As India’s working age population increases over the next decade, it won’t only increase the consumption potential of the country, but also arrest any fall in its household savings rate. This is not only due to low income but also due to lack of understanding of financial planning. With the rising prices in India, it’s crucial to work your way around your money. Follow the 3 tips below and you’ll be on the right path in no time!
Tip #1: Start Budgeting! There’s nothing better than getting your paycheck, however, most plan on spending it immediately after. Budgeting helps you understand how your expenses are categorized as well as avoid overspending, which in turn helps give you control over your money. The first month will be tough, but once you make it a habit, you’ll find that you are a lot more aware of what is going on with your money.
Tip #2: Set Time Frames for your Financial Goals. Goals can be divided into 3 categories: short, medium and long-term. Once that is settled, determine what is the exact amount of money you’ll need. This will help determine the amount of time and money you need to save up. Needless to say, remember to factor in inflation while making the necessary calculations!
Tip #3: Investing is key. A lot of new earners make the mistake of saving to save, instead of saving to invest. Investing allows money to accumulate on its’ own over time, which proves to provide greater returns than simply saving if done correctly. Therefore, be sure to invest in right instruments! The investment vehicle should be aligned with your goals and time horizon.
For example, in the short-term, savings accounts and short-term certificates of deposit are popular conservative investments. The rationale being the investment is held in cash which minimizes the risk of loss. In the long-term horizon, stocks like Infosys Ltd ,bring about higher potential rewards. This may bring about greater risk, but there is also more time available to recover from loss.
A good investment option is the Monexo P2P lending marketplace. You as a lender can build your own loan portfolio with solid returns as high as 15% p.a. To start growing your savings, click HERE.
So gain a lot more control over your money and your money will start working for you! For more financial advice and tips, you can check out our other investment blogs.
Sources:
“5 money tips for new earners”. The Economic Times. Web.
“Household savings set to fall across the world“. Live Mint
