Money and wealth are different; You own your money, but wealth is what you build.
What is the one thing you dream most about in your college or early 20s? Most of you will agree that it was certainly getting a high paid job. However, with these lucrative salaries comes the pressure of maintaining and building your financial budgets and sticking to them. Once you start earning, everyone will offer you pieces of advice. However, it is up to you whose guidance you want to follow because the right-hand holding, in the beginning, can make the sinusoidal journey of managing finance; smooth sailing.
Here are some of the best financial advice for all the youth in their 20s:
Start a habit of Splitting your Money
Many people have figured out a ratio to split their monthly salaries in, like 50, 30, 20 or 60, 30, 10 (in need fulfilling, investment, debt repayment) & it works for them. You don’t have to follow their ratios or their way, but you should divide your money into various portions of debt repayment (if any), investments, need fulfilment and so forth. Doing this in your early days helps you build a discipline that eventually will benefit you when you start getting 6- or 7-digit salaries.
Begin your Investment Journey Early
Right investment made initially enables you to “Live Life King Size”. Investment is a different world altogether. Start early; so that you have the time and potential to make the mistakes that are bound to happen early on in your personal and professional life. Learn from these mistakes, choose the suited guidance and advice & build huge fortunes for your future, but remember, the key is starting early.
Fix your Financial Goals
Set some of the financial goals for yourselves, and then plan your personal finance according to it. A goal can be Short-term and Long-term. A short-term goal can be anything like any mobile or a dream vacation or repayment of your education loans and anything you want to accomplish financially in less than five years. A long-term goal is something you want to own after ten years from now; A dream home, a world tour or owning a yacht. Your goal could be as crazy as buying an IPL Team. You should always set an aim and then start.
Make a habit of Tracking your Money
After fixing the goal, another important thing is keeping a trace of your money. It will help you in understanding where your money is going. You can then figure out if you need to cut off some expense to invest somewhere, or you need more money to pay debts. So, keep tracking your money and keep finding ways to be frugal.
Maintain a Good Credit History
You need to understand early in your financial career that maintaining a healthy credit repayment score is essential. Pay all your debts, credit card bills and loan EMIs on time, which will enhance your Credit Score. A Credit Score is an index that financial institutions use to forecast your potential to repay the loan based on your repayment habits. A good credit score helps you in getting loans.
Never Avoid Good Financial Education
Even if you’re now a salaried employee of a firm/company, you must be ready to learn whatever and whenever you can learn, especially when it comes to financing. With ever-evolving technologies, finance is updating itself every day and therefore is essential for everyone to cope-up with the new versions of finance. For example: look at all the buzz the crypto and digital currencies have erupted. So, if you don’t know anything about crypto or are not willing to learn more about them, you can miss out on the golden chance to invest in the future.
Understand the Importance of Insurance and buy one
Today, one of the most important investments is insurance. Why it is an investment? Because it helps you lessen the effect of all the uncertainties related to your life or any product you own. Make sure you buy a good life, term and health insurance before investing in other things.
Passing out of college and having sound salaries can be overwhelming sometimes. Hence, you need to understand the basics of finances and start building the fortune you want to hold once. This advice can help you begin your journey & eventually, you will get a lot of advice over time, use them and achieve your goal.