Make the most of your money: 5 tried and tested financial tips for young adults

By admin | Mar 24, 2021

Millennials are by far the unluckiest of the lot when it comes to demographic cohorts. Young adults born between 1980-1996 are known as millennials or Generation Y and comprise today’s young adults who are in their late 20s and early 30s.

Millennials grew up during the great recession of the 2000s and now face an even dire economic crisis during their working years. This has led to adverse conditions, making it impossible for them to catch a break. Reeling under debt, stuck in dead-end jobs that pay the bare minimum, and unable to accumulate wealth has left the millennial generation craving financial security.

As young adults now, millennials have to come face to face with responsibilities such as getting married, starting a family, buying a house, etc. But are millennials financially ready to make these dreams possible?

We understand that achieving your financial goals can be tough. To help millennials and young adults of this generation we’ve created a list of 5 money management tips that will definitely help you take control of your finances and build a strong financial future.

Check Your Credit Score

First things first, checking your credit score is crucial if you want to grow your assets. In India, CIBIL (Credit Information Bureau (India) Limited) maintains the credit score of millions of Indians. Having a good credit score helps you get good deals on loans and credit cards. You can even apply for a loan on Aadhar card with a good CIBIL score. Make it a habit to check your credit score regularly (minimum once a year) to stay informed of any discrepancies. Regularly checking your credit report will also help you address any inaccuracy or errors and report them to CIBIL immediately.

Master Your Budget

Having a budget is the first step to successfully reach your financial goals. To build a budget, you need to make an estimate of your monthly income and expenses. Take a hard look at where you’re spending your money. This will shed some light on your expenses and help divide them into fixed expenses and discretionary expenses. Fixed expenses will comprise your loan EMIs, electricity bills, house rent, insurance, etc. These are essential expenses that are constant every month. You cannot skip on these and will have to set aside money to pay for them month on month. Discretionary expenses on the other hand are not entirely essential. Expenses such as dining out, gym fees, online shopping, etc. are be cut down to free up some money and set it aside for bigger purchases such as buying a house or prepaying your loan.

Avail Tax Benefits

Come March and everyone’s scampering to make lump sum investments to save taxes. While that’s a good idea if it was a part of your financial plan, many might not be able to conjure up such large sums of money on such short notice. To help you with your struggle to save taxes, there are certain sections that can save you from paying hefty amounts of tax. Section 80C is one of the most basic methods of tax saving that many millennials miss out on. You can claim a deduction of Rs 1.5 lakh on your total income under section 80C. You can show LIC, PPF, Mediclaim, children’s tuition fees, etc. while filing your returns to enjoy a refund of the excess money.

Build an Emergency Fund

An emergency can strike anytime. You could lose your job, fall ill, or your home may suddenly require immediate repairs. An emergency can throw your life out of gear and leave you feeling helpless. That’s why it is important to have an emergency fund that will give you some respite in your time of need. Keeping aside a minimum of 6 months of your living expenses can help you survive a temporary financial hardship.

Divert at least 10% of your monthly income towards a high-yield savings account which you can easily access in emergencies. You may have to take on an additional source of income or cut down sharply on your expenses to save enough for your emergency fund.

Save Money for Retirement

You may be in your 20s or 30s right now, but growing old is inevitable. Best is to prepare for this is by starting a retirement fund. Set a retirement time goal of 10-15 years for your mutual funds or SIPs and start regularly investing. Pick a longer period for your investments so that your money grows uninterrupted, ensuring you retire with more than enough liquid money.

To achieve your financial goals it is best to start early. We hope our Top 5 Financial Tips help you chalk out a financial plan that will help you and your loved ones live a comfortable life now and later.

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