Savings and mindful spending are concepts which sadly are still unknown to many young individuals in India. Many also undermine its importance, but it cannot be stressed enough how liberating it feels to have financial freedom and the independence that comes along with it.
Every Indian youth must remember what it feels like to hold their first paycheque in hand. It’s when they take control over their own life or atleast get an option to do so. After you become entitled to receive your salary every month, it’s up to you to manage your money and spend it wisely.
Sure, financial freedom buys you independence. You definitely gain the right to buy whatever you fancy, like buying a gadget that you must have been pestering your parents to buy for months or trying out a lavish restaurant. Financial freedom, however, is much more than just that.
Spending your own money is quite tempting, but managing it wisely can help you in a bigger way in the future. If you recently got your first paycheque ever or are someone whose salary stands exhausted at the end of every month, here are some wise tips for you to follow:
Have a secret/alternate savings account
If you are at a very initial stage of earning, this is something that you can start with. Open an alternate secret saving account. The purpose of this is to put some amount of money from your salary which gets credited into your salary account, into this account. By doing this, you will always have a backup. This will reduce your chance of running out of money when and if there arises an emergency. Make sure that you don’t spend money from this account no matter what unless there comes an avoidable emergency.
Invest in SIPs or Mutual Funds
A SIP or Systematic Investment Plan is the best way to start with your investments. You can also start investing in mutual funds if you have a sound understanding of them. Investing your money might seem futile in the present as it restricts you from spending on things you want to buy, but they are a blessing for your future. It’s advisable to consult an expert who can tell you what’s best for you. You can consult your parents, and elder siblings as well if you wish to put your earnings into investments.
Buying yourself a life/health insurance is the best thing you can spend your money on
Life isn’t guaranteed. It is only practical to buy a life/health insurance that will have you covered in case of any unforeseen incident. The 20s is the best time to buy life insurance. Since you are young, it’s easier and cheaper to buy the insurance and derive larger benefits. Make sure you first understand the nitty gritty about buying insurance, before you actually go ahead with it.
Follow the 50:30:20 rule
This is the easiest way to manage your money. The 50:30:20 rule requires you to divide your earnings/salary into three parts. As per this rule, you can use 50% of your salary for your needs (not wants) like paying rent, bills, and EMI. You can utilise this money to buy your monthly grocery as well. Further, 50% remaining, you can use 30% to buy whatever you wish to buy like clothes, furniture, accessories, etc. You can eat out, watch movies, or plan a short weekend trip with this money. The remaining 20% of your salary amount is what you need to save. Be disciplined with this and don’t compromise on this 20% at all.
Spend only how much you can afford to
Always prioritise your spending. Ask yourself, do you really need or want a particular thing? Wait for a few days, about 15-30 before buying anything, and then again ask yourself, ‘do I still need this?’. Chances are you might not. Always know what and how much you can afford. Don’t go about spending mindlessly just because you have money coming in every month. Learn to lead a minimalist lifestyle if your earnings are minimal, atleast initially.
For most of the Indian youth, independence and freedom to live as per their will are a myth. Right from childhood to getting married, young Indians are expected to abide by what their parents tell them to do. It’s now that the times are changing a bit and if the youth plans their life strategically, independence won’t be a myth any longer. So how do you plan on becoming independent with the help of your financial freedom?