5 Essential Personal Finance Tips For Beginners

Managing money matters is one of the most basic yet important life skills that is going to have an impact on both your short-term & long-term future. As a novice, you are probably looking for simple measures to manage wealth & streamline your finances better. But given the plethora of expert advice out there on how to handle money matters, we understand that it can be quite overwhelming for a beginner.

The idea is to take small yet effective steps towards managing your money wisely. You can reach out to trusted wealth management services that can offer financial tips & help you understand money matters better. Alternatively, you can be self-sufficient & learn how to take charge of your personal finance by making well-informed choices. Once you learn how to save & invest your money judiciously, every penny will work to your advantage.

The most common predicament that most young people face is the lack of awareness around where to save and when to stop splurging. Learning how to control these two aspects as a beginner will help you save money in the present and meet your financial goals in the future.

Let us take a look at 5 beginner-friendly money management tips that will help you actively manage finances:

Regulate your expenses

The first step to financial freedom begins by analyzing your expenses. The best way to do this is to track your current expenses & create a budget that aligns with your income. Once you have established a functional budget & are actively tracking your expenses, it will help you identify how much money you can save on a monthly basis.

Ideally, you should be able to put aside at least 10% of your income into savings. If you are a student & would like to start saving for your further studies, it is best to learn about the financial costs of higher education beforehand so that you can regulate your finances accordingly.

Create a personal investments portfolio

One of the biggest financial mistakes you can make as a beginner is to not investing your money. Investment planning is not as complex as it may seem, especially for young people. You do not need to get extra creative with money investment ideas if you are not familiar with the investment territory. Instead, look for simple beginner-friendly investment prospects that align with your goals.

While recurring and fixed deposits are great for short-term goals, equities can be a beneficial source of long-term investments. For sound financial guidance, you can also reach out to Dezerv- an expert-led investing platform that offers smart investment tips based on your requirements & helps you create a personalized investment portfolio to maximize returns.

Minimize credit card expenses

Do you often reach out for your credit card to cover expenses? Well, it is not uncommon to find young people, especially those who may have recently started earning, to max out their credit cards or even pay their dues late.

While credit cards can be of great help if you are short on liquid cash, it does create an urge for impulsive buying & could lead you to live beyond your budget. Since the annual interest rate is nearly 40% or more on some cards, this along with the late fee can be detrimental to your financial health if you pay your credit card dues late.

Invest in insurance

When it comes to health and life insurance policies, investing in the right plan at a young age can be of great advantage. It will not only cost you less but also ensure that the premium amount remains the same even in the long run.

It may seem like an unnecessary cost to cover as a beginner, however, insurance can be a huge shield of protection for your finances in case of emergencies. Investing in medical or life insurance also helps you save on taxes, which is an added benefit.

Maximize tax savings

While starting out, most people are not too concerned about saving taxes given that their income is not that high. But, understanding how taxes work and implementing tax planning is an integral part of money management even for beginners.

You can invest in tax-efficient instruments like PPF, gold ETF, NPS, life insurance, etc that can help you optimize your returns. Learning about these tools will also help you stay updated on tax exemptions that could result in reduced tax liability at the end of the fiscal year.

Regardless of whether you are a working professional or a college student navigating money management, it is important to do thorough research before exploring tools that can enhance your savings or investments. The most effective financial trick as a fresher is to practice simple yet effective money management techniques that will help you save & spend mindfully.