When financial planning, the earlier you start, the better it is. Having a financial plan from the day you start working will help you to not scramble for funds to fulfil your aspirations. It is important for the newly employed youth to plan their finances by budgeting, goals centric approach, and investment, insurance, taxation and salary structure. One should always remember that financial freedom is not achieved from the day you start working but from the day you plan your finances. So, let’s look at how to invest money in a way that can help you plan your finances better.

  • Plan Your Budget

Budgetary planning is essential as it gives you a clear idea about what to spend and makes you responsible for the avenues of income that you have. You need to consider the taxes you pay, your monthly expenditure and so on before you decide the amount you want to invest. This will help you channelize your funds accordingly. It is essential to prioritize your expenses in such a manner that can save you money.

  • Set Future Goals

Setting financial goals for the future can help you formulate a proper plan of action in a timely manner so that you can have the monetary resources available by the time of actual requirement. It is best to set yourself goals for every stage in life. They can help give you direction to achieve your life dreams.

  • Have a Balanced Investment Plan

There are different types of investment available and no two investments have the same purpose. Investing in high-risk equity or low-risk debt instruments has its own respective pros and cons. You need to understand your risk appetite, financial goals and seek advice from a certified professional before investing your surplus funds in these instruments. The decision should depend on the urgency of your life goals and your risk appetite.

Where to Invest Money?

  • Life Insurance

Life insurance is designed to offer financial security against the death of the policyholder and also helps you meet several life goals in turn. The life insurance sector has been witnessing steady growth as more and more people are realizing the necessity of investing in a life insurance policy. Investing in a life insurance plan is an excellent idea as it serves as a low-cost instrument for future financial security.

  • Health Insurance

Healthcare is quite expensive and your medical cover at work won’t suffice for a lot of issues you and your family may have to face. Therefore, investing in a suitable health insurance plan can take away the worries about any health-related emergencies. Getting the right health insurance plan will help covers your hospital charges in case of variability and also tackle the pre-and-post-hospitalization costs. This basic cover ensures that medical bills and hospital expenses are the last things on your mind at the time of an emergency.

  • Annuity Schemes

By investing in an annuity scheme like NPS or market-linked retirement plans, you add to your overall benefit due to the power of compounding. This means that there will be very extensive returns by the time you retire.

  • Tax-Saving Schemes

Making investments in tax-saving schemes like NPS, NSC, ELSS etc. can go a long way in ensuring that you are not burdened with taxes. It also helps in building your fund reserves. Such exemptions are allowed under Section 80C of the Income Tax Act, 1961.

  • Unit-Linked Investment Plans

ULIPs come with a lock-in period of five years and offer insurance as well as investment benefits. A small amount of the premium goes to secure life insurance and the rest of the money is invested similarly like mutual funds. There are additional tax benefits as well and therefore, ULIPs are ideal for mid-term financial goals.