As kids you must have been rather inattentive to the importance of money, but as you grow up, the world begins to unfold its complexity upon you, especially when it comes to finances. Slowly when the cobweb of responsibilities begins to set around you, it is the time for you to realise the importance of money. It is that time when you have to begin building monetary resources for yourself, independent of what your parents offer you. Wondering how to begin doing so and what to do about it? Read on to find out all about it here.
Where will the money come from?
The building of resources has to start with something. Try saving some from your pocket money for investment. Instead of requesting your parents to buy you a bike this birthday, ask them for a small gift or cash. However, be wise enough to put that cash to fruitful use. Indulging in your favourites isn't bad, but being obsessed with it could cost you your bigger, future desires. Wondering what to do next?
You need to open a savings account
Opening a savings account can be your first step for savings. Shop around for banks offering you the highest returns and charging you the lowest service fee. Understand what services they provide you and make full use of these services to clear your financial vision.
Write down whatever you are spending
Whenever you withdraw money from your account, write down why you did so, and do not forget to put the leftover money back to the bank. Leaving it in your purse will induce you to spend further, leading to wasteful spending. This habit will help you understand where you are spending your major portions and where you need to cut short in time of emergency. This habit pays off a long way into the future-as you will be able to ration personal and family extravaganza.
Have a budget in place to control expenditure
Divide all your expenses into necessary, casual and luxury. You will get a knack of where to cut short when you need to. This saves time and you would not have to scratch your head every time, wondering whether you should actually spend or not. If you realise that a lot of money is going into the luxury pocket, it is a wake-up call for you. Small savings can make a big impact when put together, delivering big bucks at the time when it is most needed.
Open a recurring account
Along with a savings account, opening a rec-urring account would be a great step. A recurring account is where you require depositing money regularly, on which you earn interest. You may choose the amount you want to deposit — it could be as small as Rs 100 a month.
Do you know how much Rs 500 deposited monthly in a recurring account would become after five years? A whopping Rs 36,932. That would be a large amount to go on a trip with your friends when you finish your college.
Build an emergency fund
As the money in your savings account reaches a specific point, say Rs 11,000, transfer Rs 10,000 to a fixed deposit that you can liquidate online. That way you build an emergency fund, to be used by you or your family, in times of need.
Understand Credit and credit cards
Borrowing money from banks or from friends isn’t as easy as it seems. It involves costs — financial, reputational and psychological. You need to return that money with interest and you may suffer a reputational risk if you do not return the money on time. Credit cards are a spiral of costs and once you purchase through a credit card, you set the clock ticking. If you fail to repay on time you end up paying around 36 per cent interest. So beware. There are other terms and conditions attached as well that you must be aware. Visit your bank and understand each of them.
You do not require being a financial expert to lead a healthy financial life. Saving regularly and putting it into the right investment avenues is all that you need.
