Typically, the 20s are regarded as a carefree age. There is little to no stress of shouldering financial responsibilities. And since it can be challenging to set milestones during the twenties with diverse career and life paths, this golden age can be utilised to start working towards attaining financial freedom. This way, your 30s can be a lot less taxing and just as comfortable as your twenties.
- Get insurance
Uncertainties in life happen when you least expect them, and it could mean financial disruption. Getting insurance can be a smart decision while you are young. The earlier you insure yourself and your family members, the lesser are the premiums. On foresight, premium contributions are negligible if compared to how the cost of a medical emergency without an insurance policy.
- Clear your debts
You can get a head start on paying off your loans while you are still young. Be it a student’s loan, credit card or car loans, the sooner you clear them, the earlier you can start investing your money for productive uses. Start with the ones that have the highest interest rate and tackle them one at a time till you are eventually debt-free.
- Plan for your retirement
Retirement can seem ages away when you are in your 20s, but it can be beneficial to begin saving 15% of your salary towards it. You can catch on to the power of compounding early and let your money multiply to build a retirement corpus. Calculate your current living expenses and determine the amount you may need during retirement to make a start.
- Have an emergency fund
It is beneficial to keep aside at least three to six months of your living expenses in an emergency fund before investing. You can use it to cope with unexpected financial emergencies such as loss of employment, medical emergencies, and so on.
- Start investing early on
A mutual fund investment can be an excellent option to grow your money. You can educate yourself on mutual funds, how to start investing in mutual funds and types of mutual funds. Or, get in touch with a financial advisor to help you understand what is SIP and how you can invest in mutual funds via SIP investment. SIPs allow you to invest a fixed amount weekly, monthly or quarterly as per your investment budget.
For instance, your long term goal is to own a property. You can invest via SIPs in equity mutual funds with an investment horizon of seven to ten years.
Smart financial decisions for a secure future must begin early. The sooner you start, the easier it can be to manage your savings and achieve the financial goals you set for yourself.