Your first salary will buy you and your friends a round of drinks. However, with the second salary comes responsibility to plan your financial goals and priorities.
Financial success is a necessary life goal, and here are 5 smart rules to achieve that.
1. Saving is a good habit
Overspending is an easy financial pitfall. So allocate a specific amount of salary directly into your saving account every month. Warren Buffett advises young folks by quipping “Don’t save what is left after spending; spend what is left after saving.”A good rule to follow is 50/30/20 plan, where you assign a particular ratio of salary into saving by default.
2. Spend wisely
Spend on things that will appreciate in value, like SIPs or patents. That expensive smart phone can wait. A good question to ask yourself is “Do I really need this?” The market runs on harnessing your emotions to splurge. So be an aware consumer. Robert Kiyosaki, the author of ‘Rich Dad, Poor Dad’ says, “I use debt to buy assets. Most people use debt to buy toys and liabilities.”
3. Invest in yourself
Jim Rohn suggests “Poor people have big TVs, Rich people have big libraries.” So a good plan is to invest in yourself, learn new skills, upgrade yourself academically and professionally and learn from mentors. Charlie Munger has advised: “Go to bed smarter than when you woke up.”
4. Limit what you borrow
If you are already repaying your student loans, do not take a car or home loan, however economical it may seem. Just because you are eligible for borrowing, does not imply that you have to avail of the facilities. Even Warren Buffet advises to have a more solid financial plan in place, rather than relying on leverage or loans.
5. Giving back
Money has a natural tendency to multiply. However small may be your contribution, whether in cash or kind, remember to give back to society. Charity will render a clearer and more humane approach to your financial planning and inculcate the elusive sense of responsibility.
Whatever may be the higher philosophies in life, it is a fact that Money matters. It cannot buy love, but it can surely make your loved ones more happy and comfortable. So, it is time to do some adulating and start financial planning with your first job.
(Image credits- Pixabay, Giphy)