Got Your First Salary? Budgeting Tips for Effective Finance Management
Excitement is usually quite high when your first salary gets credited to your bank account. The tendency will generally be throwing up a party to your friends and share your happiness.
You should also keep in mind that from now on, you step into the world where your financial independence becomes your crucial responsibility. We have put together some important tips on how you can manage your finances effectively.
Make Saving Your Habit
Just like doing a lot of routine things in your life, you should make saving a habit. Investing in mutual funds, PPF and other saving schemes are some of the useful instruments that bring a good outcome in the long run.
Make your saving process automatic so that it will become a habit unknowingly. These guidelines will keep you financially disciplined and save you from becoming buried in debt.
Prepare Your Monthly Budget
You can allocate 50% of your income to your major expenses like house rent, food, transport, clothing, and water. Minimum of 10% should be saved regularly like a ritual. The remaining 30% can be used for gifts, travel and other unexpected expenses that might erupt out of the blue. Use your rest of 10% to repay your loans and credit card bills.
There are so many applications available to manage your personal finances, keep track of your spending and set your future personal budgets. This will be handy to monitor your expenses and safeguard you from bankruptcy.
Build Your Tax Strategies
A substantial part of your income will be deducted as tax annually. Why do you have to let go off it? There are so many ways to get tax return from your investments. All government saving schemes, Mutual Funds, Insurance Policies, Fixed Deposits are useful instruments to get tax benefits.
It is never too late to begin. These are long-term saving tools for which you need patience and start investing as earlier as possible.
Optimum Usage of Credit Cards
If you do not have a credit history, a credit card is an essential tool to build your credit report. However, pay enough attention to the terms and conditions and repayments.
If you are not bothered about taking a loan in the future for an emergency, you can stay away from credit cards.
Be Prepared for Emergencies
Keep an amount stored in your bank account for an emergency. Problems do prop up like ill-health, accidents, house repair etc. An amount equal to 4 to 6 months of your expenses saved will be vital to meet your emergency.
Keep in mind these pointers mentioned above to save you from any financial burden in the future.