Millennials or Generation Y are young adults aiming to stand on their feet and become financially independent. And that’s why there are some essential yet simple money lessons to learn that can help you effectively meet your financial goals, including a brief knowledge about the stock market today and an overview of mutual fund investments.
10 important lessons to kick-start your financial journey
- Learn finance: Learning the basics of finance is crucial as it will help to understand how money works in the real world. And it’s ok if you are working in a field that might not come under the finance sector as simple money lessons are essential for everybody.
- Millennial financial planning: A personal budget will help you clarify how your current cash flow system works and how much money enters and leaves your pocket. When you note this data somewhere, it gives you a clear picture of what is taking the big piece from your savings.
- Financial management: Making money is important, but what’s more important is how you handle this money. Creating a budget, saving money for emergencies, and allowing it to grow through investing, will bring exponential growth to your finances.
- Assets over liabilities: In simple words, assets put money in your pocket and liabilities take them out. Investing your money for building assets, such as a house, will work as an excellent passive income source for you.
- Investing: If you see the NIFTY50, an Indian stock exchange benchmark index, it reflects the growth of our country’s economy and you can see that the overall nature of the market is in an upward trend. Thus, it seems that investing in the market for a long-term period can greatly help you grow your money.
- Compounding: The power of compounding is the ability of an asset to generate income, which, when reinvested, will provide even more earnings over time. Investing in stocks will serve as an excellent medium for benefitting from the power of compound interest.
- Beating inflation: Inflation reduces the purchasing power of your money, and India’s retail inflation for October 2021 was about 4.48%. Thus, you must think of ways to grow your money by investing in assets that provide inflation-beating returns such as stocks.
- Needs vs wants: Having those extra bucks in your pocket creates an intense craving to spend more than you need to. However, it is our responsibility to differentiate between our needs and wants.
- Wealth creation takes time: Wealth creation is a slow process, and your everyday small actions that inculcate financial discipline are the key to achieving it.
- Ask for help: A vast subject like money or investing is easy to understand with a little expert help. You can reach out to a financial advisor who can guide you on the kind of investments you should make based on your goals, risk tolerance, etc.
India has enormous potential when it comes to investing, and you too can leverage this opportunity when you start taking your finances seriously and consider investing in stocks or mutual funds.