Starting Your New Life on the Right Foot with Financial Planning

Your 20s are a truly special time in your life. You graduate from college and venture into the working world for the first time. Starting your career is an exciting adventure. Sadly, many young people choose to squander their money, living from one salary credit to the next. While your 20s are the ideal time to enjoy your independence and freedom, you must start your new journey on the right foot with some basic financial planning.

Crucial Monetary Decisions to Make in Your 20s

• Create a Budget (And Stick to It)

  Once you start earning, create a budget. You can use the 50/40/10 rule to set yourself up for a secure financial future later. The rule recommends putting 50% of your income towards your needs, including rent, travel, food, medical costs and other essential debt. Ideally, find a health insurance plan to help with unforeseen medical expenses. Put 40% of your earnings into savings and investments. You can opt for a structured savings plan, such as HDFC Life Sanchay Plus, to help you create wealth for the future. Savings plans enable you to earn on your idle savings and allow you to build wealth for future goals. You can use the final 10% of your income for your wants or entertainment. The cost of a better smartphone, going to films or taking a vacation should come out of the final 10%.

• Think About Emergencies

  Consider putting extra savings away in a separate account for future emergencies. If you decide to leave your job or need to take time off for personal reasons, you can rely on your emergency fund to tide you over until you can start earning again. If you’d like to make your money work for you, pick a savings plan that allows quick and penalty-free liquidation. You should be able to easily access the money in the emergency fund when you need it.

• Start Your Retirement Plan

  It may seem decades away, but you should start planning for retirement from the moment you start earning. Find a retirement fund that encourages you to put money away every month for a secure future. Apart from safeguarding future finances, the plan will help you cultivate good money habits like saving and investing.

  You gain a lot of financial freedom when you start earning. By planning your spending and saving, you can curtail bad decisions and create a safety net to fall back on in times of need. You can pick a savings or investment plan that offers life insurance to help your loved ones take care of any debt you may leave behind. As a responsible adult, you must make prudent choices for yourself and your family. Understanding how to create a budget and identifying financial tools to help you meet future goals will help you enjoy a safe and secure future.

ARN: ED/08/22/28596