Millennials and now even a batch of Gen Z are stepping into the job market. And as COVID-19 lockdowns have caused the economy to tremble, financial education is now increasingly important.
We bet you didn’t learn anything about investing or saving in school, unless you’re a CA. “Financial literacy should be spread amongst the young for boosting both private and national economy.”, advises Mr. Sudhir Anand, Director of the Smart Funds Advisory. There are certain rules of thumb which every young professional should follow for sound financial health.
Save Every Penny
The most basic tip to follow. Save! Even if it’s a rupee or two. “Might sound old school, but saving even Rs 500 per month can make a difference in the long run,” says Anand. Savings will help you maintain a certain stable amount for future investment purposes or as a backup sum.
Invest Long Term
Your money won’t double up in your locker, so start investing. “Young professionals can handle much more financial risks than older investors. Hence, investing in the right option can boost any amount of money.”, suggests Pankaj Dubey, CA. Equity funds and liquid funds are best for young investors. “For those aiming for long term gains, can invest in mutual funds either in growth or dividend options. Provident fund is for those who want to play safe with limited alterations”, says Dubey.
Prioritise Your Expenses
Are you spending carelessly? Then, you need to observe self control and spend only where necessary, at least to begin with and have a budget for entertainment and other expenses. “As a young professional you must know what expense is necessary and what can be avoided”, guides Anand. This will help you liquidate nugatory expenses and hold important part of your capital to yourself.
Maintain A Balance Sheet
Might sound a bit technical, but it is as simple as writing your thoughts. “Maintaining a daily balance sheet i.e. what was debited and what was credited will help you keep a track of every single penny”, remarks Dubey. Balance sheets are powerful tools which can help you assess your spending capabilities and earnings which can be later transmuted into investment power.
Avoid Baseless Financial Schemes
More than being an advice, it’s a precaution that you must take. Credit cards are something which young investors love owning, but they do more damage than good. “Credit cards should be avoided at all costs. They put you in pretence that you have financial assets but in the long run you end up paying more than what you could have initially.”, warns Anand. Also only those with good knowledge of the market should invest in shares. Blindly aiming for the stock markets can put you in huge losses.
Lastly, spending should be conservative and investing should be lavish for a stable financial future. Dubey also advises, “Avoid loans but one loan which you can take up as a young investor, is a home loan as it will benefit you later, all credits to the interest rates.”