Workplace Financial Planning for Fresher’s

Table of Contents

Everyone’s desire is to get their first job. Throughout your time on university, you dreamed of the financial independence that a career would provide. A normal work does more than just pay the bills; it also defines how you want to spend your money. You purchase the things you’ve always wanted, go to places you’ve always wanted to go, and, of course, spoil your loved ones with gifts.

The corporate world is making inroads into the global arena at a slow but steady pace. Along with making unrelenting development, it expects its citizens to do the same. While it’s fine to indulge during your first few months on the job, it’s also crucial to remember that the sooner you start planning for your future, the better. The only way to achieve your financial objectives and maintain financial stability is via disciplined investment and sensible financial planning.

The goal of such efforts is to provide professional advice and ideas to employees on how to develop a habit of saving and investing in order to create high returns. Young workers that join a firm find the knowledge highly valuable because the organisation can give them with reliable information and a variety of possibilities.

Every generation has a distinct way of living that influences their financial decisions. The “save first, then spend” rule was followed by your parents’ generation. You, on the other hand, belong to the generation that believes that you only have one life. You live in the fast lane, and instead of making a budget, you live paycheck to paycheck in order to realise your ambitions. However, nowadays, dreams only come true once a large quantity of money is paid. For 5 lakh, you can have a vehicle, a 2 lakh exotic holiday, or a 1 lakh iPhone. If you continue to spend so much money on your aspirations without a clear financial strategy, you will most likely find yourself in a very terrifying situation with no savings left for those rainy days your parents used to warn you about.

3 Fundamentals that will have a Significant Impact on your Financial Life

  • Compounding

Compounding is the principle through which money returns are re-invested and earn you more money in the future. As a result, your money rises exponentially rather than in a straight line. Most certainly, this is the essence of financial planning.

  • Taxation

Taxation is a key factor that influences the amount of money you get back. As a result, an 8% tax-free return is preferable than a 10% return with 30% tax withheld (you receive only 7 percent returns in hand).

  • Inflation

Inflation takes a bite out of your buying power. Inflation is defined as a situation in which prices are rising. Because to inflation, you will be able to buy less with the same amount of money with each passing time. If inflation (prices) rises by 7% in a year but your investment yields 5%, you will still be short by 2% if you want to buy the same product you did a year ago.

5 Tips for you which will help make your Dreams a Reality

1. Prepare a Budget and begin Planning

The process of budgeting is making a strategy for how you’ll spend your money. It’s only a matter of balancing your income and spending. Making a well-thought-out plan allows you to know ahead of time if you’ll have enough money to get by for the rest of the month after all of your costs, or whether you’ll need to put off a few minor needs for a few months. Simply keep track of your monthly expenses in an Excel sheet, a basic notebook, or a mobile app that you can easily access.

The goal is to figure out where all of your money goes. You’ll be able to categorise your spending into three categories when you’ve created a budget: necessary, discretionary, and pleasure. Take a portion of your paycheck and put it away in a secure location once you’ve recognised these. If you’re not sure where to put your money, a bank is a good place to start. Choose a sweep-in account with a linked fixed deposit. This will assist you in obtaining a 4-percentage-point or higher interest rate.

2. Obtain Medical Coverage

It is critical for young people to get health insurance since health-care prices are growing every year. Any medical emergency will cost you far more if you are uninsured than if you are. Also, if you acquire health insurance when you’re young, fit, and well, you’ll have no problems getting coverage for any future illnesses with no deductibles or co-pays. Certain illnesses have a waiting period that can last anywhere from a few months to a few years, depending on the health insurance plan. Because you are immune to any of those geriatric ailments while you are young, your waiting period will be over by the time you file a claim. Medical insurance also allows you to save money on taxes.

3. Adapt to the Digital Payment System

Following the demonetization of old currency notes in 2016, the Indian government focused on encouraging the usage of non-cash payment alternatives. NEFT (National Electronic Funds Transfer), UPI (Unified Payments Interface), Net Banking, Debit, and Credit Cards are among the payment options available. It is recommended that young jobbers learn about this equipment and how to use them. These will not only assist you in keeping track of your transactions, but you will also be rewarded for doing so by the bank or service provider. Few e-commerce and food-chains provide significant discounts if you pay using a non-cash payment method.

Although there are many myths about having a credit card, it is actually one of the most advised modes of payment. Having a credit card from the start of your career and paying your bills timely helps young jobbers build a credit score which later helps them in taking loans. Credit cards also have a reward point scheme, where you are rewarded with certain points for spending. These points can later be availed for booking movie tickets, pay for food, bills, etc.

4. Purchase a Life Insurance Policy

While most young people dismiss the concept of having a life insurance plan because they do not have many financial obligations or dependents, this is not always the case. There are several advantages to getting a life insurance policy. Getting a life insurance policy when you’re young will save you money, and the premium will stay the same no matter how old you grow. If you get term insurance at the age of 20 with a cover of 1 crore, your premium will be approximately 7k to 10k per year, but if you buy it at the age of 35, your premium will be around 25k per year. Additionally, buying life insurance might help you save money on taxes.

5. Set Financial Objectives

Once you’ve begun saving, it’s critical to figure out why you’re saving and what you’ll do with your money. Begin by setting modest objectives. For example, if you want to purchase a phone, don’t put your money into it right away; instead, wait for your savings to exceed the phone’s price tag, leaving you with a fair amount in hand even after burning up your savings. Immediate spending will devastate your monthly budget and put your savings in jeopardy. If you take out loans to cover larger costs such as buying a vehicle or a motorcycle, it is quite effective. Your EMIs (Equated Monthly Installments) will be blended up with your costs, resulting in a balance between consumption and savings.

Ideas to Generate Money

  • Money saved is money earned, so cut any expenses that aren’t absolutely necessary. Reduce the amount of money you spend on cell phones and the internet.
  • Use freebies more often: Ola/Uber gives free or reduced rides, Foodpanda offers large discounts on food, Freecharge offers discounts on mobile recharges, DTH recharges, and bill payments, Redbus offers bus ticket discounts, and so on.
  • Use your strong communication skills- If you have good communication skills, you may be a tutor for a group discussion or a personal interview. Tutoring over the internet is also becoming increasingly popular. If you’re in a city like Bangalore, which is a job-paradise. seeker’s You may work as a mentor for job searchers in a coaching institute.