HOW TO PLAN FINANCIAL GOALS IN YOUR 20s?

People generally start their career in their early 20s. If you are in your early 20s then apart from building your career, the second most important thing that you should do is to develop good financial habits. You must note that the decisions you take now can set the stage for the rest of your life. Investing early, establishes a firm foundation for your finances tomorrow because an early bird always gets the biggest worm.

Financial professionals always advise people to start investing in the early twenties or just after they start earning to maximize their returns. Investing early makes time your friend, giving your fund more time to grow. It also allows you to develop a disciplined spending habit by focusing on your budget and cutting down on expenses when needed. You should note and follow the Golden rule of investing which says that,

The earlier you start, the higher are the chances of achieving your financial goals, although it’s never too late to start.

Let’s find out how you can start investing in the early 20s

1. Start The Habit Of Saving Money

Save something every single day, even if it is just a penny. You should make saving as your targeted behavior which must be repeated regularly while keeping the context constant. The hardest thing about saving money is all about getting started, but a realistic and straightforward plan will surely help you.

High savings coupled with Low Debt will put you in the drivers' seat and will ensure your financial Independence. Saving money will also add some much-needed stability to your bank account. So, how do you save money?

a. Decide Your Priorities.

b. Plan your Budget.

c. Choose an appropriate tool for savings like Savings Account.

d. Record your expenses.

e. Stop wasting money on futile expenses and Credit Card Bills.

f. Review your Budget every month.

2. Start Investing

If you are in the early twenties, then you should start understanding the importance of saving, investment, and returns. This is the age when you enjoy financial freedom while you slowly start taking responsibility for your own life. There is a wide variety of Investment options available in the market, including Mutual funds. Young investors have an additional advantage since they can stay in the market for longer and make investments less risk-prone. Investing has three major goals.

a. Wealth Creation for the future.

b. Saving Taxes.

c. Fulfilling your Financial Goals.

d. Build a solid financial foundation.

So keep a purpose in mind like Wedding Planning, Child Education or your Retirement and start investing. A Financial Investment comes up with a promise of a bright future. The amount which you will invest today will get you closer to financial success.

3. Start Taking Risks and Avoid the Herd Mentality

Your financial life always involves at least a bit of risk. According to Italian philosopher Niccolo Machiavelli, "Never was anything great achieved without danger." So if you want to fulfill your dreams and achieve the financial goals you have to take risks because opportunity always demands calculated risks in pursuit of your dreams.

A variety of Mutual Funds are available to take care of all the investors. If you are a risk-averse investor you can invest in Debt Funds or else you can invest in Equity Funds if you consider yourself as an aggressive investor. However, a young investor should invest in Equity Funds because a young investor can seek out bigger returns by taking bigger risks.

Secondly, nobody else can understand your financial requirements better than you. So, avoid the herd mentality and take your own financial decisions. If you find it challenging to take financial decisions than you can consider visiting a financial advisor.

4. Set your Financial Goals

Your investments should be aligned according to your financial goals. So, you can do the following:-

a. Identify your financial needs and risk appetite.

b. Define your time horizon.

c. Set your Financial Goals.

d. Start Contributing to your retirement.

e. Build an Emergency Fund

f. Find out the ROI, Tax Liabilities, Liquidity, and 80C benefits, of a Mutual fund.

g. Choose an appropriate fund and Start SIPing.

5. Meet Your Financial Planner.

Financial Planners have always pushed on investing early to achieve loftier returns. Timely investments along with proper investment strategy will allow your money to appreciate. A Financial Planner can help you design a proper investment strategy considering rising costs and inflation. This will result in the creation of a Financial Corpus which you can use as a Retirement fund, Emergency Fund or you can fund your Daughter’s marriage etc.

Don’t keep your money idle in Savings Account because it won’t help you resist the Inflation Bug. You should deploy your money in productive Mutual Funds as early as possible so that it multiplies and wins over inflation. So contact your financial advisor and start investing.