None of us is born with money management skills. Generally, these are the skills that one develops/learns over time, often with mistakes and opportunities they get. But on the way to learning these skills, many make several mistakes which takes a long time to be corrected. Unfortunately, personal finance is not a subject in any school or college. This results in a lack of basic financial education, which further leads many youngsters clueless in maintaining a healthier financial life, money management, loans, debts, and investment.
Due to these reasons, most of the youngsters today are facing a financial uphill battle. Therefore, it becomes important for the parents to teach their young children financial lessons before they move out and start earning their own livelihood. It is equally important for the youngsters that they should be aware of these skills and grab the financial knowledge from wherever they can. However, the availability of the internet and quick access to financial products have made it quite easier for them.
Here are quick financial tips for a young generation that can to help them live a better financial life ahead
Learn Self-Control
It’s a fact that the sooner you learn the fine art of self-content, the sooner you’ll find your finances in a healthier position.
Although you can effortlessly purchase an item using your savings or through your credit card. But here the fact is your affordability didn’t affect your needs. Buy things which are important to you, which are your needs, not your wants. The minute you want something, it’s better to wait and analyse- is that really important? Is it that worth having? Is that worth value? You may think these are too many questions before buying something. But trust me it’s better to be safe than sorry, similarly, it’s better to analyse before that being sorry about your finances later.
Keep a Record
Keeping a record of your expenses always gives you the scope of performing better. Here your performance is related to your money expenses hence keeping a track record of your expenditures always gives you the scope of saving more and spending low.
The best way to analyse your performance here is by budgeting.
Once you see your monthly expenditure overview, you’ll realize that making small, manageable changes in your everyday expenses can have just as big an impact on your finances.
Keeping your recurring monthly expenses as low as possible will also save you big bucks over time. Which you can later use for investment or something else which pays you back.
Start Saving Now
Many of us believe that the 20s are made for enjoyment. It’s the time when we start our professional life, being free from liabilities, most of the youngsters are so busy enjoying the financial freedom that they let go of the saving part.
The thinking persisting among most of us is saving a little won’t make them rich. Saving for retirement is something that older, wealthier people do. However, the fact is – there is no right time to start saving or investing. It’s always best to start early as, in the long run, you will end up gathering more wealth. Whatever you earn, fix a part of it to save, be it 20%-30% initially, gradually increase it with your increase in income. You can use RDs or any other recurring saving schemes which gives you good returns.
Don’t Escape Debt and Its Consequences
Debts are a crucial part of once finances it may in the form of credit card bills, personal loans, home loans or any other borrowing. Though loans are designed in a way to fulfil our requirements and help us through our cash crunches, when loans are not managed properly they can be a serious threat to our finances. The bitter part of it is- we need to pay high interest against our borrowings, the interest when accumulated can form more than the principal amount. The only way to come out of this is timely payments and planned finances. Borrowing as per the repayment capability and not ignoring the interesting part.
Set Your Financial Goals
Even if you start making a budget and saving, without clear goals you are flying blind. Should you save money in your bank account? Should you invest? Plan for retirement or own a house?
Well, all these are important and need proper planning before execution. One will be able to do these once he/she sets a clearly defined financial goal. Setting financial goals on the hand helps you with your budgeting and saving as well.
Here are some of the financial goals which a youngster should include in his/her bucket list.
- Homeownership
- Ending existing debts such as education loan, credit card, personal loan
- Building an emergency fund
- Owning a vehicle
- Starting a retirement fund
- Have life insurance and term insurance policy
- Saving for kids education and future
By following the above points the younger generation will surely be benefitted and have a positive impact on the way they manage their finances.
