There was a time when people could not access phones, the Internet, or abundant information. Now, with the availability of the Internet, it is possible to develop a clear understanding of any subject.
Millennials (those born between 1981 and 1996) and Generation Z (those born between 1997 and 2012) can be said to benefit more from this.
Financial information is also very accessible, so they are more financially savvy. However, experts say they must follow five tips to achieve financial freedom.
Today’s youth generally invest in mutual funds, the stock market, buying houses, etc. They do not follow the same financial patterns, but there are different ways to save money. Moreover, understanding these five tips for financial freedom is crucial.
Emergency Fund: It is essential to have an emergency fund for unexpected financial issues like sudden illness or job loss. Saving an amount equivalent to annual expenses in a bank or elsewhere is advisable.
Mobile banking apps make it easy to build up an adequate emergency fund. These apps allow you to set a certain amount of money to be automatically deposited into an emergency fund monthly.
Start early and invest regularly: Start investing from the day you receive your first salary. With increased life expectancy, retirement planning becomes crucial.
Those wishing to retire at 50 and live as they desire must plan. For example, if you invest Rs.5000 monthly at the age of 25, you can create wealth of Rs.1.76 crore by the time you reach 55. If you start investing at the age of 35, you have to invest Rs. 17,500 monthly—a delay of 10 years can triple the monthly investment amount.
How to Pay off Debt: Most people have various types of debt, such as credit card bills and other types of debt. The snowball method can be effective for settling these debts quickly.
First, note all types of debt on paper. Then, prioritize paying off high-interest debt first.
Multiple Income Sources: It is advantageous to have multiple sources of income rather than depending on a single job.
Income can be earned through renting out a property, investing in shares, or teaching skills for tuition. Multiple income streams prevent financial issues if money stops coming from one source.
Insurance: Take life and health insurance before making investments. These insurances mitigate potential financial problems caused by unforeseen circumstances.
Taking life insurance at a young age will forever lower premiums. Many people opt for younger-term insurance because it is less expensive.