Personal Finance Basics: Younger you learn the better you earn

Updated: Oct 24, 2018

It doesn't matter how well versed you are in any field if you don't know about personal finance. Regardless of the job you do, it's something which is needed by you in every stage of your life. To keep away from financial blunders due to reckless use of money, which many young people today get involved in, you, need to learn some basic personal finance etiquette. That done, it can save you many a headache and anxiety in the later life when money is more than just money!

Creating a balance between Saving and Spending
personal finance basics : saving

If you desire to shape your future life according to your own will, then all you need to do is, keeping track of what you do presently. With that motivation in mind, here we have a few lessons for your personal finance basics, which are sure to have a long-term impact on your future wealth. After all, the mature you go the more entangled the freedom and money become, hence making it hard to differentiate between the two!

1. Creating a balance between Saving and Spending

A balanced budget you impose upon yourself can give mileage to your earning. What's implied by 'balanced'? It means nudging yourself, reminding it, that you will spend, always as a rule, less than what you are earning presently. An extravagance here is sure to put you in debt, along with creating a hole into your pocket. By which is implied you will not be able to contribute to your savings for some time to come because you have the debt to pay. Again, it can prove a deterrent; hence will prevent your financial progress.

The tested etiquette to give yourself the ease of spending and saving is apportioning your money to different pockets. It's similar to allocating budget, distributing money equally into pockets for various expenditures. Like, a portion of it will go to savings, part to pay rent, and part to household expenditure.

2. Prioritize basic requirements, avoid Expensive Borrowings

Most of the people today, young especially, are crazy after lavishness. To live within the limits of your pocket seems a lost art, which needs a relearning! There is no need, whatsoever, to strain your pocket to the level of breakage. It's time that you segregate what's required and what's not and plan accordingly.

It's intelligent not to buy something which isn't needed even if it's available on EMI or Credit. Try as much as you can not to burden your budget, stick to mundane needs instead.

What's stressed here isn't being averse to buying something valuable to you on credit. Buying what's urgently needed is always a proper thing to do. But the point is you should buy something that can add value to your life, such as, a house, or any other likewise thing. Doing it for show off, otherwise, can certainly ruin your pocket!

3. Plan an investment

People, especially young, always have this question crept into their head, what to do with the money saved? Plan an investment. It's the shortest possible reply. Who'd like to have money, all stacked up in some bank, passively growing bigger and bigger with your contribution, but offering nothing in return?

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Go for investment instead. It`s the best possible way to let your money actively contribute to your wealth. Invest, and your money will not just be there, as in a bank. But, it will grow and offer you returns and dividends, which you can`t get from your money piled up in a bank you barely visit.

But the risk involved should not be ignored. Nor should it be done in haste. Proper planning and the right strategy can make your investment a success. Do it step-wise, don't go on pooling in all your money in the first go, steady is best.

4. Save something for your Retirement

Talking about retirement is boring while you are young. However, that should not tend us to ignore its existence, or it being around the corner. Put aside a small amount of money for your retirement each month and make sure you are not able to withdraw it before reaching an age set for your retirement.

It can prove a good back-up then. But you need to take the step today to reap its benefits tomorrow. If you feel hesitant, it's better to consult a financial adviser. He can advise you better how to go about it.

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