Personal finance should be taken seriously by every millennial. The value of money is only going to reduce with the passage of time. However, many millennials remain unaware about the importance of personal finance and savings. A few tips and tricks should be kept in mind in order to avoid blunders later on. Millennials should first learn suitable money management and the right monthly budget should be made based on one’s income.
Here are some tips to keep in mind:
- Monthly Savings- This is the biggest personal finance rule that should be followed at all times. You should always save more money irrespective of whether you earn a smaller income or a huge amount. If you are starting your career at present, you should aim to save up to 40% of your net monthly salary. However, once you start moving up the rung and once other responsibilities come into the picture, you should aim to keep your savings ratio at 15-20%.
- Credit Card Usage- Millennials should remember that a credit card has a few advantages as long as they use it wisely. Credit Cards offer an emergency line of credit and help in building up one’s credit score. Using the credit card in a responsible manner helps in building up one’s credit score. The credit score has to be built up in order to get a home/personal loan sanctioned easily in the future.
- Emergency Corpus- The importance of possessing an emergency corpus is unparalleled. Whatever be your income or debt levels, one should always build an emergency corpus. This emergency corpus will ensure greater protection from financial issues like job losses and medical emergencies.
- Insurance is highly important- Medical treatment and facilities are highly important and quite expensive. There are several health insurance plans that you can choose from. You should always consider opting for a life insurance plan as well. These insurance plans will be of major importance when it comes to future security.
- Understanding Taxation- Income tax is a crucial aspect to address and youngsters should endeavor to understand the same. You should clearly work out the amount that you will get in hand post deductions of taxes. You should then carefully plan out your financial objectives and your budget.
- Smart Investments- You should always aim for financial security by smartly investing money. There are several investment plans and avenues available that you should learn more about and consider. The primary goal here should be to create wealth for future goals and for building up a retirement corpus. You should invest in plans with a longer tenor. Go for investment plans which ensure future security and help in saving on taxes.