Young people are often irresponsible with the money they earn. Here are the necessary steps they need to take to lead a safe and successful lifestyle.
The younger generation of today are spoilt for choices when it comes to avenues of spending money. Consumerism has spread far and wide and has etched itself into the psyches of the urban populus. The need of the hour is a lesson in moderation for the younger earners who have just been inducted into civil society as employed contributors. Here are a few ideas for the younger generation to save money:
Understanding What You Want
This is arguably the hardest step to follow. Easy on paper but difficult to rationalise into an impactful method oriented goal. But nonetheless, a distinct understanding of what you want for your future is primary. Earning without having set up personal goals for yourself is an irresponsible way to approach life. As a young earner, it is imperative that you identify lifestyle choices that you would want to adopt into your life in the long term. When considering this, houses and vehicles are obvious choices to put on your wishlist. Maybe you have always detested the idea of having to shell out rent or resented public transport during your initial working years. The point is, it is perfectly acceptable to have goals that identify and rectify the immediate shortcomings that plague your life. It’s a good place to start.
Tax is an important instrument that helps you save money. As an early earner, most people are prone to not make effective use of this. Deliberation should be made to how much your basic CTC should be as it is fully taxable. A higher take home salary would mean that the tax liability on you would be higher. Tax saving EPFs should be another important application for the sake of long term savings. These come in 5 year fixed deposits that give credence to tax saving and important nest eggs for the future. Treating the existing tax infrastructure like a fully customisable framework you can utilize to improve the efficiency of your earned income is essential for a secure future.
Initially, insurance coverage might seem like a good way to lose money than save it. The fact, however, is that life can be unpredictable during the best of times. Going about your day uninsured, is as good as living dangerously. The reality of our times is that anything can happen to anyone at anytime. Life insurance is that one opportunity you do have to live life unhindered by financial burdens that could prove to be beyond you. It helps you face emergencies head on without having to resort to financial help from external sources. This self aware intelligence is a necessary part of keeping your finances in good health.
Having an Emergency Fund
The logic behind an emergency fund is similar to the one that legitimizes the choice to have have health insurance. The unpredictability of life deserves serious reflection. Consciously saving for an emergency fund, can help you avoid debts and liabilities should a crisis situation arise. A modern youth needs to understand the sheer luxury he/she is affording themselves through the act of creating an emergency fund. The flexibility that an emergency fund can afford you, will strengthen your finances in the long term.
Young earners are prone to have no specific ideas about the money they accumulate. Living paycheck to paycheck is a popular way of getting through your youth. These steps would help you understand why it is necessary to have responsible money saving habits.