The section of people whom we are talking about now is probably the most vulnerable lot especially in the field of personal finance. This is the young earning community. It least cares about these words in the initial earning years – savings, investments and insurance. Some of them do care but get carried away by the herd which always throws them in no-man’s land.
So, how should a young earner go about the business of managing his financial life? We are here to suggest some simple tips to have a stable financial life in the future. We will try to do this using the five alphabets in the word YOUNG.
Y for Years
Since you have just started your career, you would have lot of years left. This can either work as your strength or even as your weakness. It depends on how you react to various situations. Strength is that you have ample time to create wealth. Weakness is that you might take this for granted and not plan for your future goals. Ideally, you should be making it your strength and slowly build a stable portfolio of investments, insurance, etc. However, that may not happen overnight and you would have to be ready to cross lot of hurdles in the process.
O for Oath
Before doing anything with your money, take these oaths. First one would be not to mix insurance and investment anytime. This would mean you would only opt for pure term plans which will protect your family in your absence. Remember that insurance is not designed to create wealth. Secondly, do not blindly follow tips from any source especially when you invest in direct stocks. Do your own research and only then do anything.
U for Unlearn
This is a time when you get lots of suggestions from family, friends, neighbours and all those who act as experts. Most of these will be garbage. However, since you are new to all this, you might feel otherwise. Try to unlearn what all you have learnt from them. Learn for yourself. You might make mistakes but you will remember these lessons for life. If you need advice, consult experts such as financial planners. Choose the right person for the right job. Do not consult a CA if you need advice on investments and cash flow management.
N for Naive
Remember that you are naive in this field and never try to act like an expert. Accept the fact that you cannot weave magic in a few days. People might tell you about things such as stock picking skills and state examples of stocks like Wipro which made thousands of crores in 30 odd years starting from few lakhs. Look at the other side of the coin as well. You are still naive in this field and may have to do lot of research in this field to be able to pick such potential stocks.
G for Go Ahead
This is the time when you have least responsibilities. You might not have taken a loan yet. You might not have to spend half of your salary on groceries and other utilities. Hence, this is the best time to invest as much as you can from your income. Since you are giving this investment lot of time, even though some may be duds, others will create great wealth for you going ahead.