8 Financial Tips for Young Professionals

Save for the future because that is unpredictable. Money plays bigger in a situation than anything else. Haven’t you heard this valuable piece of advice from most people? And hasn’t this seemed THE BEST secret to battle at the time of emergencies? No one would deny this, right?

When young professionals start earning, their parents, whether dependent or not, are worried about the money expenses. But when a young professional starts minting money, a sense of independence pushes them to spend money. They want to explore life and the world, that is completely okay. Expense is a part, and saving is just another.

Warren Buffet once said, “Save/invest first and then spend later.”

Let us look at some financial tips on how young professionals should put their money in the right place?

1. Create an emergency fund.

No matter how much you earn or feel that you spend hardly any money, you must learn to save. You may have some loans to pay off or some other fixed expenses. The tip and the biggest secret to having plenty of money for many people are to create an emergency fund. If you want to never fall short of funds in your life, an emergency fund is key.

You can sleep relaxed at night if you have saved money for uncertain periods in life like a medical emergency. Make this a considerable portion and make transferring funds a habit. By the time you grow old or need money suddenly, you get control of the situation.

2. Know your taxes.

It is very important to understand how income tax works. Use online calculators that can indicate how many portions of the salary goes to the government. For example, if you make more than Rs.10 lakhs per annum, you are liable to pay a tax of 20%. Now there can be ways where you can file for a refund. You must understand these factors.

Also, you should understand what percentage of income you get in your account. Accordingly, you can divide your expenses.

3. Buy health insurance at an early age.

Being young does not guarantee you good health. You must buy a family health insurance policy as early as possible when young. A health insurance premium is on the rise and has escalated more than twice the amount. The premium increase happened after the issuance of guidelines from the insurance regulatory body IRDA.

The health insurance premium is directly proportional to a few factors that include age, pre-existing illness, medical history, geographic location and a few others. At a young age, you can choose a low sum insured that will make the premium low. But if in case, you have a pre-existing illness, the policy will cover you only after the waiting period. Hence, it is better to buy the health policy when the probability of occurrence of any health issue is rare. It will help you control the premium.

4. Buy Personal Accident Policy.

You must think of buying a personal accident policy. Life is uncertain and you would be not prepared for any accidental happening. Any such event can leave you disabled, partially disabled, or may lead to death also. This may sound unpleasant but isn’t this a fact where you must think to plan your policy purchase.

Buy a personal accident policy that can prevent financial loss after a personal injury in a motor accident. It will also cover you for accidental bodily injuries. If you have the accidental cover, you can get financial help for:

  • Hospitalization
  • Hospital confinement allowance, and
  • Medical expense

In case of death, the policy provides 100% compensation to the nominee mentioned in the PA policy.

5. Save for Retirement.

The market is flooded with different investment plans. Find out what budget you can keep aside for investment every month. You can think of SIP, Mutual Funds, and other instruments. The sooner you start saving for the future, the better it will be.

Old age is the time when you must have money as a requirement and not as a necessity.

Read more: Expanding And Growing Your Investment Portfolio: 3 Guaranteed Strategies To Try Right Now

6. Compute the monthly expenses.

For spending or investing, it is advisable that you first compute the monthly expenses. Know where does your money go like in the ration, fees, petrol expenses, monthly installments, and other bills.

The rule is your expenses must not exceed the monthly income only then you will be able to save money for the future.

Read more: 3 Ways to Help You Learn to Create a Monthly Budget and Save More

7. Self-Control your money spending instincts.

Shopping or spending money for any other reason is not always a necessity. In some people, spending money is instinctive. They spend without judging their status that may lead to overspending. It is better that you control your head of expenses only then you will be able to keep money aside for emergencies.

8. Keep yourself updated in terms of finances.

Always keep yourself updated with the latest rules of financial investments. Do not trust others in one go when it is about putting your money. Rule yourself or others will rule you.

Remember that money management is important and is the need of the hour. Considering the inflation and change of lifestyle, you would always be needing money more than you have. To meet all your expenses every time, you must follow these tips and have money in abundance.