While it is impossible to predict what the future holds for you, it is imperative to be prepared for whatever it does. Being financially secure is one of the best ways to be future-ready. When you have enough savings, it benefits you in more ways than one. You can provide not only yourself and your loved ones what they need but also enjoy the mental peace of being secure. Building your financial savings is, therefore, crucial.
Manage your expenses:
When you start earning and living independently, it becomes quintessential that you learn how to manage your expenses. How can you do that? Well, one way is to pen down all your expenses and try to cut them down wherever possible, so you don't struggle when it comes to saving. It is quite possible that every month you may have some extra expenses other than those listed. So, always keep a window for such expenses but do not go beyond limits.
Try to track your spending for a few months to manage it better. And also, make sure you don’t borrow an amount that you cannot easily repay. The burden of debt can badly affect your daily and essential expenses.
Tip: You can use the 20-30-50 ratio to manage your budget efficiently. 50% of your monthly income goes towards the essentials/ needs, 30% is for your wants, and the remaining 20% is for saving.
Identify your financial habits:
You can only master a skill when you have the right and ample knowledge about it. Financial management is, undoubtedly, no exception to this fact. You may make money in lakhs and crores and still lag in savings if you are short on knowledge. So, try to gather sufficient knowledge regarding savings, identify your financial habits and then plan accordingly. You can also set small goals and systematically fulfil them.
Tip: Follow the trial and error methods for a few months, make a budget and stick to it. See which plan of action works best for you.
The basics of different types of investment tools:
Right when you start investing, do not skip the process. The most boring yet crucial step is reading the document file before signing. Many people tend to skip it. However, understanding all about your investment is as important as choosing the right tool. Know how it works, the returns you will receive, and the investment that has to be made. Try to invest in plans and tools that can beat inflation and offer good returns.
**Tip: **Get in touch with a financial advisor, discuss all your concerns and doubts, and get a plan laid out for your goals.
Taxes affect your savings and investment:
The tax slab in India is directly affected by the amount of income that an individual makes. If your income increases by a certain limit, your tax liability will increase as well. So, the smarter and the mid-way out is to spread your investments in a way that you can save maximum tax. Long-term investments and insurance premiums are some basic ways to save tax.
**Tip: **You can get the help of a finance manager or tax2 consultant for a better understanding.
Build an emergency fund:
Financial emergencies are the uninvited guests that see no boundaries. Nobody knows when it may knock on your door. So, it is wise that you be prepared for it beforehand so that they do not eat away at your hard-earned savings. While you are saving, try to build an emergency corpus that can be used if such a situation arises.
Tip: You need to have at least 3 to 6 times your monthly salary in your bank account that you use only in case of an emergency.
Be adequately insured:
a hole in their pocket in times of medical emergencies. You can invest in both health and life insurance plansfor 360-degree protection. While your health plan will take care of medical expenses, life insurance will assure financial stability for your family in your absence.
Retirement planning:
Employment gives you regular income and various borrowing sources, so, it becomes easy to manage expenses. However, while you are employed, you need to think about post-retirement expense management as well. Once you are retired, it is essential that you have enough income sources to live a peaceful life and not ask anyone for anything. Investing in retirement schemes can be one important part of your expense management. The earlier you begin, the higher profit you make.
Tip: As early as possible, invest in a suitable retirement plan. There are many government-backed pension schemes that are affordable and inculcate the habit of systematic and disciplined savings.
Learn the art of balancing between splurging and being a miser:
If people start spending all that they want, maybe they will miss out on inevitable expenses and be forced to borrow. Appeasing your wants is not wrong, but only till a certain limit. Thinking twice before you swipe your credit card is essential. It will help you prioritise needs over wants. While the latter is never-ending, the former is an inevitable and basic necessity. So, spend each penny carefully.
Tip: Ask yourself, "Do I really need this? Will this affect my purchasing capacity for essentials?" before you decide to buy something.
Don't wait for the right moment:
Is there really a right moment to start the cycle of saving? Probably, no. The moment you start earning is the only right moment to start saving as well. Do not delay your savings plan. A wise and growing earner is one that excels in the art of early savings.
Tip: Stop procrastinating. Start saving now!
Conclusion
Unlike all the other services we take, such as doctors, tailors, and cab drivers, when it comes to money matters, we find it rather difficult to ask for help or guidance. While most of us rely on friends and family, they may not always be the best option for seeking financial advice. With changing times, you need to make some changes in your financial habits, especially if you have a clear goal. Being aware of your financial situation would give you the right foundation to build your plans and achieve them too. Knowing that you are slowly yet steadily treading towards your life goals can be very satisfying, so start planning your savings today.
**References **
https://economictimes.indiatimes.com/wealth/plan/11-steps-to-a-secure-financial-future/articleshow/53822090.cms5
https://www.investopedia.com/articles/younginvestors/08/generation-y.asp6
https://calcitecu.com/6-financial-tips-secure-future/7
https://indianexpress.com/article/news-archive/web/a-do-it-yourself-guide-to-secure-your-future/8