In the time of corona, we saw how the rich and rich went on getting richer all over the world. His income increased by 10 to 20 times. But the poor became poorer. The thing to think about is, why the poor can not become rich and why the rich become rich after all.
If you look around you, middle class, lower middle class people when they have money, they spend most of their money either in buying a big house or buying a luxury car. Or else he tries to live a luxurious lifestyle.
And they do all these expenses by taking loans. Like took a home loan or took a car loan. It is not that rich people do not take loans. He takes much more loan than the poor.
But his loan makes him even richer. The main difference is that they know how to manage money. If you look at big companies or billionaires, they all take huge amounts of loans.
For example, Apple, Elon Musk, Amazon Microsoft etc. have all taken loans. But poor people remain in poverty because they are not able to use their loan properly.
Nor are they able to manage money properly. So today we will discuss some such points, so that you can learn to manage money in your early days i.e. in your 20s and you can become rich as soon as possible.
You have to build your financial habits like Saving Money, Building Credit Score, Reducing Credit Card Debt, Controlling Spendings, Saving Plan etc.
1.) Savings
You should make a habit of saving on a regular basis. However, it is difficult amidst rising inflation and economic uncertainty. But you should save with a small amount.
Your savings goals should be easily achievable. You should set up an emergency fund. In which you have money in reserve to run expenses for 6 months.
And it is not necessary that you save only a certain amount of money every month, you can increase it according to your circumstances.
An emergency fund is most useful during a medical emergency. Because if you have the money already, then you can pay the medical bills without taking any loan or credit card loan. Which will save you from high interest charges.
2.) Credit Score
You should build your good credit score. So that you can easily access loan from credit card. You should pay the credit card and loan payment or balance on time. Because to get a credit card you need credit history.
If you have a good credit score, you will easily get loans at low interest rates. Which will help you a lot while buying a car or house. You should not spend unnecessary expenses. You should spend according to your need. Keep your credit card debt to a minimum and pay bills on time.
3.) Invest
It is very difficult to save and invest in 20s. But if you manage money properly and also control your emotions, then you will be able to invest easily.
Which means that in the long-run, that is, when you retire at the age of 60, you will have money for a decent retirement. You do not have to invest much money in the beginning.
You can invest very little amount i.e. from $50 to $100. You should make this investment in SIP, Mutual Fund, FD, Bonds or Stocks etc. If you start at the age of 20. So by age 60 you’ll have up to $5 million in savings.
If you are working then your salary will be very less in the beginning. If you have started a new business, then you will have a problem with money. But as you grow in the job, at the same time you should increase the investment.
If you are doing job, then you should update your resume so that you can get more job opportunities. And you should also focus on building a professional network. So that you can get new jobs and profession opportunities.
4.) Create A Budget
Budgeting is the most important thing. Because it also helps in your financial stability. And with the help of a monthly budget, you can ensure that you are not spending more than you earn.
And along with this, you can also plan for short and long-term expenses. And you also get to know how much salary is coming in your bank account every month.
If you want to make a monthly budget, then many online apps are available, with the help of which you can create your monthly budget. But the most important thing is that, as much as a plan has to be made, it is equally important to implement it.
So you should also stick to your budget. And on a regular basis, you should also keep checking your budget goals, if you are not spending more than the amount you can afford.
5.) Pay Off Debt
If you have student loans or credit card debt or any other type of debt, your first priority should be ‘getting debt free’. Because it will also affect your credit score.
If you have a low credit score or you have taken a large amount of debt, then you may also face difficulty in getting other financial products.
Along with this, it will affect your credit score and a lot of your money will go towards paying the interest charges. How long do you keep the loan for? Do not pay him back.
6.) Future Plan
You must have a financial plan for the future. So that what are your major financial goals. It can be achieved easily. Like buying a dream house or spending on your children’s education.
If you find this task too difficult, then you should take the help of your financial advisor. Sitting with him you should have a meeting and score goals.