India has a huge amount of young population, which constitutes a large part of the workforce. In future, these young earners will emerge as leaders in their field of expertise. This set of the population must take financial safeguarding seriously to benefit from the same at a later stage in life. People who have just started working need to plan their finances well. They might make certain mistakes because of lack of financial guidance. Here are a few personal finance tips to help young adults like you organize their finances in the right manner.
Frugality makes sense
Being frugal is not about being cautious or holding on to funds for no reason. Rather, it means that you can differentiate between expenses and prioritize them in a manner that you can save a certain amount from the income.
Prepare a budget
Planning a budget is one of the most important financial tips for young adults. It will guide you in spending and saving decisions. It will bring financial discipline in your life and help you channelize the funds in the right manner.
You cannot achieve anything if you do not set goals. Goals will help you for your future and will help formulate a plan so that you have enough money available during an emergency.
Inflation is a rise in prices of products/services over time. You should never overlook its impact on your savings and investments.
Build a balanced portfolio
Developing a diversified portfolio is one of the most important financial tips. Investing in low-risk debt products and high-risk equity products comes with own pros and cons. Keep your goals and your risk appetite in mind before you invest your hard-earned money in any instrument.
Buy life insurance
The first step towards financial stability is an investment in a life insurance plan. It will provide financial security and you can receive a huge corpus at maturity if you invest in a plan at an early age.
Buy health insurance
Invest in a comprehensive health insurance plan and put an end to worries about health-related emergencies.
Choose annuity schemes
When you invest in annuity schemes like retirement plans or National Pension Scheme (NPS), you add to the corpus due to compounding. When you retire, you will receive good returns.
Invest in tax-saving schemes
Look for tax-saving investments like NPS, Public Provident Fund, and Equity-Linked Savings Scheme, among others to ensure that you do not have the burden of taxes. You get an exemption under Section 80C of the Income Tax Act, 1961 for investing in these schemes.
Invest in Unit-Linked Insurance Plans (ULIPs)
ULIP has a mandatory lock- n period of five years and serves a dual purpose. It offers investment and insurance benefits that take you closer to your financial goals.
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Keep these tips in mind as you start investing. Remain consistent and committed to your medium-term and long-term financial goals.