As college campuses buzz with placement activities, securing a job is a top priority for graduating students. However, it’s equally crucial to be financially savvy once that first paycheck arrives. In this guide, we provide tips for young professionals in their 20s and 30s, embarking on their financial journey.
Investing in equities:
Allocate a portion of your salary to invest in equities, especially in your early career. Financial experts recommend investing 60-80% in equities, leveraging the potential for long-term returns.
Smart living in metro cities:
Living in expensive metro cities like Mumbai or Bengaluru? Learn tricks to save, such as starting a systematic investment plan (SIP) in mutual funds and gradually increasing contributions with annual increments.
Financial assets over real estate:
Consider investing in financial assets rather than real estate in your youth. This provides flexibility for career moves, job changes, or relocations, enhancing financial freedom.
Spending discipline:
Keep spending in check, especially on luxury items. Impulse spending, often on non-essential items, can lead to financial strain. Evaluate needs versus wants and avoid unnecessary borrowing.
Smart borrowing:
While borrowing for education or a home is reasonable, be cautious with discretionary spending. Avoid high-interest loans for non-essential items, as they can harm your credit score.
Emergency corpus:
Build an emergency corpus equivalent to 3-6 times your monthly salary or expenses. Combine regular SIPs in equity funds with investments in debt funds for a well-rounded financial portfolio.
Health insurance:
Prioritize health insurance to cover medical expenses during sickness or hospitalization. Personal medical insurance is essential, even if your employer provides coverage.
Setting long-term financial goals:
Keep your financial plan simple by listing long-term goals, determining required funds, and setting aside a percentage of your salary. Avoid shortcuts and focus on sustainable financial practices.
Professional guidance:
Consider seeking guidance from a mutual fund distributor or a SEBI-registered investment advisor. Online platforms can provide tailored portfolios, but establishing a personal relationship with an advisor is beneficial in navigating market fluctuations.
Embark on your financial journey with these tips, ensuring a secure and independent future in your 20s and 30s.
