It's like the beginning of your life at 20. The excitement of college, friendships, independence, and potentially starting a job is boundless. Despite the chaos and aspirations of many, financial planning, particularly pensions and long-term security, is a topic that most people fail to consider. Why? I previously held the belief that pensions were exclusively for the elderly. Now I perceive it as one of the most intelligent things I can initiate early.
🌱 Why Planning at 20?
It's possible to start financial planning early on, but it'll take some time. Starting early is advantageous as compound interest increases. Without hustle later in life, any savings of 1,000 per month now will be worth lakhs by the time you reach 50.
💰 What are my plans at 20?
What are my plans (and yours) to plan for the next 5 and 40 years? Please read:
1. Emergency Fund First
To get ready for retirement, I've established an emergency fund with 3-6 months of expenses. They deposit it into a high-interest savings account. This gives me a sense of security for unexpected situations.
2. Budgeting & Tracking
Free apps are used by me to keep track of my spending and make purchases. By following this routine, I can cut down on unnecessary shopping and gain insight into the exact amount of money I spend.
3. Starting SIPs Early
A good mutual fund allowed me to start my SIP with only 500/month. I aim to raise it in the future. Small steps, big returns. Long-term investing remains the better choice despite market fluctuations.
4. National Pension Scheme (NPS)
I opened an NPS account. This scheme is backed by the government and provides me with tax-free savings to build my retirement fund.
5. Gain insight into Index Funds & ETF stocks by visiting the index page
I have been reading up on passive investment strategies such as ETFs and index funds. They provide long-term benefits with low fees. I put my trust in what I know and not the hype.
6. Avoiding Loans I Don't Need
Although student loans are necessary, I'm steering clear of the credit card traps and speedy repayments. If you start out debt free, your future will be stress-free.
7. Side Hustles & Skills
Learning technology and engaging in freelance work through online platforms. What are my options? The surplus earnings are invested in savings and some in future investments, such as small-scale gold SIPs or REITs.
🎯 How would you describe the experience of being on a pension at the age of 20?
You don't have to worry about pension if you start working on your retirement fund now. Whether it's through:
- EPF is an option for those who are employed and have a steady income.
- NPS for long-term stability
- Can you provide information on PPF (Public Provident Fund)?
Start building it now. Keep the money in a silent growth mode for 30-40 years? The fact that you are now 60 years old will be very much appreciated.
🧘 The final words to describe a retirement as the ultimate goal
Planning my finances is not about aging; it's about having the freedom to choose my life', whether that'S by traveling, starting a business or retiring early. Happiness can only be purchased through smart money habits, not money.
Small decisions taken at the age of 20 initiate those choices.