Money Tips: These 5 big mistakes during your first job can break your dream of becoming rich..

After studying hard day and night, every person thinks of getting a good job. When one gets the first job, there is no limit to happiness. One gets the money earned through hard work and a feeling of new financial freedom is felt. But this is the period when some mistakes are made in excitement, and if these mistakes are not taken care of in time, then they affect the whole life. Due to these, your financial future can be affected and your dream of becoming rich can be shattered.

Mistake 1: The trap of lifestyle inflation

This is the most common mistake. As soon as the salary comes in hand, the list of expenses becomes long. Suddenly, expensive phones, branded clothes, weekend parties, and eating out daily start. This is called 'lifestyle inflation', that is, increasing expenses as soon as the income increases. Most people think that "Now I am earning, I can spend." They immediately buy a bike or a car on EMI, without thinking about how it will affect their financial planning. But this mistake never allows you to save. You always live "salary-to-salary" and at the end of the month, your pocket is empty.

Mistake 2: Considering a credit card as a 'magic wand'

Banks easily offer you a credit card. Youngsters think of it as a magic wand, with which they can buy anything, even if there is no money in the account. They forget that a credit card is a kind of loan, which, if not repaid on time, has to pay a hefty interest of up to 30-40%. This is such a debt trap, from which it becomes very difficult to get out. This mistake should be corrected in time or else the credit card bill can trap you in a cycle of debt and spoil your CIBIL score, making it difficult to take a loan in the future.

Mistake 3: Postponing investment - "Abhi toh age hi kya hai!"

"My career has just started, let me enjoy it a bit, I will invest later." This is the thinking of almost every youth. They focus on spending their salary, but do not think about increasing it. Whereas the biggest rule of financial planning is - the sooner you start investing, the bigger the benefit you will get. The power of compounding can turn even your small investment into a big fortune over time. By delaying investment, you miss out on the benefit of lakhs of rupees that come with the magic of compounding.

Mistake 4: Considering insurance as an 'unnecessary expense'

Many youth ignore health insurance or term insurance, considering it an unnecessary expense. They do not understand that even a small medical emergency can finish their months of savings and drown them in debt. The premium for taking insurance at a young age is also very low. An unexpected accident or illness can break you and your family financially. Insurance is a safety shield, not an expense.

Mistake 5: Not setting any financial goals
Without a goal, you don't reach anywhere. The same applies to money. Most young people don't even decide where they want to be in 5 years, whether they want to buy a house, a car, or travel abroad. Without a goal, savings and investments become directionless. Without a goal, you don't stay motivated and end up wasting your savings on unnecessary expenses.

So, what to do?

You can certainly fulfill your hobbies, but first, learn to manage your income properly. Maintain a balance between necessary expenses, hobbies, and savings. The easy way to do this is the 50/30/20 rule. By adopting this, you can fulfill your needs, hobbies, and also invest as much as you need. Under this rule, you should set aside 50% of your salary for needs, 30% for desires or hobbies, and 20% for savings.

FAQs
1. What percentage of the first salary should be invested?
Financial experts recommend investing at least 20% of your salary according to the 50/30/20 rule. You can also increase it according to your capacity.

2. Is it wrong for a youth to get a credit card?

No, it is not wrong to get a credit card, provided you use it with discipline. Never spend the entire limit, and always pay the entire bill on time. This helps in building your CIBIL score.

3. Which is the most important insurance for youth?

Every youth must have good health insurance so that their savings are not exhausted in any medical emergency. If someone is dependent on you, then term insurance is also necessary.

4. Where to start investing?

You can start by investing in mutual funds through a SIP (Systematic Investment Plan). This is the best and easiest way to start investing with less money.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.