Lenders can deposit money directly to your bank account.
FINANCIAL ADVICE FOR YOUNG PEOPLE – VERY BASIC THINGS TO UNDERSTAND
Sometimes I do wonder what all could have happened if I know how to manage my money when I was in my 20s. What most people think is that key to better standard of living is to increase their salary. That is true to some extent but what ends up happening is that as soon as you get a raise, you end up spending that extra money. If you keep trying to improve your living standards through this, it can take you years or decades and still you wouldn’t be able to reach those financial goals you had thought of.
There are some very basic things which if you understand from the get-go, you will have a much more comfortable future. You don’t even need to spend a lot of time to learn these tips. They are basic things to keep in mind when you budget the next time.
This is the most important part of your financial planning. Most young people will end up buying that new phone or new shoes on credit or as soon as their salary gets credited. Let’s take a look why this is the wrong approach.
If you buy a new phone using your credit card, you can end up paying for it for years, especially if you miss out on any of your payments. Credit card companies make money when people don’t pay on time and you can tell how rich these companies are. You have to learn how to delay gratification.
There is a famous quote which says, “you can only afford something when you can buy two of those”. A big part of financial planning is to make sure you are earning more than what you are spending. One way you can make it easier is to only use credit cards in times of emergencies, stick to debit cards.
These days it is becoming easier and easier to own things you can’t afford, and all of the companies and banks try to sell you better deals, making you think it’s better for you but in reality, it just gets you into debt.
READ A FEW BOOKS
It’s not a bad idea to hire a financial planner. You don’t have to know about everything in detail and make all the investments yourself. There are professionals who will take care of it for you. But you should be knowledgeable enough so that no one can take advantage of you.
Whenever someone realizes that they can easily make money off of you, you will be surrounded by sharks. One way to get out of this situation is to educate yourself, not a lot, but enough so at least you can tell if they are trying to con you.
Get to know about different types of investments and what the average returns should be. A lot of young people are attracted towards claims of high returns which they believe to be true. Know this, Warren Buffet built his wealth over decades, it doesn’t happen overnight.
The best way to build this knowledge base is to read a couple of books on financing and personal finance. Or you can take a small course online. There are a lot of choices out there.
DON’T BE AFRAID OF TAXES
Don’t ever try to get away from paying your taxes. You might think you are being very smart, and you will never get caught but at some point, of time you will. Even if you don’t, living in fear is not a good way to live.
On the other hand, what you can do is plan your taxes smartly. You can end up saving a lot of income if you know how to legally pay lower amounts of taxes. Most young people have no idea about filing their taxes, this is one thing which no school teaches but you can easily get into trouble if you get it wrong. If all of this seems too complicated, then this is where a good accountant comes into the picture. Why do you think tax lawyers make so much money? Because any successful person will tell you that the amount you pay for a good tax lawyer will end up saving you a lot more in actual taxes.