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First job? Lesson 101- Financial Management
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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Your first job is a huge leap! For the first time in your life you’re no longer financially dependent on your family. And every desire or wish is now only a card's swipe away. The urge to splurge and enjoy a lavish life tends to grow on you. Shopping sprees, fancy meals, outings with buddies...will all vie for your attention. This is when your prudent senses would need to take a stand, or you could end up blowing away your earnings.
Here are few fundamental rules that'll make sure you enjoy life without getting broke at the end of the month. Let’s take a look at them.
Plan a budget and stick to it:
Firstly, know what you are spending on! It is important to not get blinded by the bling. Allocating a specific portion of your salary to various expenses is a good plan to start with. You can set a rule like 50/20/30 with 50% set aside for fixed expenses, 30% for lifestyle spends and finally 20% to save for your future goals. You can set a plan that works best according to your preferences. Expect fluctuations, but try and stick to the plan as much as possible. And if you are seeking some expert advice on how to manage your budget like a boss, head straight to your mother! You'll realise how right she was for not fulfilling those unreasonable demands of yours.
Open separate accounts for Savings and Spending:
Having both the accounts with the same bank makes it way too effortless for you to transfer funds from savings account to spending account. To make savings easier you can set Auto-debit from your salary account into your savings account. This way, you don’t go down on your savings. Furthermore, having accounts in multiple banks gives you access to deals and privileges exclusive to each bank. Click here to check out the privileges and offers our Savings Account has for you.
Start small:
No matter how big or small your salary, it’s never too early to start investing. Setting financial goals is a proven way to motivate yourself towards savings. But remind yourself, not go overboard with it. Start small by setting short term attainable goals. To start with, go for simple investments like Recurring Deposit and Fixed Deposit. There are a variety of investment plans in the market — Systematic Investment Plans, Mutual Funds, Bonds, Life Insurance Plans etc. Make sure you understand the investment before you put in your money into it!
Understand taxes:
Tax seems to be a big word, but once you understand you’ll know it’s not that terrifying. When you start with your first job, take some time out to learn about your taxes. Talk to some salaried person in your family, or consult with the some reliable and knowledgeable colleague from the accounts department. You could also talk to your Relationship Manager from the Bank for guidance. Understanding your taxes well in time will help you plan your investments well in time and save your money.
Get yourself insured:
Life is uncertain! One trip to the hospital is all it takes to sweep out the arduously accumulated savings. That aside, the insurance policies subsidized by your employers too could prove to be too little to cover all bases. That’s when, buying an health insurance policy would seem to be the best thing to have invested in. The policy would also bring you tax benefits. Get hold of additional life insurance over and above your company’s group insurance policy, as that may not cover you and your family sufficiently well. Here are some policies that you may like to explore.
Learn your Employee Benefits:
Every office provides its employees with a set of benefits to avail in personal life. Whether to gain from it or not is up to you. Take time to learn about all of your benefits as an employee like conveyance benefits, mediclaim facilities, etc.
All in all, it is important to be financially independent and enjoy life. And both of which can be done together, simply by maintaining balance and playing smart!
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