Are you a fresher and joined in a new job! What do you do if you received your 1st Salary-Obviously you’ll enjoy the day! But think-over your future ahead;as you don’t have responsibilities at such age; it’s the best time to save / invest for your future.
To ensure Financial Freedom in your latter years, you have to-
1.Take Health and Life Insurance– Covid taught us the need of the insurance-whether it may be life or health insurance it is essential to take risk-cover(Insurance)Otherwise your hard-earned money would be eroded, instead you have to take debts to spend on medical expenses. So taking health and life insurance should be the 1st priority on receiving your first salary. In fact the premium payable would be very less at such age.
You should take “Life Insurance” only if anyone are dependent on your income. If you are single and have no dependents, you can skip life insurance for sometime. But after getting married and blessed with boy/girl you should take “Life Insurance” immediately.
2.Start Savings and Investments– After taking adequate life and health insurance, there comes the need of savings and investments. If you invest early, you can see the magic of compounding works for you as you have long tenure to retire. You may prefer investing in equities as they tend to give higher returns in the long run. As you don’t have responsibilities at such young age, you can take calculated risk. But your investments should depend on your risk-appetite and life-goals.
3.Create an Emergency Corpus-Financial Planners suggests to create an emergency corpus up to 3 to 6 months of your expenses. This corpus should be used only in case of emergencies. The corpus created should be kept in sweep-in fixed deposit, savings bank a/c and liquid fund where you can withdraw at any time.
4. Avoid Debts– Today youngsters are earning 6 digit salary figures at their career starting. This makes financial institutions/Banks to offer loans, credit cards though you don’t need at that moment. If you tempted to take loans , you may fall in “Debt Trap”. The interest paid on Personal Loans and Credit Cards are much higher and they are totally avoidable.
5.Prepare a Budget and Stick to it– It may be fool-proof to prepare budget at such young age. Preparing Budget develops discipline towards savings. It would be helpful in your future for unforeseen events. In Fact, Sticking to your budget brings happiness to your parents as their son/daughter is financially secured at that age.
6.Review Your Plan– It’s not your duty over by investing and taking adequate risk-cover, it is also important to review your plan from time to time. Every individual has their own goals, risk taking ability. Modify your plans according to your life stages and goals are prudent steps to be taken at such young age.
Finally, No Size Fits you All! You should plan carefully at such young age and as you gets older, alter your plans according to your life goals.