“I just don’t know how much to save and where to invest of my monthly income, so I don’t budget and end up spending a lot,” says Harsh, who started working three years ago as a marketing manager. He doesn’t know how to formulate a plan for himself. This is a dilemma many youngsters in their mid-20s face and fail to know the importance of their monthly salary.
Today dreams come with a high price tag. In actual fact, apparently simple needs have been elevated to dreams due to the high cost associated with them. You need either a large income or a strategic plan to meet up these basic life goals. The first step in his context is to make a financial plan for your monthly income from the day you start earning.o
Budgeting should be your first step to reconciling your income with your expenses. Make a note of your monthly spending as per your ease of usage. It does not matter even if it is a small amount, the earlier you start saving, the more time your money will have to grow. But saving aggressively and invest with extreme vigor is also not good, but most people do it so often by jeopardizing their goals. This is a common mistake made by most of the people, irrespective of the age group. The other thing is you have to make the necessary adjustments with your changing circumstances, say, after married or having children.
Now the biggest dilemma that most earners face is where to invest their monthly income which can also give them a scope of some savings and save their tax as well. You can start by going for a right insurance plan. The basic purpose of insurance is to cover risks in your life, and a term plan offers a big cover to you and your family for a small premium. Then, there are traditional plans, which include endowment and money back policies. These offer small covers for a high premium and low rates of return. Eventually, there are ULIPs, which are market linked insurance plans with a lock-in period of five years and provide a low cover for a high premium, but offer market-linked returns. When you start earning you trapped in the excitement of making money, the urgency to buy things and eagerness to save for bigger goals like a house and a car. You forget the preparation for financial emergencies like sudden loss of job, medical eventuality or sudden financial support required by a family member, you will need to be ready for contingencies. In this context, your monthly income is crucial as you are not the only one but your actions will definitely influence your family. So with these smart moves, you can make the best of your monthly income.