Money matters are the most crucial matters in one’s life. The decisions relating to money you take today, lay the foundation of how your financial future is going to be. Financial planning is as important as difficult as it may sound and takes a lot of dedication and discipline to cover all the major aspects of life financially.
However seasoned you may be, it takes a lot of planning and vigilance to achieve the desired outcomes from all your savings and investments. Here is a list of 5 mistakes most young professionals make and must be avoided;
- Missing out on the insurance
While the insurance ads may sound funny and irrelevant right now, you must get yourself insured the moment you start earning. Insurance is not an investment but an expense yet it is important for every individual. Life and health are uncertain, you cannot avoid the uncertainties but at least be prepared.
- Missing out on emergency fund
The next big mistake is not setting aside a corpus which can feed and fund you for at least 6 months if need be. It could be any form of emergencies like a medical emergency or sudden loss of job etc. whatever the case may be, you need to have an emergency fund which can act as a back up for you. while most people prefer keeping the emergency fund in bank accounts, a better option would be to park your money in open-ended liquid funds.
- Missing out on investments
There are a lot of people who save a lot of money but keep it in their savings account an1qd` do not invest it. Wealth creation does not happen by keeping money in a savings account or as a liquid fund rather it needs to be invested. One important factor that needs to be considered is inflation. You must save and invest keeping in mind the factor of inflation that can eat up your wealth if not dealt with properly.
- Missing out on clearing debt
This is one thing that nobody tells how harmful it can be. Most households are in-debt either under homer loan or car loan but seldom do we realize that debt can be extremely harmful to your savings and portfolio. Start clearing off your debt with every chance you get.
- Missing out on retirement planning
Lastly and most importantly, young professionals miss out on planning for retirement. Procrastinating on this essential life goal can cost heavily later on. You must save and channel your money in the right direction in order to enjoy a hassle-free and independent retirement.