6 Money Saving Rules to follow in Your Early 20s
You begin working in your early twenties. Your pay is typically entry-level. For the first time in your life, you have a sense of financial independence, so your ambitions are out of this world! Most of us have the instinct to spend our first few years’ salaries on things and travel. It is very likely that what you save in your first year of employment will be a fraction of what you can save in your 30s. However, early saving habits will serve you well as you get older and your income grows. So here are 6 Money saving rules to follow in your early 20’s.
Above all, do not underestimate the power of compounding. When you are 20 years old, Rs 1 lakh invested at 10% grows to Rs 45 lakh when you are 60. If you invest the same amount at 30, it will only grow to Rs 17 lakh.
As a result, it is wise to enjoy your money while you are still in your twenties. However, your parents are correct when they advise you to begin saving.
Here are some fundamental guidelines to get you started
6 Money saving Rules
1. Put Away 10-20% Of Your Salary
When calculating your expenses, assume that only 80-90 percent of your salary is available. You were probably a student until recently, so you understand what it’s like to live on a budget. Frontloading your investments, such as scheduling your systematic investment plan (SIP) for the first of the month, investing in your Public Provident Fund (PPF) in April rather than next March, is the best way to ensure you save and invest enough.
2. If You Don’t Invest, You Lose Money To Inflation
The most important thing to remember is to never leave money in your savings account. Apart from what you require immediately, begin investing the remainder. The concept of money sitting in a savings account being “safe” is flawed. Your money is losing value against other assets on a daily basis; for example, in 2021, the rupee lost value against equities, commodities, and other assets due to inflation. As a result, it is critical that you consider saving and investing to be part of the same process.
3. It’s Okay To Make Mistakes
You will make errors in your saving, investing, and spending. You may invest in something because everyone else is, spend more than you intended, or become lax and fail to start that SIP. It’s fine.
It is critical to learn from mistakes and correct course. It is never too late or too early to begin saving and investing. “The best time to plant a tree is today,” as the Chinese proverb goes.
4. Use goals for Saving
Do you want to go to Europe next year? Perhaps purchase the next iPhone? Make a separate pool for these large outlays. Using large goal posts to delay gratification is an excellent way to develop savings habits.
5. Educate Yourself
One of our education system’s major flaws is that it does not teach personal finance in school. As a result, read a few books about finance, the stock market, and asset allocation. This educational investment will provide you with the principles you need to get started on your saving and investing journey.
6. Basic “Hygiene” Investments
Increase your provident fund contribution, start a Nifty SIP, and purchase term life and health insurance.
Keep in mind that saving is tedious. It’s similar to taking care of your health; you have to put in the effort every day.
As you begin your careers and personal finance journeys, cultivate good habits from the start and watch them grow.
Follow us on Instagram.