“Do not save what is left after spending; instead spend what is left after saving” – Warren Buffett
The coronavirus pandemic has taken an obvious toll on the physical and mental health of people around the world. But another factor that is, and will continue to remain a big point of discussion, is its economic impact. Several companies have either laid off employees or introduced pay cuts in order to survive. This has resulted in many people struggling to afford some basic amenities and essentials. At a time like this, it’s worth reflecting on how we as individuals handle our finances and the importance of savings. In particular, if you’re a student or a young professional. So here are some basic tips to help you be smarter with your money, and be prepared for the unknown.
Start saving early!
One of the most overlooked rules of saving that is oft-quoted, but rarely followed. People usually tend to realize the importance of saving only when they’re in a dire situation and in need of money. In order to be prepared, start saving early. When you first start earning and get a steady source of income, allocate a fixed percentage of it to your savings. While 20% is generally accepted as the minimum amount you should save on a monthly basis, each individual should assess their own spending needs and decide this number.
Make your money work for you
If you’ve started saving early, then great! But is your money working for you, or is it just sitting in a savings account? If it’s the latter, then you need to change things up. Take some time out to research ideas for how you can invest your money and get good returns. Look up options like Fixed Deposits, Public Provident Fund, Mutual Fund Investments,etc. which involve varying degrees of risk and returns. You can use this savings calculator to determine how much you stand to earn if you start investing today!
Use your credit options wisely
It’s common for people to get carried away the first time they start using a credit card. This can lead to a whole range of issues including delayed repayments affecting their credit score, high-interest rates on repayment, and debt. Credit cards provide a great cover to customers during emergencies. Be smart with your usage of your card. Track your spending habits on a regular basis to make sure you aren’t living beyond your means. slice helps users do this through a neat feature on the app that shows users how much they have spent, and on what. You can read more about this, here!
Diversify your sources of income
Now, we aren’t here to tell you what you should be doing with your free time. But we’ll do it anyway. The nature of work and businesses has evolved rapidly over the last few decades. So, whether you’re a student or a young professional, consider putting your skills to good use and earn some extra income. Websites like Freelancer and UpWork are a great place to begin. The earlier you start to earn, the earlier you can start saving and building a healthier emergency fund!
Have any other tips for how to build your savings and avoid debt? Tell us below in the comments!