The excitement of getting your first pay check
could be beyond measure. Plans like throwing a party to your friends, paying
off debts, buying gifts for your parents, indulging in charitable acts etc.
would have already occupied your mind. These are some of the common things that
everyone does on getting the first salary. However, it is also the high time
you understand few financial concepts to make the money work for you
ultimately.
As you step into the world of your own
finance, a little bit of financial literacy and financial planning is
imperative to manage your credit. Start early, it is possible that most of you
are in your 20s and you will reap the benefits much earlier.
Tip
#1: Understand Savings
It is still early days and you have, your
whole career ahead of you, resist going on spending spree to buy the things
they yearned to have or to travel to the places they wished or to indulge in
fun-filled activities. Though these are not bad things to do, overspending
could leave you broke at the end of the month.
Allot a certain portion of your income
exclusively for saving. Strategize your savings for 1, 2, 5, 10 and 15 years
and attach a goal along with it. As you make progress in your career, you will
find it easier and beneficial for your timely need.
Tip
#2: Understand Credit
Credit is very simple, borrow from lenders
for your needs beyond your means and repay with an interest. The factor based
on which a bank lends to you is known as the credit score and it represents
your worthiness.
Get a look at your credit score, if you
haven’t already; a good score (above 750) leads to better loan offers. If you
do not have a credit score now, work towards obtaining one as it will serve you
well in the future.
Tip
#3: Understand Investments
Many people wish to buy a car or
two-wheeler once they secure a job. Though it is a necessity, investing in a
depreciating asset or liability would bring additional expenses to you. There
are lot of investment options that keep growing and all you may have to do is
invest a minor part of your income into it. Make a thorough research and invest
smartly to enjoy the benefits abundantly.
Mutual funds, stocks, bonds, real estate,
gold etc. are some of the investments that may grow in value in the future.
Tip
#4: Understand Taxation
Paying tax to the Government is a legal
duty of every citizen. Once you become a salaried employee, you are bound pay
income tax. It is also high time you understand how the tax slabs are placed
and you come in which category. One can claim tax deductions under various
sections for specific credit activities prescribed by the Income Tax Act.
Insurance policies, PPF account, tax saving mutual funds and fixed deposits,
interest on education loan, home loan, charitable donations etc. are eligible
for tax deduction. By wisely choosing any of the above tools, you can not only
benefit from their returns but also gain tax benefits.
Parting
Note
Planning your finances, can help you manage
a lot of problems and offer you a peace of mind in life. Commence your
financial planning early and start reaping its benefits while you still have
time to enjoy it.