In this day and age of 'quick' money, it is important for youngsters not to lose sight of a few basics in managing their money. Presented below are five must follow mantras. Take a print out, write them down, whatever; but do not lose sight of them.
1. Set Your Financial Goals: Be it planning for future studies, buying a car or a laptop or a pool table - identify it and put a monetary value to it. You can achieve your goals only if you systematically save for it.
2. Buy an Insurance Policy: For those youngsters who have dependants; insurance is a must. However, we generally undermine the importance because we are young. The sooner you get insured, the better. It will also work out cheaper because of the age factor.
3. Spend Lesser on Credit Cards: The plastic money is very convenient and most of us prefer this to actual money. And since it is convenient, we tend to over spend. Do make sure you read the fine print before using your C-card lest you be unpleasantly shocked to receive the bills. Do not forget the basic rule, 'Don't spend what you don't have'.
4. Think 'Future': It is never too early to start preparing for your future; plan for your retirement now, the sooner you start the better it is for you. You will be able to see the power of compounding, when you start investing small sums of money, but still see it grow gradually to the amount you set as target.
5. Invest Regularly: There are various options for investing your money. One of the most popular and rewarding options is to invest in mutual funds. There are a variety of options to choose from (equity, balanced, debt) and also a variety of fund houses. Also, most of the fund houses have fairly easy procedures for Systematic Investment Plans (SIP). Systematic Investment Planning is a simple process of investing the same amount of money every month over an extended period of time, regardless of whether the market is up or down.
Money Matters Mantras:
- Set your goals
- Do not spend what you do not have
- Start saving for your goals- small but systematically
- Postpone your expenses, not your investments
The author Lovaii Navlakhi is a Certified Financial Planner, Managing Director of International Money Matters Pvt. Ltd.