It is extremely essential to respect one’s money and to think about savings and investment as soon as one starts to earn. This is one of the biggest problems seen in today’s youth because they have a tendency to not spend a lot of money in a very short span of time, mostly on depreciating assets and then when the time comes to spend on something worthwhile they often find they do not have the resources to do so.
Considering that we live in an age which promotes immediate gratification, this is more of a problem and youngsters do not have the farsightedness to understand they might face difficult times ahead. This poses greater problems than not being able to pay for a particular lifestyle- with no savings they might not be able to pay for a medical emergency if it unfortunately happens and they are often also not eligible for loans in the event they do want to settle down and try accomplish something worthwhile, like a car or a home. Hence, to avoid such financial anomalies in the future, certain steps can be taken.
One of the best ways of doing that is to create a budget. One needs to make a budget about the expenses that are mandatorily incurred each month, like the basic expenses for food, clothing and shelter, rent, transportation, and basic medical expenses.
Next comes the tricky part- instead of spending for entertainment and leading a lavish lifestyle, and then trying to save whatever is left from it, one should try the opposite. One should make it a point to save a particular amount each month after the compulsory expenses are meant, and then spend from whatever is left for entertainment. There could be certain deviations a couple of times a year of course, but this should be the basic plan. Making it a habit of saving a certain amount each month will help you gather a substantial capital in as less as five years which could then be utilized for any emergency that might crop up or invested further for greater returns in future.
It is important to set some financial goals if one is aiming to accumulate a certain sum by a certain age and this can be done with the help of investing in fixed deposits and SIPs. Most FDs cannot be broken before a certain time and this keeps the money safe even though one might feel tempted to spend it. One should also build an emergency fund so that just in case one finds themselves in between jobs, there should be enough in the fund that would take care of at least three months worth of household expenses.
One should also look for tax saving methods and look for good retirement plans as this is a lot more likely to decrease any sense of financial burden as one grows older and this healthy habit should be formed as soon as one reaches adulthood and starts to earn.