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Having an excellent credit score is one of the few bits of financial wisdom that everyone needs to follow. This does not mean that you cannot survive with bad credit, but it means that bad credit cannot create easy opportunities for you.
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10 Financial Planning Tips for Young Adults In the post-covid phase, the style of money management has completely changed. Now starting from spending on lifestyle to investing in the future both have become equal priorities for people. While young adults have a lot of options to spend the money on, they are equally keen on saving and investing it. In this scenario, to serve both purposes, money management is crucial. If not, be it one or multiple sources of income your hard-earned money will be of no good as it won’t be available in an emergency or for any future requirements. Following are a few tips that young adults or anyone per se can use for sound financial planning- 1. Understand Your DTI Ratio: This is the foundation of excellent financial planning for young adults. The debt-to-income ratio is the factor between your income and expenses. Once you understand this, make a budget and then head for savings and investments. A good DTI Ratio will also help in the instant approval of a personal loan if you need it. 2. Make a Budget and Stick to it: Starting from meeting your household needs to lifestyle expenses, weekend trips to pursuing some hobby, entertainment to future planning; money is involved in everything. To cherish all of these it’s important that you plan your expenses based on your income and budgeting helps the best for this. You can distribute your income amongst needs, savings and investments, emergencies and wants. While it’s equally important to make a budget, sticking to it is equally necessary for fine financial planning. 3. Track Your Expenditure: Tracking your expenses is the best way to eliminate unnecessary ones. It helps in curtailment and results in better savings that can help you meet your future plans. Stopping the meaningless expenses at once is not possible but if you keep on tracking them, within a few months your finances will start improving. 4. Savings For Rainy Days: Savings are the money you actually have earned. This money caps you in medical emergencies, educational needs, family requirements, wealth creation and many other things that will add value to your life. Saving 15-25% of your income is the standard way you can
go for sound financial planning. This will save you from taking many personal loans in future for additional needs. 5. Investment for the Future: Compounding your money is essential to keep up with the raising inflation and to improve your financial health. Buying some property, investing in the share market, well-planned SIPs, putting some money in government-backed investment plans etc. are a few ideas that will help you in compounding your money. 6. Insure Your Life & Health: Covid-19 has taught us all to stay active and keep a check on the wellness of us and our loved ones. Getting proper treatment for an ailment and securing your family against an unfortunate situation are two musts. Health and life insurance are not additional expenses but they are the most important ones that last in and after life as well. 7. Plan Your Retirement: Privatization has grown, pension schemes from government organisations have also been pulled o?, lifestyle changes have taken down the stamina of young adults and the age of smart work has arrived. All these reasons ask together; What about retirement? It’s important that as young adults you be ready for the answer with a retirement plan. Your savings and investments should be designed in a way that helps you going even after your retirement and aids your lifestyle with proper health security. 8. Plan Well for Taxes: Government extends many deductions under various sections to help save the tax. It’s up to you how you avail of their benefits and save the maximum tax possible. Deductions are provided on income under various heald; income from salary, profit from business and profession, capital gains, income from house property, income from investments and dividends etc. Deductions on the interest paid on a personal loan of some specific kinds are also available under the income tax act. You can discuss with a CA or any subject matter expert and reach on a tax saving plan that is maximum and boost your financial planning as a young adult.
9. Build Your Credit Score: Building a credit score is very important while you are doing financial planning as this can will an instant approval on your loan applications. Borrowing some money and then gradually paying it back is always a better option than breaking your savings. you start early. Not applying for multiple loans, default-free repayment of debts, a stable source of income etc. are a few essential steps you can take to maintain your credit health. While a sound credit score is good for your financial planning it’s equally good for quick approval of your personal loan if you apply for it. 10.Open A Credit Line: While multiple credit lines are not suggested for sound financial planning, having none is also not good. An open credit line that you are constantly using and repaying helps in building your credit score and it tells if you are a potential borrower or not. Maintaining an open credit line will safeguard you while borrowing as the lender can assess your credit history easily. FlexSalary line of credit is one such option for all salaried professionals that helps in building credit health if maintained well. The best part of this credit line is that you can get it with a soft credit pull and or based on only your salary slip and bank statement. It’s available at a reasonable interest rate and comes with relaxed eligibility criteria. FlexSalary credit line can be the continuous cash support in your financial planning as then you can keep withdrawing money when you need it without a?ecting your long-term financial goals.
