Just joined the workforce and became financially independent - here is how you can keep distractions at bay.

Consider this – you are fresh out of college and have moved to a new city to take up your first job offer. The pay is chunkier than what most people who are in the same age and experience bracket get, the profile aligns with your short and medium-term career goals, and the job location is also agreeable to you.

The excitement of not being accountable for your expenses to your parents or guardians feels incredibly satisfying. However, after a few months, you find yourself in a spiral where you feel your money simply evaporates from your bank account.

Many early career professionals can relate to this scenario. Managing finances prudently in the face of the dazzling sheen of newly acquired financial independence can be a challenge. The desire to have a curated and Instagram-worthy lifestyle or the underlying You Only Live Once (YOLO) mentality can blur the lines between needs and wants, leading to an endless wishlist. According to the Deloitte Global 2022 Gen Z and Millennial Survey, 44% of Indian Gen Zs and 41% of Indian millennials said their day-to-day finances contributed a lot to their feelings of anxiety and stress.

The time to start is now

Initiating saving and investing at an early stage can significantly amplify the power of compounding. Starting early when you are young will allow you to take full advantage of many years of future income, which is the biggest determinant of returns on investments. Getting into the habit of investing soon after you join the workforce also allows you time to build discipline and form good habits with your finances.

In addition, it is less costly to make mistakes with your savings and investments as a 20-something than later in life when your obligations and responsibilities may have increased drastically. Being consistent with investing and making it a regular practice will ensure you invest regardless of market fluctuations. Even small amounts of investment can go a long way when the power of compounding comes into play.

The overwhelming desire to project an image of wealth and prosperity that is prevalent in this age group can distort your perspective on the more important aspects of life. Beginning to save as soon as one starts their career is crucial. Many people hold the belief that starting with small amounts won't lead to substantial capital accumulation, and hence they put off saving, but it's important to remember that some amount of savings is necessary before starting to invest. Waiting too long to invest can make you lose out on the benefits of compounding. It doesn't matter how much one starts with - even a modest sum like Rs 500 is a good start, and it's advisable not to wait for one's income to increase before beginning to save.

Choosing a suitable plan

Financial discipline is a skill that takes time to master, but there are numerous ways to select the most suitable path that helps you stay on track. Setting unattainable goals when beginning a financial journey can have the opposite effect. A few unsuccessful attempts at adhering to an ambitious plan may lead you to lose motivation and stop trying. If you are a young earner, a helpful approach is to pay yourself first, which means setting aside a portion of the salary and investing it immediately. This ensures that money is not spent unnecessarily, leading to positive savings and investment habits. By doing so, you can live within your means and invest diligently for your financial future. A basic understanding of finance and avoiding unnecessary debts is crucial in safeguarding one's hard-earned money.

In addition to adopting easy techniques for developing saving habits, it's crucial to choose uncomplicated investment vehicles that can be easily comprehended and monitored. New career professionals who are just starting on the path of financial management should keep things simple and not make them too complicated. Mutual fund investments are a good choice because they are flexible and allow you to start saving and investing on a monthly basis through SIPs (Systematic Investment Plans) with a small amount. Depending on your objectives, you can have a mix of debt and equity mutual funds in your portfolio. Equity investments are the ideal choice for long-term objectives and especially if you are a young professional, because you would have time on your side.

Equity is the most profitable asset class that works especially well over longer holding periods and generally carries lower risk. A straightforward calculation can illustrate that investing in equity mutual funds through a regular stream, such as a SIP, for long term can yield substantial gains, making it easier to achieve goals such as retirement. The type of investment vehicle can be either active or passive funds.

An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund

All investors have to go through a one-time KYC (Know Your Customer) process. Investors to invest only with SEBI registered Mutual Funds. For further information on KYC, list of SEBI registered Mutual Funds and redressal of complaints including details about SEBI SCORES portal, visit link : https://mutualfund.adityabirlacapital.com/Investor-Education/education/kyc-and-redressal for further details.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

म्यूचुअल फंड निवेश बाज़ार जोखिम के अधीन हैं, योजना संबंधी सभी दस्तावेज़ों को सावधानी से पढ़ें।