Millenials or Generation Y which refers to the young workforce aged between 20 and 35 years have high dreams and hopes both at a personal and financial level. And to reach the different financial goals, it shall not be a difficult task if one starts well in time. So, as a young individual once you begin to earn your livelihood you should take these money moves at the earliest.
1. Figure out your monthly budget and stick by it- To better control your personal finances and to be financially independent, it is a crucial step to know your expenses. Most millenials do not take light of their expenses which can befall them heavily at a later time. So know your monthly budget and try at best to stick by it.
Also, before spending from your income source take out the portion you wish to invest for meeting your future financial goals.
2. Buy a Term Plan- The early you buy a term plan the better it is as your family or dependents are well taken care of in case of any mis-happening. Also, on the premium front you are at an advantage if you buy the term plan early in life as the premium is then very nominal.
Also you need to ensure that you buy adequate cover both life and health insurance. Premium for personal accident and health insurance is also less at an early age in life.
3. Build an emergency fund- In these times of uncertainty, you never know when a pink slip will be shown to you, so to be proactive at this front, personal finance experts have time and again suggested to build a corpus amount as emergency fund. Ideally they have suggested keeping as much as six months' expenses in a liquid fund or bank FDs.
And if you are able to maintain over and above this threshold, nothing can be better.
Remember to take account of any debt you service in this emergency fund as the fund will then rise by the same proportion to repay the debt.
4. Start investing with financial goals and time horizon in mind- There are many millenials who are saving and investing with no clarity in respect of time horizon and financial goals. For them it is advised that they make clear specification in respect of financial goals that are measurable, achievable, realistic as well as time and do take note of time constraint as well.
5. Manage debt efficiently with proper debt repayment plan- With millenials, credit cards and other debt are not uncommon, in fact they resort to financing through these sources in a far big way then they indulge in making investments. So it shall be in their interest to devise the best possible debt servicing plan so that their credit score does not falter. Credit score is a measure used by banking institutions to track the debt repayment track record of the borrower. A score of 500 and above out of 750 is considered to be good.