Earning your first paycheck is quite liberating but knowing what to do with it can be tricky. You are probably out buying your friends and family a round of dinner and drinks with your first salary.
However, with the second one though, you have a slick opportunity to start prepping yourself up for success. Getting a head start on saving and investing is vital. You are reminded time and again on how important it is to save but everybody’s financial journey is diﬀerent based on the choices they make. Good thing you are reading this blog because we are going to enlighten you with 5 facts about handling finances that no school or college will tell you about.
Set up a budget :
Okay, do not fret when we say start budgeting, we got your back. There is nothing worse than realising money evaporated into late-night Swiggy orders and spicy momos or binge shopping. Hence, setting a budget is a way to pre-empt that disappointing ritual. Step up your financial literacy game by knowing exactly how you are spending your income.
50/ 30/20 Rule: Here’s how it works:
50% : spending on your basic needs like rent, food, Ice cream! what? That’s a need alright!
30% : spending on your wants like a trip to the salon, spotted a cute dress on Shein (yes we are all guilty of that.)
20% : Here’s where all the wealth is. Literally! 20% of your income goes into your savings or if you have student loans, start by paying oﬀ here.
As Warren Buﬀet once said, “ Do not save what is left after spending; instead spend what is left after saving” So the key to master your spending ability is to first set aside your savings and then spend what you are left with. (Yes, we are saving you from the low bank balance guilt, thank us later)
Invest in a credit card:
We know what you are thinking, How does one get a credit card approved right out of college? Well, no need to take a rain check on that. Plan your financial freedom with slice! Get on board with us with absolutely no joining fee, no hidden charges and wait for it… convert your credit card bills to EMI’s and pay it oﬀ monthly! It is important to build your credit score from the start so invest in the card and reap all the benefits for your future endeavours.
Insurance is more important than you think:
Insurance sounds boring until you wind up at the hospital. As tempting as it is to save a little more money and ignoring to buy insurance, it will come back to haunt you in diﬃcult times. Go beyond the health insurance your company has to oﬀer. Buying the right policies at the right time is the way to a healthy financial life.
Savings and Investing are not one and the same :
While saving money, you mostly do it with a bank account as your money earns interest and you have the freedom to tap into it whenever a need for it arises. They are also low-risk, meaning there are very little chances of losing the money you have saved. In turn, opening a savings account is a fantastic way to start saving for a long-term goal. Investing money on the other hand means putting it into the stock market or investing in mutual funds and bonds. In this case, your money has a chance to grow rapidly and only if you have the patience to put it away for the long term.
The trade-oﬀ is that investing is riskier than just saving since you can not predict the market. But either way, it is important to educate yourself about savings and investments and where they fit in when it comes to achieving your financial goals.
Retirement plans :
Yes, we said it. As bizarre as it sounds, it pays oﬀ to be the early bird. Young people are in the best position to save most eﬀectively. The longer you have to put money away, the more you can benefit from it during your retired days. Getting a kickstart on your retirement savings even if it is just 3000 rupees or 5000 rupees a month, can put you ahead of the game.
Start planning smartly with slice! Head downtown and get your first slice card. Did this article help you? Let us know in the comments below.