Financial planning: 5 money habits to begin from first paycheck

Receiving the first paycheck is a wonderful feeling. It comes with a sense of empowerment whereby one can spend their own money at their own terms on their long-harboured dreams and desires. And it's easy to get carried away. But it is important to know that spending the first paycheck wisely, or in other words, inculcating healthy spending habits is very crucial for setting a solid foundation for the financial future. One must begin by budgeting, saving, setting up an emergency corpus and investing in financial protection. Here we present a checklist for those who have just begun earning and set out on their financial journey—  

Budget and track expenses: 

One must develop the habit to create a detailed budget that outlines income and all expenses. One must keep track of every rupee they spend to understand where their money is going. This awareness will help identify areas where they can cut back on unnecessary expenses and save more.

Save and invest regularly: 

One must cultivate a habit of saving a portion of their income consistently. They must set up an automatic transfers to their savings and investment accounts, in order to pay themselve first before spending on other things. One must explore various investment options like mutual funds, stocks, bonds, and fixed deposits to grow money over time.

Live below means: 

This is again very important. One must avoid excessive spending and prioritize living below their means. It means spending less than what they earn. This habit allows to save more, reduce debt, and build wealth faster.

Emergency fund: 

Building an emergency fund is a crucial component of financial planning. One must aim to save three to six months' worth of living expenses in an easily accessible account. This fund acts as a safety net during unexpected events, preventing from dipping into your investments or going into debt.

Insurance coverage: 

Health and life insurance are crucial for financial protection. One must invest in a comprehensive health insurance plan to safeguard against unexpected medical expenses. And one must must consider getting a life insurance as early as possible. Here's why - 

When an average of major insurance providers was taken by a leading insurance aggregator, it was found that by delaying buying a term insurance policy by 10 years, a 25-year-old would have to pay 48% extra, a 35-year-old would have to pay 72% extra and a 45-year-old would have to pay 89% extra. Ss start early and save more.

Continuous learning and financial education: 

One must learn about personal finance and investment strategies. This can be done by attending workshops, reading books, following financial blogs, and seeking advice from financial experts, in order to be better equipped be to make informed financial decisions.

Disciplined spending and wise investing can help one achieve financial freedom really quickly. By starting small and being consistent in one's efforts, one can make significant progress towards their financial goals.