credit card bills: Credit card bills are often given the least priority when faced with a financial crisis. However, paying at least the minimum due is critical for maintaining a healthy credit score. Therefore, if you've made some big purchases, talk to your credit card provider about converting these to EMIs, to minimise your interest outflow.

It may be a cliche, but every drop makes the ocean. The earlier you start, the longer you compound for, the faster you head towards financial independence. By squeezing the most out of your credit cards, boosting your earnings through a strong education, starting an SIP early and maintaining a healthy credit score so you can respond with speed when opportunity comes knocking, is the best investment you can make now, when in your 20s. Keep an eye on your credit score, using the OneScore app. As long as you regularly ask yourself #ScoreDekhaKya, life won't ever surprise you financially; and that is a brilliant way to create a strong, secure financial future.

For more articles, information and tips, visit our page #ScoreDekhaKya.