Moving into the latter part of my twenties has meant that I finally had to grow up (in some aspects) whether I liked it or not. Managing my life, my finances and the prospect of ‘planning for the future’ were all something that were definitely new to me thanks to being pampered all my life. I’d always been a saver by nature and I never had problems controlling my urge to spend money. Being cautious by nature right from childhood, I always preferred to see at least 70% of my money in the bank and the rest could be anywhere (most probably hanging in my closet). To this day I have budgeted by spending very strictly and focused on saving. Now along with that I have also started to seriously think of different ways I can invest my money and make it grow.
I was exposed to the world of mutual funds, bonds and the stock market for the first time when I was studying to major in finance. With a growing number of my readers being in their teens or in their twenties, I thought it was just as important to tell them how to save & invest their money and not just on what to spend!
Tips to save & invest your money:
1. Live below your means: Just because you have the money to spend, doesn’t mean you have to spend it. That’s always been my motto. Even if I was earning enough to spend luxuriously everyday, I would still prefer to spend something on the lower side, except for an occasional splurge here and there.
2. D is for discipline not debt: Saving might not come easy to some. But it’s something that you can cultivate by leading a very disciplined financial life
3. Emergency funds for emergencies only: A lot of times you might be tempted to dip into your emergency funds. I mean you are leading a healthy life, no immediate problems ahead, so what’s the harm you might think. Emergencies don’t occur by giving you a ten day warning, so keep your hands out of the emergency fund, and strictly in your pocket.
4. Analyze spending habits and BUDGET: I can’t stress about this enough. Sometimes you might not realize how much you are spending unless and until you put it down on paper. A hundred here and a hundred there, can very quickly add up to a lot. I used to maintain a daily expenses sheet to analyze how much I am spending each month and on what. There would be some recurring costs like phone bills, fuel, food and if you are running a business then costs related to that. So it’s really important to budget.
5. Create a dream board: Saving and investing doesn’t mean you need to deprive yourself of spending. Create a vision board or a dream board, a realistic list of things that you want to achieve and what it’s going to cost. Plan accordingly and invest.
6. Find a financial mentor: In the beginning it can be confusing and overwhelming to figure out everything on your own. Find someone who can guide you and advice you on what steps to take. Someone (other than google) who would answer all your questions and clear whatever doubts you have, and help you plan better.
7. Educate yourself and Invest intelligently: Savings will only get you so far. You need to learn to invest your hard earned money smartly and double it. There are a lot of methods in which you can invest money. And it is important that you make logical decisions.
Birla Sun Life Mutual Funds recently came up with an ad that talks about the exact same thing. About how sometimes it is easy to get caught up in rituals and superstitions, and believing that a couple of rings on your fingers are the answer to having a secure financial future. Or that moving things around according to vaastu will suddenly make your luck turn around. Think smart and invest smartly. What you invest in today, is what you will reap in your future!