When we enter the workforce, what we look forward to most is our first salary. There are so many plans. It seems as if we could do everything, buy anything with whatever money we get. This is a phenomenon that is seen widely among the millennial population, who are known to splurge money on finding ways to – what they call – “enjoy life”. Some of them are wise though. Having survived on limited pocket money thus far, they tend to know the value of money and strike a balance in their expenditure and savings, one of the most important financial decisions they make so early in life.
There could be nothing wrong with spending on luxury once in a while. Doing so often would create problems. It is important that young people develop a habit of saving a part of their salary so that they can build a corpus for emergency or future needs.
How do you do that? Here are a few options that will help you – the millennials – manage your finances from the start.
1.Buy Life And Health Insurance
First things first. Being an earning member of your family, you must create a security net for yourself and your family members now. Invest in life insurance as well as health insurance. The first policy will keep your family secure and the second will ensure you can access expensive medicare if there is a need. In the long run, health insurance saves you from sudden healthcare expenditure, thereby ensuring your other investment plans remain on track.
They are the safest way to enter the stock market. On average, mutual funds give higher returns than what the bank will give you. In bank accounts, your money sits idle. In mutual funds, they are likely to grow faster than that. You can also open a Strategic Investment Plan (SIP) for three years. You will have to invest in it at regular intervals (weekly, monthly or quarterly).
Start building a contingency fund to meet your expenses for 3-6 months and keep it aside, untouched until absolutely required. This fund will come in handy when your finances are stressed due to a variety of reasons – like job loss; healthcare expenditure; helping out a family member etc.
Though it’s early days for investing in cryptocurrency as there’s no regulatory oversight on their trade, history has taught us that early movers have the biggest advantage. Cryptocurrency investments are known to give very high returns. Still, you can consult your personal financial adviser before investing because of the volatility risks.
5.Spend some on yourself
Since you are beginning your career, it is important to invest in yourself. You need to look energetic and on top of your game. Keep a small part of your salary on keeping yourself fit. Invest in eating healthy, appearing charming and upskilling yourself. For example: If you’re in the tech industry, enroll yourself in an online course to know the latest innovative methods and enrich your knowledge.
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