Financial Planning - Tips For Early Professionals

It’s a volatile and hyper-competitive world that we reside in. It will only get more competitive from now on; this puts the young professionals in tremendous pressure. Since there are some basics that society excepts one to have, these young professionals find themselves in debt early on, not only they have to get out of it, plan for the future, a career to look after, start a family, and plan retirement. This can be overwhelming at times and more so with COVID-19 and market volatility. This here will help young professionals with an actionable financial plan for their future.

Plan a Budget

“Do not save what is left after spending, but spend what is left after saving” – Warren Buffett

The great Warren Buffett said that and we are society which particularly believed in it. Lately, however, the young generation has forgotten it. It’s best to start a practice saving and living within your means early on and is the key to building a strong financial future.  Track your income and expenses with numerous free applications out there or budget it the ‘old-fashioned way’ with paper and pen or Excel. The goal is to understand your income and outgo.

Now, the first priority is to create an emergency fund. It’s best to have 3-6 months of living expenses in liquid mutual funds or separate bank account only meant for emergency situations. 

Living within your means was always exercised in this part of the world and when it comes to financial planning, you’ll see all advice emphasizing that. It also helps in keeping away the stress that comes from Debt. Prioritize essential expenses over discretionary one and save for emergencies. This is the key for a strong financial foundation and general peace of mind.

In Debt? Make a Plan

Living within your means should keep you out of debt but if you do end up in some debt, it is best to make a plan to because high debt should be done away asap. High interest credit card debt is a killer. Make a plan to get out of those high interest debts.

Retirement Planning

This should start simultaneously when your career starts but even if you haven’t now would be a good time to start. Sure, it’s a little difficult to figure out how your career trajectory will be but retirement age happens to be the same for all.  

One can start the retirement planning and within each career progression or increment in salary, go over the retirement plan.

Companies do offer a customized ‘Retirement Planning’ basket of mutual funds wherein one can start from as low as Rs.500 a month. If we consider inflation, a figure can be arrived and then it’s a matter of sticking to the investment discipline.

Wealth Protection

Nothing wipes out savings than being sick or hurt because the regular bills have to be paid with the new ones! Insurance and medical plan can help here. These are important because it’s not only important to protect yourself but your loved ones too especially if you’re married. Medical expenses are increasing exponentially for your sake they can’t be ignored. 

Maintain good health, exercise regularly and try to manage a stress-life life. 

Make a Goal

Without goals almost all life becomes a game of luck. Can’t play with life in this fashion and the only way to make life predictable is to have goals. Where do you want to be? How would you like to retire? Plan for the child? Car? Home? All these are tangible, realistic goals. 

A realistic plan with goals clearly laid out can help a lot. Goal planning is offered as a feature in mutual fund apps and all one has to do it select and start, it’s that simply, really.

A financial planner can definitely help and with the right goals, all this can seem like a breeze. While you give your 100 % to your career goals, a planner can set the other things in order.