Finance doesn’t come easy to the best of us. It is difficult to juggle money and handle it with care. And boy do you have to care for money!!! Because if you are not careful, money tends to leave you in a hole. Just ask our heroes from the Hindi movies of the 80’s. Your responsibility with money starts much before you even start earning a salary. It begins when you actually start doing some major spending which for you is an education loan and the education itself. So your first learning starts with spending money and not actually earning it. So we decided we would give you some free education on finance to offset the expensive education you got with your education loan:
- Learn to budget: This is the most important lesson you must learn while dealing with money. Always be careful about what and how you budget. Let us be honest that we all have needs, wants and desires. It is normal to crave that new phone or go party with friends at the latest club. All these are normal desires you have but having a budget helps you indulge in them while still not going overboard. Get an idea of what you require to survive from rent and food to travel. Then have an amount I mind that you hope to save every month and diligently put in a safe deposit which even you can’t touch. Finally have separate budgets allocated for big and small expenses. The big expenses are for expensive purchases like a phone, an upcoming holiday etc while the smaller account will be for immediate wants like a weekend craving.
- Use credit cards prudently: This is a perfect case for the Hindi maxim ‘aamdani atthani, kharcha rupaiya’. While credit cards are a life saver and a huge convenience in many cases, it is easy to go overboard and misuse this instrument. Credit cards are amazing tools which help you pay with ease, do online purchases and gain a credit period. But you must remember that whatever money you spend on a card has to be paid back. And the interest can spiral soon if you do not control your outstanding balance. So keep your spending in check as there are other things which will affect you in the long run if you have a large outstanding.
- Invest wisely: Look at risks and rewards before investing your hard earned money. There are a lot of lucrative investment opportunities in the market including the stock market. There are also some ponzi schemes which offer you high returns that are a trap. Be aware and deal with only genuine institutions which are accredited by the government. It might be tempting to invest in stock markets or mutual funds which offer high returns. But at an early stage of your career you should take care against high risk investments. Look at a good balance including FD’s, insurance, MFs and stocks.
- Check your loans: There will be times when you will take a loan or some other overhead. It is perfectly OK to take a personal loan for any purpose. Infact they are versatile financial tools that help you get on in life whether for travel, medical, wedding, rental deposit or any other purpose. They provide you with a way to access funds easily and quickly to meet life’s needs. But don’t blindly take ay loan offered to you. Research through a site like ours to see where you will get the lowest interest rate, pre-closure option etc. After you take the loan, make sure you pay the EMI’s regularly and do not delay or default. This could affect your CIBIL score which will hurt you in the future. Be careful and don’t take loans which you cannot afford to pay back.
- Plan for future: What is your ultimate goal in life? For many of us it would be to be successful, lead a good life and have enough for old age. To do all this you need to have a basic plan for your finances too. Estimate by when you might get married, have a house, investments and work towards it. Look at which financial instruments like personal loan, home loan, etc can help you at each stage. Be aware of what influences your financial life like CIBIL. Insure yourself properly and be properly covered against any emergency. Close all your loans properly and have adequate funds for the education of your children. Look at retirement funds and the like.
All said and done, try to be a little more financially aware and know the consequences for your actions. Being carefree is a good way to live but we expect to live long and being a bit aware has hurt no one. Also remember that even if you dig yourself into a hole, there are ways to get out. With a proper financial plan and awareness you can come back from any situation no matter how dire it seems. But try not to get into the hole in the first place.