Friends 10 Best Financial Tips For Beginners for 2022. This post is especially for all those whose age is between 25-30 years. The age of 25 to 30 is a very special age. At this age neither you are a child nor you are very big.
At this age, people are often married and some people have had children and some people are just about to get married. That’s the age. When you have to show in front of your parents that you are financially dependent. And after marriage, she is ready to take care of her family. At this age, some such financial mistakes also happen, which affects the whole life of a person.
Most people often lack financial understanding at the time of starting their livelihood and due to which we make wrong financial decisions. Which we regret after the passage of age.
So today I am going to tell you about such amazing things in this post, which can greatly increase your financial understanding and can save you from making financial mistakes. So let’s know those 10 Best Financial Tips in brief For Beginners, which you must know.
What does Financing mean?
Financing is the process of making, purchasing, or investing money available for business activities. Finance institutions, such as banks, are in the business of providing capital to help businesses, consumers and investors achieve their goals.
Why is finance important in life?
Finance is the study of money and the various ways in which it helps in running aspects of life. From investing to finding strategic ways to save money, finance is an important topic to study in order to be successful in personal and professional life. And I hope you understand it from this post of Best Financial Tips in brief For Beginners.
Control over Personal Finance and the right way to Save Money
Personal finance means handling your money properly so that you do not get into any kind of financial trouble and also if we talk about the best way to save money, then the best way to save money is “Income – Saving = Expenses”.
That is, 10% of the income that you want to save. You have to set it aside first and you should use the rest of the money.
Safe Investment of your Savings
The second point finance-wise is the safe investment of your savings. The first responsibility is to protect the money that you start saving, so that that money is not reduced, as well as that money can be used in some safe investment.
As Warren Buffet said, there are two ways to invest safely: ” 1. Never Lose Your Money” and ” 2. Always Remember Rule No. 1” and for this, you should make a safe investment of your saved money.
Understanding Power of Compounding
In the third piece of advice for beginners, you will learn about the power of compounding. The power of compounding is called the eighth wonder of the world. Only after understanding this rule in the world of finance, can you become a good investor.
Time is the most important thing in compounding and that’s why early in your career when you know the importance of the power of compounding, you can use it to make a lot of money in the long run.
For example, suppose you are 25 years old and you want to retire at the age of 60. so you have 35 years’ time and if you start investing 2000 rupees every month in this 35 years. In which you get 15 percent compounding benefit, then after 35 years your age will be 60 years.
Your depositing this amount of 2000 rupees every month will become 2.28 crores with 15% CAGR profit. Saw that even the amount of only 2000 rupees can give 2.28 crores. To take advantage of compounding, you have to invest for a long period of time. This is my main advice ok.
Understanding different passive Income types
We are taught only one thing in school and from childhood that to earn money we have to work, we have to work hard. When there are three types of income in the world –
- Active income – For which you have to work actively. Like a job or single handed business.
- Passive Income (Passive Income) – In this, you do not have to work for income, but the system that you have created, that system works and gives you money sitting. For example, income from rental income, income from book writing, income from affiliate marketing, website and blog income, and income from such business, where it is not necessary for you to be there.
- Portfolio Income (Portfolio Income) – You get this from different investments. For example, income from stocks, mutual funds, bank deposits.
Making a budget means that by spending money properly on your needs, avoid wasteful expenditure. So that you can avoid money problems that come at the end of every month.
Creating an Emergency Fund
The sixth advice in Best Financial Tips for Beginners is to create an emergency fund. The emergency fund is arranged so that we can handle any kind of emergency well and avoid asking for loans or loans.
Insurance Policy (Term Plan & Health Plan)
In the seventh piece of advice of Best Financial Tips for Beginners, you will learn about the insurance policy. You may already know a lot about insurance but you often forget its importance. The importance of insurance is realized only when a sudden accident occurs and the earning member of the family dies.
At such a time, if there is no insurance, then it is very difficult to think about what will happen to that family. Insurance is not an investment and hence you must do insurance to avoid any kind of life and property and the pure form of insurance is a term plan.
Therefore, whenever you take life insurance, make sure that you have taken a term plan. Another special thing that you should keep in mind is that the younger the age of insurance is taken, the lower the fee.
Understanding of Good Debt & Bad Debut
Taking a loan is not always considered a good thing, but debt is not always bad. There are two types of loans. One good debt and the other bad debt. The biggest difference between good and bad debt is that your income increases due to good debt, your cash flow increases.
But due to bad debt, your income decreases, and your cash flow does not increase. So you should increase your wealth by taking a good loan and increasing your income.
In the new advice of Best Financial Tips For Beginners, you will learn about the finance plan. By making a financial plan, it means the biggest expenditure in our life. For them to understand in advance where the money will come from and plan them and reduce them.
Learning about Investing
This is the most important thing, the meaning of investment is to create such an asset that you can keep earning. May the cash flow keep coming to you. Investment is a very big topic in which you learn to make money from money.
If you start learning and understanding about investing from an early age, then as you age, your knowledge, experience, and confidence increase a lot and then you can make money very easily.
For example, for marriage expenses, house construction expenses, car expenses, children’s education expenses, festival expenses, retirement (retirement) or finance, independence, etc., by using savings and investments, to create a fund. This is called financial planning.
I hope you understand what we are trying to explain in this article. These are major helpful tips regarding finance especially for beginners who want to start their investing journey or we can say smart journey. If this information helps you like it & share it now with your family & friends.