Got your First Salary : A Financial Guide for you.

personal finance tip

Got your First Salary : A Financial Guide for you.

Hi EveryOne,

This post is for whom who has got his first salary and having lot of enthusiasm to spent that money but before doing that just look into this post and see how better you can manage your finance, It’s clearly an advice you can always consult your financial adviser before investing. So Let’s discuss why it is so important to go through this guide, It’s high pace and high risky life since you start earning you are no more liability to anyone rather you are an asset for your family there is a lot of dependency is created on you. It’s your responsibility to manage your finance well so that it will fulfill all the desire of you and your dependent. Do follow the steps to make your future financially secure and stable. And yes I am following these steps.

1. Make your contingency fund.

A fund that help you in any kind of emergency whether it is cure of some decease or layoff of job. Keep ready at least thrice the amount of your monthly expense in liquid form. Even you can keep this amount in liquids funds for better return and liquidity. Won’t aware about liquid funds stay tuned for post on mutual funds.

2. Take a sufficient medical cover each year.

When you diagnosed of some decease there is a third-party who partially or completely bear the medical expenses, that third-party is the medical insurer. Life won’t be fair always if somehow you or any of your dependent got some serious decease medical cover help you to bear your medical expenses. And moreover it gives you a risk free feeling. Keep in mind if your employer is providing you a medical cove do check whether that cover is sufficient for your family or not, if it’s not sufficient buy one personal medical cover. There is various online sites are available where you can compare various medical cover plan and even you can purchase.

3. Buy a term plan.

Term plan is most important instrument in this bucket. In this plan your insurer is providing you a life insurance for certain term in certain fixed premium annually. And this premium is very less compared to the life insurance amount you get. Term Insurance is completely different from any kind of investment. Term plan is for completely mitigating the risk of your life. Unfortunately if insured person die then their nominee will get the lump sum amount for their livelihood. Keep in mind that for undisturbed and healthy life of your dependent take term insurance 15 to 20 times of your current annual income. And if you have some loan add that loan amount as well with Insurance amount. As early you apply for term plan as low premium plan you will get because life risk keep on increasing with increasing age. Again there is various online sites are available where you can compare and buy an online term plan.

4. Start investing for your retirement fund.

As you covered every unexpected risks about your life so you can invest your left out money freely. As I already said life is not fair every time so how it will be fair at the time of your retirement. You can get retire as early as you start. Let’s say your life expectancy is 80 year. And you started earning at age of 25. Maximum you can work till the age of 60. So in this 35 working year you need to save money for 20 retired year. So in every 1.75 working year you need to save money for 1 retired year. And think if the expectancy would be 85 or 90 year, ultimately nobody wants to die early. You can mange your retirement fund buy NPS, PF, PPF and if you can take risk you can choose mutual fund as well so that you can retire soon.

5. Invest to reduce your tax liability with proper care.

4,5 and 6 steps is not necessary mutually exclusive rather they are overlapping. You need to save your tax up-to maximum extent so choose your instrument wisely so that it can fill your kitty of retirement fund, sort and long-term goal. For egg. You can choose NPS which will reduce your tax liability along with the generation of retirement fund. Or you can choose ELSS funds which can help you in achieving short-term goal also it reduces your tax liability. So think properly are take the advice of financial expert and plan well.

6. Invest money for your short and long-term goal.

Invest for sort term goal do inclined towards less risky instrument such as Recurring deposit or large cap or indexes funds. Keep in mind for short-term goal keep investing on low risk instrument only. And then it comes to long-term goal, there is always long-term goal in every ones life, Invest the money to fulfill your long-term goal, You can choose any instrument now since you have already covered most of the risk of your life, As per your risk profile you can invest in directly equity, equity oriented fund or dept oriented fund. Remember long-term goals are those which are at least 10 year away.

7. If still any money left you can spend it any where as per your desire.

And if you are feeling that nothing is left to spent now then seriously it is the time to create the more source of income, so try to look out the fair way to increase the income.

That’s all from my end. And I think that sufficient to become a financial literate person. Keep reading. Happy Saving and happy Earning.

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