Financial Tips

When I look back on my early 30s, there are so many things I could have done differently to put myself in a better financial position at the time of my retirement. Let us face it when you are young, saving for retirement or budgeting are the last thing on your mind. There are some financial tips, I wish I had known in my youth. Here are some tips for all but especially for the younger generation:

1 Build Your Financial Literacy

It is generally said that knowledge is power. Then it should come as no surprise to you when people say that wealthy people are more financially literate than less wealthy people. So you must take some time out of every day and build your financial literacy by learning about earning, saving, investing, borrowing money, etc. When your children grow please tell them to follow this habit also.

2 Set a Budget

Do you ever feel how your money evaporates after your earnings are deposited in your bank account? To avoid this you must know about budgeting, it helps you create financial goals, track where your money goes each month, and stop living paycheck to paycheck. So you must choose a budgeting method to set money goals and use your income smartly.

3 Make Sure Your Money Keeps up With Inflation

It is a fact that every day your money loses its value due to inflation. The cost of goods and services keeps going up, and your money which is in your bank account is simply not keeping up with it because it is losing purchasing power. So you must put your money in a high–interest yielding financial scheme. Yes, some amount should always be there in your savings account to take care of your monthly expenses. You must do an investment that is easily accessible to you in case of an emergency.

4 Invest

Generally for naïve people investing seems to be a risky business. You must learn about how to invest money in the stock market/mutual funds etc. Once you understand the nitty gritty of the market, then it becomes a valuable tool to grow financially. Start with a small amount, and gradually after you become comfortable with the system, start investing more.

5 Have Multiple Sources of Income

Do you know what wealthy people do besides investing? They maximize their cash flow by having multiple sources of income. Since the start of the Covid 19 pandemic, you must have noticed that many people have discovered creative ways to make extra income. In this way you can earn more money, learn new skills, and never have to depend on one salary for your livelihood.

6 Save With Purpose

One of the most important financial habits you should know from a young age is how to save money. It is the building block of financial independence, it gives you peace of mind, and it is there when you have important life milestones. Making a specific saving goal will be much more effective than saving for the sake of saving.

7 Plan for Retirement (Even if it seems Too Early)

When you are young, retirement is not exactly at the top of your list of needs. you think you will have plenty of time to save for it, and there is no rush. But if you come to know that saving for retirement is not difficult, then the earlier you start, the more money you will have when you retire. What you must do is open a retirement account and contribute a portion of every salary cheque to it. One of the options is to invest more in employees’ provident fund or in public provident fund.

8 Learn About Taxes

Learning about taxes and having at least a basic understanding of how they work can save you a lot of money in the long run. There are certain investments, if you invest in them you save on your taxes. Even you can maximize your tax refund by knowing about certain tax deductions. Whether you have a traditional job, are self-employed, or have investment income, the more you know, the more money you can save.

9 Don’t Give Into Consumer Culture

One of the most important money tips is not to give in to the toxic culture of consumerism. It relies on instant gratification and convinces you a certain product, outfit or makeup will improve your life, which is not true always. Do not let yourself be swayed by social media which constantly encourages you to spend money on the things you do not need. They call these people ‘influencers” for a reason, their job is to persuade you to buy things you may not or do not need. So before you buy anything, ask yourself if you truly need it. If the answer is no, put the money you would have spent in a savings account or invest it. Just because you have extra money does not mean you have to spend it.

Whether you are a young person who has just started his/her career or a retired person. It is never too late to put some of these habits into practice.

Waiting for your views on this blog.

Anil Malik

Mumbai, India

26^th July 2022