When it comes to money management, the youth find themselves quite confused most of the times, since no one teaches basic finance management at school/colleges. So here we present five crucial money management tips that will help you get started on your path to financial freedom.
1. Invest Your Idle Money
Keeping a huge chunk of your money in savings bank accounts is outdated and the only beneficiary is your bank which further invests your savings and makes huge profits. Though it is always advised that you should have ample savings to face any contingencies in life but never get into the shell of putting everything into savings only, learn to invest smartly.
You can go for equity mutual funds through a systematic investment plan and let your money grow at a safe and steady pace. If you are someone who doesn’t want to take any risks at all then you can always opt for a fixed deposit at your bank, it will still give you better returns as compared to your average savings account.
2. Get Yourself a Term Plan
Buying an insurance policy is the last thing that any youngster thinks of, and here we are suggesting you go for a pure term plan that only offers you coverage against a fatal mishap without any returns. But one can’t neglect the fact that in the event of a mishap, the policy holder’s dependents receive a lump sum coverage amount which is always a good financial situation. Moreover, if you start young, the premium costs are pretty low and remain constant throughout your policy coverage so you end up saving quite a bit there. You can always add more policies to your portfolio as your family grows.
3. Invest In a PPF Account
Public Provident Fund or PPF is also a fruitful long-term investment option for people who are just beginning to invest and are looking for a safe option with stable and good returns. With an assured return of around 8% per annum, this makes a pretty good financial investment for young people with low-risk appetite. Moreover, the interest you receive on these is tax-free and investments up to Rs 100,000 are also eligible for tax benefits under Section 80C of the Income Tax Act. Long term investments in PPF makes a strong investment portfolio and enables you to expand into risky horizons as well in the long run since you will have the safety net of assured returns from your PPF account.
4. Keep a Check On Your Credit Card Expenses
If used judiciously, your credit card can help you set up a good credit score which will put you in the good books of lenders and bankers in case you ever need to borrow a loan for personal needs or investment plans. Features, like withdrawing a certain amount of cash through your credit card or paying only the “minimum amount due” on your credit card bill, may seem like fantastic facilities but they come at a steep price. The fees and interest rates charged for these services can be quite high once accumulated over a longer period of time. So spend wisely and always pay your bills on time and make the most out of this amazing financial tool in your pocket.
5. Learn As Much As You Can
The best chance that you can give yourself to grow financially is to learn more and more about managing your own finances. You can always get help from competent financial/investment advisors, but if you can get yourself involved in the process, it will certainly help your cause. Invest your time and efforts in educating yourself about the trends in the financial sector and make your own prudent decisions. Making the right financial decisions consistently over the long run will keep you moving strongly towards financial nirvana.