The independence from obligations and a sense of fearlessness that define school days make them some of the most cherished memories in our lives. Ironically, as we become older, we joyfully look forward to finishing school, setting out on our own, and securing our financial future, only to long for the carefree years of our childhood.
Early advice on efficient personal finance management is sadly absent from a student’s school experience.
It’s simple to believe that achieving personal wealth is achievable rapidly in today’s social media-dominated environment. But nothing could be further from the truth than this. For the ordinary person, accumulating personal wealth normally takes 15 to 20 years of commitment, perseverance, and discipline.
Effective money management is difficult for young graduates who have only recently begun their careers. They frequently choose between spending all of their income and letting it build up in their savings accounts. Many people blame their lower starting earnings for their lack of savings and say they’ll start when they make more.
This strategy has many flaws. Take into account a scenario where their employer lowers their pay by 10%. Does this modification imply that they can no longer pay their bills? In practice, the majority of people manage to adjust.
Warren Buffet, who famously said, “Do not save what is left after spending, but spend what is left after saving,” is someone I strongly like.
This comment made me feel strongly about something. As soon as you receive your monthly paycheck, you should routinely set aside between 10% and 20% of it.
This behavior encourages a saving culture. Having emphasized the significance of saving and managing personal finances, let’s now look at several methods for doing so.
By starting early (around age 18–20), it is possible to collect a sizeable sum (about $42–$45 lakhs) by the time you are 35, and all of it is still tax-free if you decide to withdraw it. Create an emergency fund equal to one year’s pay once you’ve developed a PPF investment pattern, and invest it in debt funds or fixed deposits.
Such a fund offers a safety net in the event of unanticipated situations in a volatile work market. Even if your investments aren’t growing, the goal is to keep them safe.
I increased my savings and began Systematic Investment Plans (SIPs) in two mutual funds when I immigrated to the US in 2003. Along with making investments, I also wanted to learn more about the market.
