The millennial generation is all about financial independence and with that comes a host of unwanted expenses. This generation’s dependency on credit cards and online transactions lures them to spend more. Creating a corpus of funds may not be the first priority but with financial independence comes greater responsibilities of effectively managing your finances for future.
To begin with, make a monthly budget and set aside a fixed amount, depending on your assets and liabilities, to build an emergency fund. Learning to save early helps in avoiding the debt trap or seeking small loans to make ends meet.
Avoid spending on unnecessary things at all costs since it’s easy to drift away from your goal when you have just started to earn. Always set an achievable savings target and build on from there. Restrict your credit card spends and be cautious as they become liabilities in the very next month.
Learn about the taxation system and ways to save a good chunk of your hard-earned salary going towards taxes. Invest in policies that come with tax benefits and have positive returns like life insurance or the PPF account.
A life insurance policy not only provides financial security on maturity but also comes with risk cover. However, research about their lock-in period and premature exit policy. Investing in mutual funds in high-risk but can give better returns than other investment plans.
It is important to keep a good chunk as liquid funds in the form of cash deposits in savings accounts or fixed deposits as they give a sense of financial security. FDs generally have a lock-in period of five years and can be adjusted to a lesser time period depending on your choice.
It is a good habit to slowly and carefully build a diverse investment structure and allocate assets as per the risk factor involved. Once you start investing, it is advisable to be consistent with the savings and investments for better results.