Prioritising savings will make you financially disciplined which will in turn instil strong financial habits that can last a lifetime.
Accounting for 47 per cent share in the working age population they are the chief wage earners, the largest demographic group in the country and characterised by high levels of disposable income—these digitally connected individuals are currently redefining the Indian consumer story. If you haven’t guessed it already, it’s the millennials.
Millennials are exceptional in many ways. They are better educated than their predecessors, more ethnically diverse, and more economically active. Yet they face greater difficultiesincluding economic uncertainty and lack of financial planning. Young millennials lack the education in managing finances which is imperative when applying for credit, staying out of debt, long-term wealth creation as well as saving for life’s uncertainties. Financial literacy and basic personal finance strategies like the discipline of spending, saving and investing in a regular manner can go a long way in building a solid financial foundation for the rest of your life.
Here are some essential tips to keep your finances in order and lead a prosperous life
Even if the amount is small, start saving. Prioritising savings will make you financially disciplined which will in turn instil strong financial habits that can last a lifetime. Here a key tip would be - Don’t save what is left after spending; spend what is left after saving. If you routinely pay your last bill of the month, only to discover that you have mere pennies left, reverse your tactics. Calculate correctly in terms of –income, expenses and the amount you should be able to save, things will work out.
Have an advance planning
As Warren Buffet has rightly said, “Risk comes from not knowing what you’re doing”. Make a list of liabilities for the next six months such as - insurance premium, EMI’s, rentals etc. advance planning and reserving for fixed liabilities well before time will help decrease risks substantially. Keeping abreast with your earning and spending trends and taking charge of your finances will help you grow your investments. Simply put – if you aspire for a particular asset, start planning in advance, keep a check on you income and spends and chart a suitable deal.
Look for options
A thorough homework in terms of research and comparing the features of the product is imperative to ensure optimum value returns for our investments. Before investing in stocks or mutual funds, compare the returns, check with trustworthy, knowledgeable sources and then take a sound decision.
We get to hear a lot of schemes and offers and read about them on the internet too. Don’t fall prey to them, especially if any is too good to be true. Always, check with atleast 10 people preferably experts or seasoned people before putting your money into a new financial asset. During emergency situations we don’t tend to think straight, but this is the time when you can go for a cash loan without disturbing your existing long-term investments.
Know your risk tolerance
Don’t go overboard and risk all your assets and money, to get better returns. Always check your risk tolerance before investing in Mutual Funds or any other financial asset.
An unexpected situation can rise without any heads up. This means you need to have some funds to face the situation. Having said that, in case you are short of funds, you can easily avail short-term loans from new age digital lenders who can come to your rescue during emergencies rather than availing other precarious offerings in the market.
Use a credit card wisely
The habit of swiping credit cards can be addictive and disrupt your financial calculations. Use your credit card wisely depending on your cash flow management. Keeping a tight check on the amount you may swipe for a fortnight or a month can actively contribute to your financial discipline and in case of an emergency, go for a quick loan offering low-interest rates.
Always have a bigger picture
A lot of people get disappointed when the market falls, -- this is bound to happen. The share market goes up and down, the key is to give it time and be patient. The longer you invest, more likely you will get good returns.
Diversify your portfolio
Don’t put all the egg in the same basket is a golden rule and hence don’t invest all your money in one financial asset; split your budget and invest across offerings. If you plan a big purchase, don’t redeem your investments, instead get a cash loan and pay it off in EMIs.
By Ketan Patel, CEO, CASHe