The first fixed income instrument that an investor should have is the fixed deposit, which can be used as a contingency or as an emergency fund. This would cover all your monthly expenses, insurance premium et al.
Develop small saving habits: It is often difficult to follow the discipline of long-term planning if one travels, owns fancy gadgets, follows fashion trends, etc. This is why setting aside a portion of the monthly income can work to inculcate discipline around saving.
Follow the 50-20-30 rule: While starting your investment you should follow the 50-20-30 rule. Under this, 50% of income can be set aside for living expenses, 20% for food, entertainment, and travel. The remaining 30% should be kept aside as savings.
Track expenses: Income is viewed as disposable by millennials and used for immediate needs like house rent, groceries, dinner etc. To save and invest properly, they need to record their spending patterns by noting all expenditures over a certain time period. They should also reduce unnecessary expenses.
Set up an emergency fund: You should have contingency fund for emergencies like medical expenses. Even if you do not use the emergency fund for any emergency, it will encourage you to set aside a portion of income that may prove useful in the future.
Start investing through mutual funds: Millenials who haven’t yet invested may lack the necessary knowledge to get started. By investing through Systematic Investment Plans (SIPs) they can save to achieve long-term goals. Regardless of your income level, 15 to 20% should be invested in mutual funds.
Investing in stocks: Nowadays, stock market knowledge is readily available and accessible to everyone. A portion of total income can be allocated to investments by exploring stock market options. As stock markets constantly fluctuate, understanding how they work can help protect your investment.
Buy insurance: Purchasing insurance is very important today, as it protects you in case of an emergency. To ensure the financial security, millennials must opt for insurance products such as health insurance, life insurance, etc. You can protect your future as well as your family’s future by purchasing insurance.
Avoid paying only minimum credit card dues: Users have a tendency to postpone the total amount due on their credit cards as credit cards allow them to pay the minimum due amount on the due date. However, you should make full credit card payments to save money.
