Take a leap into your prime during India’s twenties, a decade filled with countless opportunities. Danish Mohd and the team at Pluto Money have uncovered a fact: despite Indians saving 50,000 Crore annually, only a mere 2.9% choose to invest, leaving the majority’s savings locked in real estate, fixed deposits or idle bank accounts. The financial landscape in India is rapidly changing with the introduction of initiatives like ‘Jan Dhan’ and the upcoming milestone of 1 trillion UPI transactions. There is still a segment known as “India 2”, consisting of 40 crore households in smaller towns earning between ₹25,000 and ₹40,000 per month. For those who are in their twenties and looking to navigate this terrain successfully, we have put together this guide that offers five expert financial tips to help you pave your way towards a prosperous future.
1. Start small
Many people falsely think that their income is not enough to save. But the reality is that starting with modest contributions and staying consistent can actually build a strong foundation for a secure future in the long run.
Here are the best ways that can help you start small savings with ease:
Start a Recurring Deposit (RD):
An RD assures a fixed return at the end of its tenure. Depending on the money available after your liabilities and expenses, you can start an RD with just ₹500 or its multiples.
Mutual Fund SIPs:
You can start investing in mutual funds through a systematic investment plan (SIP). You can choose to pay a fixed amount every month (as little as ₹500) toward mutual funds.
Public Provident Fund (PPF):
The Public Provident Fund (PPF) occupies a position in the portfolios of Indian individuals who prioritize low risk and aim for relatively higher returns on their investments. With a PPF account, you can enjoy an interest rate of 7.1%. You have the option to apply for a loan of up to 25% of your account balance, and professionals can take advantage of tax benefits on their investments.
2. Plan Budget & Stay Within
Think of this resolution as your companion. It may not sound exciting. Taking a moment at the beginning of each month to organize your finances can make a difference. It helps you avoid overspending and gives you a view of where your money is going. Here’s the tip: try following the 50 30 20 rule. Allocate half of your income for expenses, set aside 30 percent for things you desire but aren’t necessarily essential, and save the remaining 20 percent for needs. You can make it even easier by using cards for certain types of expenses.
Save big on your every international money transfer!
Send money at the lowest exchange rates & ZERO convenience fees with moneyHOP.
3. Set Up An Emergency Fund
Take control of your future in your twenties by establishing an emergency fund, which serves as a safety net for costs such as medical bills or car repairs. Financial experts advise setting aside three to six months worth of expenses. Make it a priority to save a portion of your income regularly, following the principle of “pay yourself first”. Treat savings as an obligation that cannot be compromised. Consider exploring options like high-interest savings accounts, short-term CDs or money market accounts that offer compound interest to maximize the growth of your savings.
4. Implant Your Financial Goals
Even though the future may feel uncertain now, it’s still important to set goals and work towards achieving them. The key is to identify the milestones that are meaningful to you personally. Whether it’s owning a home, starting a family, starting your business or traveling the world, each goal requires a level of financial stability. You don’t have to plan out your life. Having a general idea of what you want to achieve in the next few years can help guide you on your journey towards making those dreams come true.
5. Set Up a Retirement Fund
Retirement may seem far off, but it is extremely important to save up for it. Not saving for retirement is a very common mistake around the world. Like the emergency fund, setting up a dedicated retirement fund is also crucial for people in their 20s. As the name implies, the retirement fund is the account that you use to save money for your post-retirement life. Retirement is most often misinterpreted as a pension, but accumulating a retirement corpus is different and is an addition to the monthly cash flow that a pension would provide. Availing insurance coverage that can be renewed for life could also be a great retirement tool. As soon as you get your first full-time job, make sure to open a separate account for your retirement fund and decide on an amount that you can put out every month. Keep in mind that the key to growing your retirement fund is to be consistent.
Final Thoughts
Your twenties are a time for setting the foundation for your long-term financial success and stability. It’s important to create a budget, keep an eye on your expenses, and build up an emergency fund. Investing in retirement accounts can take advantage of the power of compound interest. Educating yourself about finance will also empower you to make decisions. By utilizing cutting-edge tools and seeking expert advice, you can ensure that your financial goals are within reach, making your twenties a stepping stone towards a better future.
Leave a Reply