Now-a-days everyone are getting jobs in their early 20’s and becoming financially independent. Till then, they depend on their parents for their day-to-day expenses, but when they get their first job they think themselves as “independent” and neglect the advice of their elders to save money from their first pay check.
Many youngsters prefer to “enjoy the current moment” rather to save money. Actually saving and investing money from your first pay check would do wonders in your latter years. This is due to “Time” element to “Compound” your money several folds.
If you are in early 20’s, neglect these common mistakes which defer your corpus to a larger extent-
- Not Planning For The Future– The foremost thing every youngster does when he gets his first salary is enjoying with friends on parties. We are not saying it is wrong! But just think over the inflation rate and the probability of the prices rise in the future! If you spend today lavishly your future would be effected as the life is uncertain;anything would be happen in the future. So be prepared for the future expenses.
- Not having proper Retirement Plan-Youngsters should plan for their retirement from their first pay-check. Assuming inflation rates, he should start planning for his retirement. Besides this, when you are young, you can avail personal loan, housing loan etc. Because banks assume your earning capacity as you have long earning career. But do you find any banks giving loans for retirees?Obviously-No! This is because their income levels are dropped and they can’t sustain to pay higher loans! No friend would like to give credit when you are in 60’s, This is fact! So be prepared for your retirement from your 20’s
- Choosing wrong Investment Products– Some are very conservative to take risk! But you have- “Time On Your Side”, if you take calculated risk, you will earn huge corpus as the years pass-by! Invest in Right Products in your 20’s and see your wealth grow over the years.
- Not Taking Insurance– Making investments is not only important, it is important to preserve your capital from unforeseen events. As life is uncertain, any medical emergencies would erode your investment corpus if you don’t take health insurance. Health insurance premiums would be low when you are young.
Take life insurance if anyone is dependent on you! If there are no dependents at present, ignore to that moment , but once you get married, take life insurance cover immediately to protect your family!
- Credit Cards Misuse– After getting job, many banks offers credit cards. This is a part of the banks business growth. If you missed to pay even a single installment, banks would levy 24-36% per annum(some times 48% also).
So Think before taking credit cards. Take them only if you need them and are confident to repay before the due date. Taking credit cards as the banks are offering would lead to fall in the debt trap! So think twice before taking credit cards.
If you avoid the above mistakes in your early 20’s, surely you will lead a comfortable and financial-free life in the future.