A beginner’s guide to understanding life, savings, and investments. Most of which aren’t taught in schools, so here is an idea which will help you to make better decisions.
Let’s unfold from the beginning…
College days are rough. Because you have to do so many projects, be busy doing many activities like dance, acting and helping parents. Also, you don’t have money to spare.
The pocket money which you receive is less. And it gets spent as easily as you receive them.
Being low on cash means – you have to rely on rich friends or live your week whining about the things you can’t do.
But not all is bad. Chances are high that you fell in love in college – the gushy feeling is new & vibrant. You experience your first kiss & emotional connection with a partner.
The money issue slides in – because you want to take them to fancy restaurants, modest gifts & dress up well for impression.
If only you had money, then everything will be sorted – or at least you hope so.
After college, you try for many things to get a job. Suddenly you realize – the soft skills weren’t taught and you struggle.
Finally, you settle temporarily with a job that pays okayish. The first salary is credited & it feels fantastic.
Indulge & Responsibility
Getting your first paycheck is an excellent feeling. You cash out the money & give some to your mom. And you plan to spend the rest.
Finally, the day had come that you have enough money to indulge in pleasures – buy what you want, impress girlfriend & give a party to friends.
Then your mom reminds you that you are an adult who is earning. And so you have to chip in for responsibilities. The electric bill, rent & food takes up almost all your income. You now wonder how did even you get some pocket money when your parents were working.
This made you realize that you aren’t earning decent money yet.
And for now, it can only take care of your responsibilities. So your work routine gets stiff – you work hard every weekday. Do small outing on weekends with friends. The moment you receive the paycheck, almost all of it gets vanished in all the expenses.
Adult life doesn’t seem how you envisioned it to be. Now you remember your college days – that was fun.
You realize there is no way you could do all the things you had dreamed on this peanuts salary.
So you start looking for jobs. And the market is a total mess. Except for a few unicorn companies, most are trying to low-ball you, trick you & make you believe that you are a loser.
All in the hopes that you agree to work with them for a low salary.
Your first interview goes incredible. You wanted a 40% hike, but you ended up with 15% hike instead.
You take the offer & get disappointed. But an idea struck you – what if you apply to another company saying you have an offer & you are looking for better money opportunity.
And it works. Companies are doing cheap stunts- well you have to play along to get what you want.
Finally, you landed the job. And now suddenly, you have 40% extra money. What all things you could accomplish with this money. So you feel happy – you go home to tell your mom the good news.
She was thrilled – but then she asks you, how much you are gonna save…
The Save Vs. Invest
It seems that you can’t enjoy your life. This thought had just occurred to you, and then your mom interrupts. Son, do enjoy your life – but first, save up some money for the future.
Hence, you go on to the internet to find all the lucrative saving opportunities. Almost all of them are bad. Interest rates are less than inflation rates – so you are losing money. You talk with friends, and they vouch that investments are a good bet.
So you think of only to invest. And start your journey of researching & understanding those. And the more you learn, the more you get confused. And you decide to take the time. Because you wanted to do it right.
After 2 months, your mom asks about your investments plan. And you have none – so your mom asks how much did you save.
And then it hits you-you have no saved up money. You are at the mercy of your next paycheck.
Savings is a negative return thing. But still, your mom is rolling her eyes because you didn’t have any savings account.
Momma-Socrates explains if you don’t save money, then probably you are going to spend on a particular lifestyle. The alternative is to live a less lifestyle & save some money every month. Because, then after 3 months – you might have less value for money – but at least you have money. So if there is a sudden loss of a job or a medical emergency, you are alright because you got money.
Investments are essential for growth in money. But there is risk associated & you might lose money too.
So first, you need to find your discipline – the habit of saving each month, set up a pension account with the employer, and many fixed deposit schemes.
One, you are disciplined & formed a habit, you can go to the investment stage. Because now you have an emergency fund saved and pensions money going every month.
Here is the simple plan to follow for a good money life. In your job, try for a promotion with raise. Switch jobs, get skills – now you are energetic, get as many enrollment and responsibility as you can.
Save for at least 6 months of an emergency fund. Invest regularly to a pension fund giving money to you after retirement. But that’s not going to be enough. That’s why there is investment.
Saving is guaranteed. Investments are risky, so you need to balance them.
Try mutual funds, hold stocks, or buy real estates, and you will be fine. Investments are always for the long term. Savings are for short term requirement.
Imagine if you were losing money on investment & you needed money, then you might need to bear losses. But since you are saving too – you are covered & you can let investment float till retirement and then cash in.
Investments over the long term are profitable. Not guaranteed but that’s a general trend. For most of you – this much is enough. What else can you do?