Are You A Millennial? Here Are 5 Money Tips You Did Not Know About
When we are in our 20s and have just started earning, budgeting is not really a popular word in our vocabulary.We hear our parents talking about it all the time but there is enough time for us to do that. Is there?Not really.In most cases, our financial commitments are at their lowest in our 20s,which is why,this is the right time to start thinking about and implementing money-saving tips.Most of us have a misconception that to save money, we need to earn more money but it could also be the other way round.If you wait till later in your life,a large sum of your income will be required to build a certain corpus.
Here are 5 significant yet easy tips from Samriddhi that will help you to understand and use money better.
- Track your expenditure:Before you start saving mindlessly,begin with tracking your expenditures.This includes every penny that you spend because that is how you will know where your money is going.At the end of every month, you will be able to find out the avenues that are not essential and these are the places where you can cut down your spending.Once you know your spending habits,you can make a monthly budget.Stick to it and put away the leftover money in a retirement fund or an emergency fund.
- Diversify your money:After 6 months of saving money by budgeting, you will have a decent corpus to start thinking of investments.You will be glad to know that you can start investing in SIPs with a minimal amount of Rs. 500. Apart from SIPs, you can also diverse your investments in various ways.If you plan to buy a house in 5 years from now, calculate your financial goal and invest accordingly.When you diversify,you also minimize your losses and since you are young,you will not be in a rush to double or triple your investments by opting for risky stocks.
- Consider Mutual Funds: Now that you have done the difficult part of saving money and are waiting to eat the cake of a good corpus, how about we offer you an icing on the cake?By investing in mutual funds,you can not only save money but also make more money with the returns you earn.The best part about investing in mutual funds is the fact that there are both long-term as well as short-term schemes.If you want to invest money for an overseas vacation,a short-term debt-fund will give you the flexibility and the tax-saving opportunity that you might need for a year or so.Similarly, you also have the option of investing in equity funds, if you have long-term goals.For a diversified portfolio,good amount of liquidity and steady returns,mutual funds are the best way to go.
- Create An Emergency Fund: An emergency could be anything, from medical to financial and other miscellaneous expenses. Trouble often comes unannounced and for younger people, it often arrives as a loss of job. If you are in the habit of saving money every month, aim to create a 3-month emergency fund, at the earliest. As you grow older, you should aim to create a 12-month emergency fund as you will take on more financial responsibilities in the journey of life. We are all witnessing how a global pandemic can impact work and lives in such a drastic way. This is more reason to prepare ourselves for unpredictable situations by creating a corpus that will help us when the going gets tough.
- Avoid Debt Accumulation On Credit Cards: The perks of a credit card are tempting but if you want to maximize the potential of having a credit card, the best way out is to use it only up to an amount that you can repay. A lot of people are into the habit of paying the bare minimum dues on a credit card but that attracts a good amount of interest. Additionally, it ruins your credit score and your debt accumulation increases. Build the healthy habit of paying credit card cards in full, every month, and continue to be money smart. Views are personal: The author is Koonal Jain, Director, Samriddhi Investment Services Pvt Ltd
Disclaimer: The views expressed are of the author and are personal. TAML may or may not subscribe to the same. The views expressed in this article / video are in no way trying to predict the markets or to time them. The views expressed are for information purpose only and do not construe to be any investment, legal or taxation advice. Any action taken by you on the basis of the information contained herein is your responsibility alone and Tata Asset Management will not be liable in any manner for the consequences of such action taken by you.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.