Five Tips To Manage Your First Salary

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Five Tips To Manage Your First Salary
Rajat Mishra - 23 June 2019

Putting its importance aside, the concept of investment and saving have never been able to intrigue youngsters and this situation is much worse in case of youngsters falling in age bracket of 21-25.

Ashish Jha, 21, has just made a foray into his professional life. He hails from Supaul district of Bihar. Ashish came all the way from Bihar to Delhi in order to attain a quality education and to earn well in his life.

Now, after confronting many ups and downs and beating all the odds, Ashish has joined his first job and is expecting his first paycheque very soon. He is just like one amongst many youngsters, who all are clueless about their saving and money management plans. On being asked that what he is going to do with this paycheque, he says: “Firstly I am going to buy gifts for my parents and sister and secondly as this is the first paycheque, I am going to have fun with the rest of the amount after fulfilling all financial obligations such as room rent and food expense etc. But when a question was posed to him about his saving road map Ashish seemed quite perplexed and baffled and broke into a statement: “I have not planned anything so far, as the first salary is to get some memorable experiences.”

Ashish was at his wits end, when he was asked about mutual funds and other instruments. Barring few banking terms all other things seemed an alien concept to him.

This is not the story of Ashish in isolation; it is the story of all most every youngster who is expecting his first salary. No one has a roadmap to save money as the first salary for them is meant to splurge.

But now the time is ripe to break away from this tradition that your paycheque is meant to splurge and enjoy. So here are five tips to start managing your hardly earned money.

1. Set up a Budget

First and foremost thing that you have to do is to set up a budget, which means that you should have a plan, where to spend and how to spend. You need to know that how much money you have to spend. So that proper management of your income should be done at your end.

2. Buy an Insurance Policy

I know it’s very boring to think of buying an insurance plan for you amid you have lot of plans ready in store. But buying insurance is of huge importance for youngsters at this stage of your life. So get your health insurance done at the earliest because you never know when there is a situation when you will have to spend a lot of money on any medical exigency. And it should not only confine to health insurance, but buying a life insurance is of utmost importance too.

3. Try to figure Out Your Financial Goals

Life is so long and is full of ups and downs thus you never know at what stage you will need saved money to meet all those exigencies. Thus keeping in mind all the financial goals in mind it becomes imperative to know all your financial goals. Different people have different financial goal thus it’s mandatory to know your financial plan. Retirement plan, kids education, marriage, buying home can be a few financial goals.

4. Invest In SIPs

Now you have a series of financial goals to accomplish and also for this you have to have a corpus of money to spend on. Now if you want to have corpus of suppose 20 lakhs by the age of 30 you will have to invest in SIPs. A systematic investment plan is a method of investing in mutual funds wherein an individual can invest a small amount regularly-On a weekly, monthly or quarterly basis to have a desired corpus over a period of time. Many financial experts are of this opinion that ideally an individual should invest at least 20-25 per cent of their income in SIPs.

5. Avoid Debt Traps

Being a young guy/girl and getting your first salary also comes up with a wish list. And there is huge tendency that you will fall prey to your consumerist urges as it is difficult to curb them. A wallet with many credit cards and multiple debit cards can very easily lend you in a debt trap. And there is strong need to understand a difference between your needs and desires. One must need to understand that credit card does not pave the way for debt but they are meant to meet exigencies. There are a few reasons for plunging into a debt trap. Like rolling over credit card dues, if you don’t have a proper budgeting, taking loan for meeting your needs etc.

So maybe you will enjoy most at this point of time without having any systematic plan. But mind it that by following all the above mentioned things you will be able to enjoy throughout your life. So, it’s up to you to decide whether you want to enjoy right now or you want to make your entire life enjoyable.

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