As we celebrate Holi, the festival of colors and joy, we at EarlySalary want to ensure your finances remain colorful too! Some basic practices, which when applied and practiced regularly, can go a long way in ensuring you don’t fuss about your future and your retired life, even if you’re living on a modest pay right now. We’re here with some fairly essential tips to help plan your finances and by extension, your life. Let us know what you think!
For young adults fresh into their careers, managing finances can seem like a challenging task. Many may even find the idea of retirement planning preposterous and majorly premature, as they are already overwhelmed with managing finances for the present. While this seems like a reasonable reaction, it almost always culminates in the late realization that they haven’t saved up enough for their future, a little too late in their lives.
Without having begun their investment journey, they stand to lose significant amounts of money that they could have generated outside of their professional work. In this blog post on International Happiness Day, we had shared why investing as soon as possible earns you a lot more money for investing the same principal.
Mutual funds investments, coupled with SIPs (Systematic Investment Plans) are arguably the most efficient way to work towards your next big spend. Whether it’s your dream house or that long-awaited trip to Paris, a SIP not only helps allocate periodic savings, it also helps grow the quantum of your corpus. Consulting with a financial planner, or a mutual funds agent, saves you (and makes you) a lot of money in the long run, helping you achieve your long term goals.
Earning beyond Rs. 2.5 lakhs annually attracts Income Tax in India. While taxpayers have learned to make use of the legal deductions to reduce their tax liability as much as possible, they often leave their tax-saving spends until late February. Unsurprisingly, many have to live through February and March like they’re broke. This happens primarily because they haven’t planned for their taxes in advance, throughout the year. Spending INR 1.5 lakhs (the maximum deductible limit under Section 80C) throughout a year, is certainly more convenient than spending INR 1.5 Lakhs over two months. Check out our dedicated post on tax savings tips for an in-depth look at maximizing your tax advantage.
Credit is the best example of a double-edged sword. When utilized properly and effectively, is the best tool under your belt for your money problems. A financial crunch happens to everyone, stemming from temporary cash-flow problems or employment situations, or whatever else as a reason. It’s important, however, to make sure you’re on the right side of loans:
Perhaps the most underrated tip that’s often given little attention. It’s critical that you deliberately resolve to spend some time to plan out your finances, and don’t just do it when you have free time outside of your other responsibilities. While a large part of our waking hours are spent in generating (and spending) our income, we often disregard the ‘managing income’ bit.
Of course, it is not practical to compare our financial abilities to trained professionals, but it is certainly possible to get better at finances by spending some time and doing the legwork. Before you get intimidated by the idea of committing a large amount of time for this project, know that this can be achieved simply by inculcating the habit of spending some time towards budget making, researching, managing your portfolio, etc.
These are just some of the many tips that we have shared in our blog over a period of time on finance management. Do check out our finance blog for an in-depth understanding of personal finance and how you can leverage it to your advantage.