5 useful financial habits for the youth
We are the wealthiest generation (youth) on earth for this time being, as we have an edge over others on account of their edge. We are in the best health, we can ever be in or we can say natural immunity zone in context of physics. We have less resistance to change, having attitude to keep learning & potential to change the world. As a top priority, we all have to achieve our life goal to fulfil our dreams as well as to hanging out in clubs on weekend. But, sometimes we are so much occupied in our 9-5 job, family business or start-ups, that we forget to pay proper attention to the most important factor of our life i.e. Personal financial planning. One of the very well-known financial advisor - Sir Robert Kiyosaki have use these 2 words in his books: “Financial Freedom”. In very simple language, Financial Freedom means living financially free without worrying about your expenses, and retirement plans. So, in today’s era where life style is getting higher & higher, financial planning becomes very important factor of our Life.
So, to enjoy financial freedom in life, every youngster whether in corporate jobs or family business or in his start-ups, shall follow these 5 financial habits.
1. Do your Homework before you go to Party:
In our childhood, we were taught to do our homework first, then only we are allowed to go out and play. During our higher studies too, once we are done with our work, We can go for a party without any worries and enjoy the party freely. So, Same method applies to our Financial Planning too. We don’t have to work only for our never-ending expenses but also for our Investments & long-term Savings. When we receive our Monthly Pay at the starting of every Month, we must allocate first to our Investment according to plan and then take back the remaining Salary to Home. The Basic formula of Personal Finance is “Income - Savings = Expense.” It means you are allowed to spend the available money which is left after your regular Investments & Savings.
2. Asset vs Liability Rule:
The basic difference between rich and poor is the decisions they take in their life. If, you want to enjoy financial freedom, you must understand this basic financial rule. Invest your income in the Income generating tools i.e. Assets. So, it will generate income in future for you, and you becomes more wealthy than today. Invest in the things which create Assets in Future, & not which increase your Liabilities.
Over dependency on Credit card and EMI on smart phone will increase you liability, Whereas Systematic Investment Plan (SIP) or EMI on Home loan is your Asset and makes you Rich in future. SIP is one of The Best way to achieve near coming goals like Sister’s Marriage, Child education, or to enjoy Easy Post Retirement Life.
3. LEARN FINANCIAL IQ:
Always make a Habit to learn from successful person you see in your life, It could be your Father, Your Teacher or Your Friend. Make efforts to analyse how they Invest, and how financial decisions they make in their Life. Though, Financial Planning is different for each individual but you can correlate and improve your decisions with help of such People. Listen to Experts’ advice for financial planning and try to learn what they are advising you and which Ideas they are giving to you. Go and learn how their Ideas works, use Internet, Books for Awareness and find whether If different options are available in the market or not for the same objective.
4. Higher the risk, Higher the return:
Most of us are Single and do not have responsibility to give Money to our Family, So this is the right time to take any kind of Risk in your Life. In this Young Age, You are free to invest your Time plus Money in anything you want. There is a general Rule of Thumb which says that “The Higher Returns you want, the More Risk you must take”. So, don’t be afraid to take risk and try to invest your Funds in the Risky but Worth Investments. One thing to be remembered that risk must be calculated risk, not just mere fluke. So, first get detailed information about any investment you are going to make, take an advice of an expert for that particular subject and then go with your decision. One other thing, always remember, Investment is the area where everyone must have patience to enjoy handsome Returns.
5. INSURANCE: JEEVAN K SATH BHI, JEEVAN K BAAD BHI:
Don’t ignore life Insurance by just thinking that you are too Young and nothing is going to happen to you. Life has uncertain things for all of us. And always keep in mind that what you are earning is for your family too. They expect you to insure them, even after you left them away, that’s your responsibility.
Not only Life Insurance, but maintain emergency funds too. Like 3-4 months EMI for your home loan, or fund for any medical emergency, Funds required if you quit your Current Job. These Funds will help you to take bold decisions without worrying much about how will you get money for daily expenses.
Success doesn’t happen Overnight, So keep working on these Habits every day.
What do you think? Have you tried any of these points to enjoy your Future Life Goals? Do you have any other tips to share? Please let me know your thoughts in the comments below.