Wednesday, August 15, 2018

Just started earning? 5 Tips to manage your money in awesome way. - Financially Pro

Started earning right?
Many times it happens that your salary is in your hand still don't know where to spend if you are still very young, if you responsibility then obviously it'll go in household expenses.


BUT wait...
Do you know how you can use your salary in such a way so that you can save lot of money and still enjoy with what is left..
Because
     "Money saved is
      money earned."

So here I am to guide to make optimum use of money in your hand, mostly it happens that you become confused which expenses to incurred first and which not.



TIP 1


Did you heard the Money rule ?
The Rule of money 50/30/20.
If you heard about this rule then you may be thinking that ,' jst a rule can't be applied practically'.
Today I'll solve this issue also.

Rule of 50/30/20 says that you should divide your expenses into 3parts
  • Needs
  • Wants
  • Savings

Which expenses to allocate to which ?
You can read it out here but complete this first to get insight out of it:

Did you tried this rule and think that such rules just look good in books and not reality?
Believe me you hadn't tried this rule anytime and just speaking.

If you really try to figure out expense according to this rule,
It may be possible that you may not have achieved this exact number but I bet you'll be very near it and at max. Deviation will be of 10% to 20%.
So try to note your expense and divide it in said rule.

       TIP 2


From this rule you can know that you should save minimum 20% (I said minimum).

So, where to invest and how to invest ?
- If you don't know much about Stock market don't go directly into it,
Start with Mutual Funds, it is less risky and you can get good return.

Best option is to invest 20% of your saving in DEBT and 90% in Large Cap equity fund.


TIP 3


Don't go in trap of debt at very young age.
If you completed your education with a huge burden of education loan, try to settle it as soon as possible as it has a very high rate of interest.

Create your financial plan and invest accordingly to fulfill your dreams like buying home and car.

For buying home, you can take home loan as it has low rate of interest, it can help for tax benefit.
So, how to create own financial plan ?
I'll come with this very soon!


TIP 4


Buy insurance for your self as soon as possible. If you are working in a company and it is providing insurance to you, make sure that insurance is proper with your living.
You can also go for Family Floater.


TIP 5


Do tax planning properly. If you are earning income above tax limit, you can plan your tax in such a way so that you can save properly and also invest in that.
You may go for ELSS for tax benefit and Investment purpose both.


TIP 6 (Bonus Tip)

It is very necessary to have emergency fund.
The thumb rule is to have minimum 3 months of your income or salary to be kept aside to meet any emergency.

You should keep that money either in bank or other instrument but remember that it should be easily converted into cash. Otherwise in emergency it would become difficult to get your money.

Don't invest emergency fund in equity fund, try to keep it where risk is very low.


I'll come with topics in detail very soon.
Till that if you have any doubt be free to comment it.
I love to answer comments!



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