Are you living on a salary-to-salary basis, thinking you will consider income and expenditure, each day at a time? Then that is the worst financial mistake that you can do. Finance planning is real, required, and an immediate concern as you start your first job in your 20s. Financial planning doesn’t only mean to save up all the time; it also includes investments, guidance and adequate changes in your lifestyle so that you don’t suffer financially in later life.
Here are 11 basic steps that you can take in your 20s to lead a comfortable life, free of financial worries.
Having high fixed costs: If you relocate for your work or decide to live separately, then consider living with the basic infrastructure, in a modest space, which demands a modest rent. If you lock yourself very early in life with high fixed costs, it might be very difficult to save up later.
No emergency fund: emergencies don’t give advance letters and drop in. they can include job loss, medical issues, family emergency or technical/infrastructural defects, which may develop at any point of time. Thus, always keep some savings from your monthly salary to handle such scenarios.
Carrying a credit card: Many people jump in the opportunity of owning a credit card without realizing that they will have to pay back the money with interest. Credit card loans may keep piling up and give you sleepless nights. Thus, many youngsters today prefer not to keep a credit card and ask only for a debit card. However, having a credit card sometimes offers you discount benefits while travelling or in the bank's services itself. So, one can always collect it and use it for financial benefits rather than financial mistakes.
Letting your money vanish: Many times you purchase subscriptions which auto-renew in nature. Sometimes, you make the purchase and then forget. And once your salary comes, you see how fast it starts depleting because all these bills have to be paid off. And this, apart from your heavy fixed expenses, food, water and other needs. Thus, keep a journal – digital or physical- to measure the amount of money spent each month. Check the services you don’t need. Cancel all auto-renewable services. This helps in saving a lot of money.
Having friends with expensive taste: Always hold your ground while making friendships. You may have friends who have a taste for luxury and overspend at the drop of a hat. But if you are not in a position to do so, make it very clear to the
Not investing at the right time: Your 20s are the best time to invest so that you can lead a comfortable life in your 40s and above. Many youngsters think that investing is hard and involves very technical jargons and thus leave it to ‘later’. But that is a mistake. Start by having a guide and start investing small. One day you will be able to reap larger benefits out of it.
Overlooking retirement and tax: It may seem weird that when a person is just starting out with their first job, they have to start thinking about retirement. But that is necessary. When you accept a job, check all the financial perks that come with it. See how you can make the best use of the provident funds or the medical insurance offered by your company. Also go over very carefully regarding the taxation details. See how much is deducted from you and how much you can reclaim at the end of each financial year.
Not securing any insurance: Since most people don’t visit the hospital without a purpose, they are not aware of the rising amount of service charges there. One medical emergency and all your finances can be wiped clean. Hence investing in a health insurance is a must.
Burying yourself in heavy loans: Many a times, people who are more or less settled in their jobs want to aim higher for a comfortable life and end up purchasing cars or houses on loans. While a moderate amount can be worked upon, a luxurious amount might put you under considerable financial strain and stress.
Not negotiating your salary: Most individuals are very happy to have landed themselves a job with a real salary. This makes them forget to negotiate the salary. While too much negotiation isn’t advisable either, slight negotiations are valid if you are asked to relocate. Also, check for bonuses, transport coverage, future raise patterns and more.
Financial problems aren’t only money: Financial problems don’t mean just debts, investments, insurance, credit card bills or taxes. It is literally tied to every aspect of your life, including relationship, career trajectory, emotional and mental well-being, lifestyle habits etc. The more grounded you keep yourself, the better you can manage your finances.
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