Exploring the Game of Finance

Back in the 90s, when I was studying in a school, I watched my grandmother telling my dad and mom to save bucks for our future. She kept telling them that the money they save, be it INR 10 a day or INR 50,000 a year, will only help the family prevail no matter the time and era they will be in. Since I was a kid, I used to enjoy it with my friends and make mom and dad spend on toys, chocolates, and all the other things kids normally want. Knowing the gravity of finance, expectedly, was beyond me at that stage.

But as I stepped into the corporate world and got my first pay cheque after a month full of slog, I realised the value of money. It doesn’t come easy, because you not only slog, you also get an earful when you err while performing your duties. Physical, mental and emotional exhaustion goes into receiving your bread and butter. That's the corporate world for you in short.

Immediately, my mind cast back to the thought my grandmother had on money. The fact that I started as a banker, I became familiar with finance a lot earlier than expected. With more exposure to the fintech space, my knowledge on financial matters widened. So, here I am with a simple game of finance strategy, which is easy to implement in real time. Keep reading!

Start Saving from Your First Salary

It’s always an emotional moment when you receive your first salary, it’s like topping a school or college examination. You might want to buy your favourite stuff and do all the other things we wish for. But life is big, so the goal has to be bigger. Set realistic goals and look to achieve all of them with disciplined financial management. So, instead of splurging around, it’s better to save at least 10-15% of your net monthly income. Follow this pattern throughout your professional journey. If you have room for more savings, don’t hesitate! That will only help you more.

Now Where Should You Keep Your Savings?

Some in a savings bank account, some in a recurring deposit and some in a top-performing equity mutual fund. The allocation among them can vary depending on your risk appetite. Normally, when starting your professional journey at say 20-25, your risk appetite tends to be higher. So, ideally, you should be betting on an equity mutual fund that can raise your invested capital exponentially over time. However, the inherent market risks can make you jittery at the same time.

Looking at the overall scenario, build a secure savings base by investing more in a savings bank account and a recurring deposit more than a mutual fund for the first two years. After that, start investing more in an equity fund. Hopefully, by that time, your salary must have grown too. The enhanced salary will allow you to put more in a mutual fund.

Take a Loan When It Matters the Most

There’s nothing wrong with a loan. But why would you unnecessarily take it for means that may not hold much importance in your life? I mean, what’s the point in paying the loan EMIs for stuff like holidaying in Maldives or other tourist destinations at an early stage of your life? At this stage, you should focus on creating a solid foundation for a strong financial future. The time for travel will come, and you should enjoy it. Even if you have to take a loan for the same, you might not feel burdened. As you’d have saved enough, the extent of the loan for travel won’t be much, making it feel negligible.

Credit Cards Fascinate and Trouble in Equal Measure

There’s nothing that credit cards can’t do! You go to the restaurant and pay your dining bills, hop to a movie theatre and pay for your cinematic experience, and spend on all other things using a credit card. One may think, credit cards have made life easier! Of course, they have! But only when you use them intelligently and up to the limit you can afford.

The moment you swipe it for everything and anything, it starts to affect you financially. The bills will surge beyond your comfort zone, forcing you to either commit a payment default or pay the minimum due, which constitutes around 5% of the credit card balance in a billing cycle. Either of these is a big NO if you care for your money. The high interest rate of 30-40% per annum will likely give you sleepless nights. Be disciplined with a credit card and spend money that you can pay back on time to feel relaxed.

Conclusion

Mastering the game of finance is like doing basic things right and staying ahead of the curve. Don’t be influenced by your peers’ lavish approach to life. Instead, tread your own path by saving religiously, saying NO to injudicious credit card purchases and taking loans for means you can easily avoid. That’s all we have for you today! Stay connected as zarooribaathai.in will keep sharing insights that matter.