Financial Mistakes: The thrill of the first job and the first salary is special for every youth. But, this is also the time to lay the foundation of economic discipline. Financial decisions taken at an early age later decide economic stability or insecurity. Financial experts believe that youth make some common but serious economic mistakes in the early years of earnings. If they are avoided, then their financial future can be secured. Also, they can also avoid getting caught in a trap of unnecessary debt and stress.
Let’s know about the 7 big mistakes that young professionals often do after getting the first salary. Also, you will also learn about the practical ways to avoid them.
1. Spending spending by not making budget
Often the youth start spending fiercely as soon as they get the first salary, such as buying, eating out, walking out. All this is not wrong, but not having a budget becomes the first and the biggest mistake. Neither saving nor investment is done by spending without plan. Creating a simple monthly budget and walking accordingly makes financial balance easier.
2. Being completely dependent on salary every month
The habit of living ‘pay check to pay check’ means the balance at the end of the month. This not only causes mental stress, but can be overshadowed in any emergency. Financial experts believe that at least 20% of the salary should go into savings or emergency funds.
3. Avoiding retirement planning
The youth often think that retirement is still a distant thing. But the truth is that the sooner the investment is started, the lower the amount can be prepared by putting a low amount. The effect of compounding is seen with time. Therefore, you should make a habit of savings and investment from the first salary.
4. Credit card and loans greed
With the first earnings, they often entice offers like credit cards, BNPL (Buy Now Pay Later). But without spending planning from these means, interest rates are headed and becomes a network of debt. Avoiding debt for private expenses and timely repayment is necessary for financial health.
5. To ignore emergency fund
An emergency fund is very important to deal with any medical emergency, job or family crisis … to deal with them. Financial experts are of the opinion that such funds should have the amount of cost of at least 3 to 6 months. With this, you will be able to deal with the sudden unwanted difficulties.
6. Lifestyle inflation
As the income increases, the expenditure also increases automatically. This is called lifestyle inflation. The youth should understand the difference between their expenses and needs and pay attention to long term goals instead of showing. If someone is taking expensive gadgets or clothes, then definitely question yourself whether it is really important.
7. Financial literacy deficiency
Schools and colleges in India have very little focus on financial literacy. As a result, youth do not understand the basic concepts of investment, tax and saving and start spending after the first job. If financial literature is noted from the beginning, such as book, podcast and reliable source is possible to avoid mistakes.
You should always remember that the first salary is of course a major achievement of life, but it is also a sign of responsibility. If the right financial habits are adopted from the beginning- such as making budget, avoiding debt and retirement, then your future can become much safer and stress free.
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