Smart financial planning is crucial for all young professionals because of fluctuating financial standing and inflation rates. Doing so enables you to:
With these benefits in mind, here are some easy-to-follow tips you can rely on.
Before you incorporate the suggestions given below, map out your short-, mid- and long-term goals. This way, you can effectively use the steps based on your goals and current financial standing.
Before driving into planning, you must know the basics. You can read a few books on personal finance or do basic research online. Understanding factors that affect your finances and how to grow your wealth can help you build a solid foundation for inculcating good habits.
While it is a great tool to help you bridge gaps, at the end of the day, it is a loan that attracts interest. Overusing it can lead to a debt trap, which may negatively affect your finances and credit score. So, it is important to exercise self-control and use it responsibly.
Budgeting is another wise step towards financial planning for young professionals. It allows you to manage the monthly cash flow. With this, you can avoid unnecessary expenses and save more, even with a limited income.
The most common practice is using the 50/30/20 rule of budgeting, but you must customise your budget per your requirements.
This simple practice is the key to overcoming unforeseeable financial troubles. Be it a savings account or money market Investments, this will be helpful in times of uncertainty, such as unexpected job loss. During this time, you can rely on your emergency reserves for essential bills and loan repayments to avoid added financial burden from penalties or additional loans.
When you don’t invest as per your requirements and tolerance, you run the risk of making hasty or ill-informed decisions that harm your future finances. So, it is crucial to keep your goals and risks in mind. Once you have that, here are some investment options you can choose from:
Also Read: Budget planning tips to follow
Before choosing, compare the pros and cons to make an informed decision that suits your needs. Moreover, remember to diversify your portfolio to counter uncertain market conditions.
Saving for retirement in your 20s will help you get better interest on your principal deposits. In addition, investing in such goal-specific schemes early on can result in lower monthly premiums, which benefits in the long run.
You must leverage the deductions and exemptions offered by the government to lower your tax liability. This can help you save significant amounts that you can invest in other schemes and secure your growth.
With good creditworthiness, you get better and more affordable access to financial services and products, which can be beneficial in the long run. As such, one of the most underrated yet smart financial planning tips is to build and maintain a good score. Here are some ways in which you can do that:
Following all these tips will help you boost your current financial health and build a stable and strong future. You can also apply for a Personal Loan to get up to ₹5 lakhs with no end-use restrictions and kick-start your financial planning.
Moreover, you can enjoy interest rates starting at 2% p.m., flexible repayment options, zero foreclosure charges and many more benefits. Download our Personal Loan App or go to our website to apply online.
This is a rule of budgeting where your income is allocated as follows:
Here are a few things you must do:
This is a personalised process, so you must remember your financial goals and aim to save more. You can use any other rule that suits your needs and plan accordingly.
This is an alternative budgeting strategy which distributes your monthly income into three categories: