Everyone has dreams to become successful at a young age, but few people are able to fulfill them. It is not necessary that every person increases his wealth, sometimes he also increases his wealth, and sometimes he loses his wealth due to lack of knowledge of wealth. Sometimes adults forget the reason behind the financial goals that they have set for themselves. Although there can be no one fixed formula to earn money, But today we are going to explain to you 8 Financial Tips for young adults for 2022 which can help a lot in making you rich.
1. saving money
This is the most important habit and if you have not started it yet, then make it a habit as soon as possible. Why is it important to save money? So that you have enough money and can raise more money from them (we will tell you how to do this soon). So now think about how to save money. Simple, if you spend less than what you earn, you will save money. How much money do you need to save? Experts say that if you want to maintain your current lifestyle even after retirement, then you have to save at least 25-30% on average. This may sound difficult but with the kind of life we have felt during COVID-19, we can now understand better what is important in life and what is not.
2. Keep track of expenses
If you are not able to decide what is important and what is not, then the best way is to keep track of all your expenses. Most of the payments are done electronically so all you have to do is track the transaction. Don’t think too much about it. Tracking your expenses for just a month will give you an easy idea of where your money is going and how you can save it.
3. Don’t spend impulsively
Today I got my salary and bought a 55 inches TV, spending it on impulse… not limited to this, last night’s food is left but still ordered food from the outside or old jacket is fine yet bought a new one, much of the Time we spend on impulse. This is the money that would have been saved had we not spent it. We can achieve economic stability only by keeping our expenditure under control. Everyone’s foot slips at some point, but if it starts happening often, it can become an accident. Spending on impulse should be an exception, not a habit.
4. Invest for the Future
If you are wondering who to save the money for, then the answer is yourself; If you want to take a vacation next year or buy a car next year, then these savings can come in handy. Youth in the age group of 20 to 30 years might think that investing is not your priority but the pandemic has taught us one thing that there is no harm in preparing in advance for any calamity but if we are not prepared and If any calamity comes, it can become very difficult for us. To avoid any sudden crisis or to give yourself a good reward or retire at the age of 45, start investing today.
5. UNDERSTANDING THE POWER OF COMPOUNDING
Power of Compounding is called the eighth wonder of the world, only after understanding this rule in the world of finance, you can become a good investor –
Time is the most important thing in Power of Compounding, and so when you know the importance of this Power of Compounding early in your career, you can use it to make a lot of money in the long run.
For example, suppose today you are 25 years old and you want to retire at the age of 60 and for this, you start investing Rs 2000 every month from your income, in which you get a compounding benefit of 15%, then 35 years. After that means when your age is 60 years, you will get this amount of 2000 rupees every month with 15% CAGR benefit – 2 crore 28 lakh 29 thousand,
To take advantage of compounding, you have to invest for a long period of time, as in this example we have seen how the amount deposited every month in 35 years with a profit of 15% per annum becomes more than Rs.2 crore.
6. invest wisely
If you are thinking of investing, it is very important to know when and where your money is going. And how much benefit will you get from it?
Don’t invest blindly just by looking at the market. First, learn the basics of the share market and then invest. Avoid investing money by looking at the trend of cryptocurrencies or looking at the rising stock market. First invest your time to understand what it is, see What is it? Like it or not and invest in it only if you like it.
7. Set a Budget and Stick to It
Budgeting means planning, not putting yourself in a cage. If you want to get the most out of your money, you need to plan things. Plan how much you will spend each month on what things. Plan in advance for big purchases and make room in your budget for sudden expenses like hospitalization due to illness etc. or spend from savings.
8. Get insurance cover for yourself
The COVID-19 crisis has proved that there is no guarantee of life and emergencies can arise at any time. Insurance provides the necessary protection to meet financial emergencies due to illness or death. If you want financial freedom, you should consider adequate insurance cover- both term and health. A term insurance plan will give your family a financial shield in the event of your absence, and a health insurance plan will allow you to take care of your expenses in case of sudden hospitalization. Your term insurance should ideally be 20 times your annual income.
If you earn Rs 10 lakh per annum, then a term insurance of Rs 2 crore will suffice. At present, for health insurance, you should get a medical cover of at least Rs 10-15 lakhs – this should include your entire family – spouse and children. Get comprehensive health insurance even if your office has provided you with a health plan.
These eight things are not enough but important for your financial health. If you are an adult & you want to become financially independent, please follow these eight habits, you can give your financial condition a better shape so that you can successfully face any challenge in life. If you like this information like it & share it more with your friends and family so they also get to know about this knowledge. Thank you