Source/Contribution by : NJ Publications
Sameer, an IT professional, starts his month with Rs 35,000 being credited into his account. In the first week itself, he pays off his bills and rent and other essential expenses, he often treats himself in fine dines and clubs, he's a generous soul and doesn't mind paying for his friends' share at times. However, towards the end of the month, he is often seen seeking 'udhaar' from his friends, to meet his basic expenses. And this is his routine for almost every month.
And Sameer is not an exception, there are so many people who are living a life similar to Sameer's. And this salary to salary approach is generally seen in young people who are early in their careers.
So, are you also among one of those who start their month in riches and end up in rags after 30 days. Are you too living Sameer's life?
Young people are stuck in the mess, primary because of excessive spendings, their love for gadgets, fashion, expensive food, better lifestyle, and in the pursuit to have all of it, they end up spending much more than they should. Mismanagement of finances, extravagance and a living in the present approach is creeping into the young blood.
The repercussions are:
1. You don't save for your future goals. A living on the edge approach doesn't let you grow and achieve your goals, because you are stuck with making both ends meet, at the end of every month.
2. You aren't prepared for emergencies , you might end up losing the job and in absence of any savings, it'll be about survival.
3. By the time you'd realize you'd be far behind others. When your friends will be buying their first house, you'd be struggling with your credit card debt.
Ideally, the best time to start investing for your future is when you are early in your career. You don't have the responsibility of a family on your shoulders, which extends you the leverage to save more, for short term goals like buying your first car, as well as create a strong financial backup.
So, What you need to do, to get back on track?
Budget: First of all, prepare a budget and follow it religiously. Write down your expenses, so you'll get a clear idea about where all you are overspending. If you like gadgets, download a Budgeting App on your phone. You'll be able to track your expenses, you'll be alerted before approaching the expense threshold, and it'll help you manage your bills, etc.
Spend judiciously: Cut impulsive spends. Make it a point to always consider your need before you take out your card. You would realize that much of the money you spend goes into discretionary expenses, a large part of which could be avoided.
Identify your Goals: Define your goals. It could be saving money for a professional course, a hobby like joining the swimming club, a 10 day trek to the Valley of Flowers, saving for marriage, first car, etc. Or it could be long term goals like buying a house or even retirement. Whatever it is, whatever fantasies you have, pen them down.
Consult a financial Advisor: Once you have your goals ready, look for a knowledgeable and trustworthy financial advisor, who will help you in designing the masterplan to achieve your goals.
It'll be a step by step plan, considering your goals and your current financial standing, your advisor may even suggest you to put some goals on hold. Your financial plan will serve as a guide for you, it'll tell you how much money you need to carve out for each goal. It'll help you cut your discretionary spends, since you have your investment commitments.
Invest: Lastly, it's important to start. No matter how small the investment amount is, but you need to put your vehicle in the first gear.