As 20-somethings out to conquer the world, we have a long list of things we want to do. But this quest of ticking items off our bucket list often makes us lose sight of ground realities. We forget real-life matters like money, health and family, and before we know it, we’re back to needing our parents for all the adult stuff. Not the best way to adult, is it?
In this Adulting series, we’re going to help you with hacks and tips on basic adulting. Let’s start with the deadliest villain in our lives- money! ‘Forever broke’ has become our generation’s mantra; no matter how much we make, it just isn’t enough. We’ve barely got enough to survive; how do we even get to savings? Here’s when we go back to our childhood tales and learn something from the thirsty crow – bit by bit, we can tuck away enough for the future.
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Here’s a list of six things you can do to manage money like a Bawse Adult.
1. Budgeting for the Win!
Jot it down, always. It doesn’t matter if it’s your rent or the big bucks you spent on those amazing shoes online, make a note of every single paisa. Once you’ve noted your expenses for the month, start categorising them as:
Essentials (things like rent, utilities, insurance, etc. – stuff that is important for survival)
Splurges (That expensive meal you had last week? Your Netflix and Amazon Prime subscriptions? This is a list of your ‘treat yoself’ expenses)
Wastage (Think about those unnecessary online purchases – the cute doggy toys you bought even though you don’t have a dog.)
Once your list is sorted, budget one portion of your income for these expenses and stick to it. Trust us when we say this – even maintaining a record will help you be more aware of your spending habits and cut out the unnecessary ones.
2. Savings and Investments – the Golden Combination
Yes, your parents were right all those times they nagged you about savings and investments. If you zoned out during their lectures, here’s what you need to know – saving even 20% now can help you keep a good lump sum aside to pay the bills in the future when all you want to do is retire to a faraway island.
(Psst… You can begin with saving as little as 1% of your income and gradually increase it every month.)
Now, saving doesn’t mean hoarding it all in an account or hiding it under your floorboards. Invest it and watch it grow. With enough research and expert guidance, you can customise your investment plan based on your income range and the short, medium or long-term goals you have from them.
Additionally, the earlier you start investing, the richer you get, thanks to the miracle of compound interest. This helps you earn interest not just on the principal amount you invested, but also the interest you earned on it! Go on, start your investment journey right away!
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3. The 50/30/20 Rule to Financial Glory
There is a 50/30/20 rule that tells you how much to spend and how much to save. About 50% of your income should be spent on essential expenses, 30% on leisure and at least 20% must go to your monthly savings and investments. This golden rule by Elizabeth Warren is said to be one of the best ways to manage your money.
At first, it may seem painful, especially when you’ll have to cut down on your Amazon and Zomato splurges, but keep your dream goal in mind – that beach house you can retire in!
4. The Best Investment – Yourself
Sometimes, in your quest to spend less and save more, you end up compromising on your personal growth. If you’d like to get fit, sign up for that yoga class or get that gym membership. If you’d like to learn how to play a musical instrument, look for a reasonably-priced class and go for it. There will never be a better time than now to try these things and invest in yourself! You don’t want to be that person cribbing about how you never got around to mastering your favourite martial arts style or learning how to play your favourite sport!
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5. Maximise Your Routine, Minimise Your Expenses
Put all your nights of binging on MasterChef to use and learn how to cook for yourself – it will cut down on your eating out costs. Travel by public transport – take the train or metro to work instead of a cab. Try and organise house parties with friends instead of going out every weekend. What sounds better – enjoying parties at home with people you actually like or being surrounded by too many strangers and paying too much for food and drinks? The former is also way cheaper – it’s a win-win!
6. Get Insured!
As unusual as it sounds, getting life insurance in your 20s is way more beneficial. Since you’re way fitter in your 20s (and the premium rates depend on how healthy you are), you end up paying much lower premiums. There are also loyalty and tax benefits of investing in insurance. Do your research and get your insurance in place!
Try these tips to manage your money like an actual adult. Now that you’ve got your first lesson in adulting, stay tuned for the next one – it’s going to teach you all about looking after your health!