Money management lessons at the first job. | Personal finance tips for first job.

 

Money management lessons after the first job.

 

Personal finance tips for first job.

 

        The first job is a stepping stone to entering the financial world.

 

        The first job is like romance with a girlfriend. You will remember each and every detail of it in your lifetime. Like the day of joining, first day, first project, interaction with colleagues, your desk, lunch, dinner, everything. The list will go on. These all will be in your sweet memory. 

        Now on the 1st of next month, you will receive a message, ''your salary of amount xxxxx has been credited to your account''. Your eyes are wide open. there's brightness on your face with a wide smile. You may cry out. There will be no limit to your happiness. After some time you will start thinking of family members to buy some gifts for them. Like, Saree for mother, shoes for father, sweets for sister, and so on. No one thinks about himself or herself on his/her first salary. 

 

Do planning from the second salary.

After giving treats to friends and gifts to family members from the first salary, you must start thinking of management of money from the second salary itself.

        ''Your amount of salary doesn't matter but planning does'' ~ unknown

 

First thing first

• clear your debt
• finish your EMI
• calculate your monthly expense
• decide your goals
• plan for saving and investment

 

 

Clear your debt: Debt is a financial burden. we must always stay away from it. it will be advisable to get rid of your debt as soon as possible. If the debt is very high plan to finish in by paying extra. when you will pay off your debt you will feel light in your life. This lightness will be converted into joy. 

Finish your EMI: You have bought something online and paying partial payments. Try to finish it half of the months of agreed months. Like you bought a smartphone of 12000rs and its EMI is 1000rs per month for 12 months. Pay 2000rs per month and finish it in 6 months. In this way, you will be EMI free in 6 months and end paying less interest to the biller. 

Calculate your monthly expense: Calculating monthly expense will give an edge over your budgeting. This will help to reduce your unwanted expenditure, give a clear idea of money allocation, control your thinking process. This will create a mindset of saving. Overspending will be reduced drastically. 

Decide your goals: Set your goal first. Planning for future requirements is very helpful for achieving goals. Suppose, your age is 23 and you thought of owning a car by 25. Now your goal is clear and you will start saving according to it. Within 2 years at least you will be able to gather such an amount that it will help to reduce your car loan amount and accordingly it will reduce the EMI of it. Deciding on a goal will give you a roadmap to achieving it. Stick with it and see the wonders.

Plan for saving and investment: suppose your salary is 40000rs. Your monthly expense is 20000rs. What about the remaining 20000rs?

Save 10000rs in a bank or liquid fund to create an emergency fund. (to understand emergency fund click here). rest 10000rs start diversified SIP for long term. Long-term investment will create wonders. In long term, the compound effect will create magic for you. 

Now, What must you spend on?

You must must must must spend on 2 things. 

1. Life insurance 
2. Health insurance

These are the most essential products to be spent on. I will explain in simple terms how are important

1. Life insurance: I am not recommending endowment plans or ULIP or moneyback guarantee plans. I will recommend you to buy a plain term plan. If your age is 25 and your package is 5lakh pa then your cover must be around 25 times. It means 1cr is an insurance requirement. At the age of 25, your term plan will cost you an only 500-550rs pm. The higher your age the costlier it will be. You earn for yourself and your family after all from insurance your family will benefit from it.
2. Health insurance: Serious hospitalization can create a big hole in your pocket. Sometimes it can wipe out all your savings and investment in a single hospitalization case. Medical insurance can prevent such types of incidents. Health insurance is not costly. It can cost you in 1000-1200 rs pm. From this amount, you will be covered by 3-5lakh hospitalization expenses. There are quality health insurance policies available in the market, which provide great benefits. Before taking one ask your company whether you are covered in the company's insurance facility. 

A financial advisor is as important as a family doctor: A good doctor takes care of your health, A financial advisor takes care of your wealth. Advisor will help you increase your wealth and plan for it. Never hesitate to take advice. Decide the frequency of meetings and make a proper plan with him. A good advisor will prevent you from losses but also help you generate additional income. But, it's important to have a quality advisor. 

Generate second income source: Sticking to a single income source is not recommended and advisable. You must have a side hustle. You can create your hobby into an income source. Like photography, singing, painting, art, music, writing. These hobbies can become secondary to primary income sources. You might have seen many artists who excelled in their respective fields and have become famous or wealthy. At least these hobbies will help you to reduce your stress, add joy to your life. Ultimately happiness is everything. What would be better if your hobby is your work. you will do it passionately. You will feel restless. It will create a positive vibe around you. You will trade your time with enjoyment and wealth. 

Extra tips :

1. Donate regularly.
2. Pay taxes.
3. Take care of your parents.
4. Help your society.
5. Help the needy.
6. The nation must be your priority.
7. Health first.
8. Don't boast money.
9. Enjoy life fully.
10. Keep learning.