5 Financial steps I took in my 20s and felt empowered like never before
Being in your 20s is a time when we are exposed to the outside world and the good and bad that comes with it.
I was lucky enough to have people around me who made me realize that along with all the exploring, fun and making memories; it was also a phase where I would get my first job and have to be financially responsible for myself.
As I move into my 30s, I look back at the last phase and cannot be thankful enough that I took the following financial steps to safeguard my life and make it stress-free
1. Stop depending on parents
As I got my first paycheck, I started taking control of my finances. Starting with small steps like managing my budget and saving a certain amount each month, I moved upto paying Insurance premiums for myself and my family.
2. Develop a saving mindset
I made it a practice to save a certain percentage of my paycheck every month. Even though it was a small amount, it more importantly got me into the habit of saving for life. That does not mean that I would not spend on my wants, but I would control it and follow a budget.
As I was living at home, I could save upto 30-40% of my paycheck. If you live in another city, at least 10-20% should be your target.
3. Get Insurance
Being financially secure meant protecting myself from any emergencies and events. I took health insurance and term insurance that suited my income. I did not go for a high coverage plan as I could not afford the premium.
As my income rose, I increased the sum insured and ensured that is sufficient to take care of any unforeseen events.
4. Start a PPF account
Saving from your paycheck is not enough, it needs to be invested to make it grow and become a significant corpus over time. Since I was not well versed with investments at the time, I opened up a PPF account and started putting a fixed sum every year. It helped me save on income tax and became an investment tool.
Today, I realize the power of compounding when I see the interests that my deposits generate. PPF account can be opened at any bank/post office and gives tax free returns at the end of maturity period.
5. Invest in Gold and mutual funds
Towards the later part of my 20s, when I was earning more and was more financially secure, I ventured into investments that generate more returns and would help me achieve my life goals. I took help of a Financial advisor, chose the best fund to invest in and started a SIP.
Also, as is the fascination with gold in our county, I also invested in gold through digital means like RBI gold bonds and gold ETFs.
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Having age on your side gives you the advantage of time while saving and investing. Making yourself financially wise and managing your money in your 20s, will make navigating your later years much easier.
