The simplest way to become rich is to follow the rules of financial planning. This is true for young employees also as the early you start saving for your future needs, the better it will be for you.
Here we are taking a look at five things which you should do in New Year:
Don’t pay hefty bills on credit cards:
It’s good to keep credit cards until the time you are paying the dues on time, but once you start exceeding your credit limits, you may fall short of money in future. Going cashless through credit cards no doubt is a better option, but that should be done under proper control. Do not get excited by the credit limit given to you which is approximately 2 to 3 times of your salary. It is advisable to do necessary expenses from your credit card and keep the expenses lower than your salary limit. Eventually, you have to pay your dues from your salary unless you are not earning money from some other sources.
Start saving for your retirement. Why is it necessary? Because the early you start, the more corpus you will generate at the time of retirement. For example, if you are at the age of 25 and you want to retire at the age of 55, you will get 30years of time horizon on your investments. So, by saving Rs.3000 a month you can generate approximately up to Rs. 2 Cr. Isn’t it that good? You can even increase your investment amount from time to time.
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Do proper tax planning:
Tax awareness is necessary for every employee, whether you currently fall into the tax bracket or not. If that is not the case, then you may never know why that much tax suddenly got deducted from your salary. So, it is better to calculate your taxable amount every year. Invest in such a way that you can avail tax benefits altogether.
Prepare a budget:
Be clear with your expenses, mainly your household expenses need to be separated from your discretionary expenses. If you are planning for your goals, then include savings in your discretionary expenses, while your daily basic needs must get included in your household expenses. Prepare a short-term budget and review it from time to time.
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Always try to save 3 to 6 months of your expenses in a bank account which can be used in case of any emergency. To maintain an emergency fund, you need to develop a habit of saving. Save before doing any purchase of goods. As soon as you get your salary transferred, shift your saving amount into another bank account so that you shouldn’t be using that amount for any purchase.