Key strategies for youngsters to become financially smart

financialexpress.com:

As a student or a fresh graduated person, it’s easy to overlook the importance of financial planning amidst the hustle and bustle of academic life. However, making a right start in managing your finances is crucial for a secure and prosperous future.

In this article, we’ll explore some key principles and strategies that can help everyone in becoming financially smart.

The 50-30-20 rule is a simple yet powerful budgeting method that can help students manage their finances effectively. This rule allocates 50% of your income for needs (such as rent, groceries, and bills), 30% for wants (like dining out, entertainment, and shopping sprees), and 20% for savings (including emergencies, investments, and financial goals). By following this rule, anyone can ensure that their spending is balanced and aligned with their financial goals.

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Many students receive their first paycheque from internships or when they secure their first job. Challenging, as it may sound, but it’s essential to start financial planning from your first paycheque. This means setting clear financial goals, creating a budget, and tracking expenses. Starting early allows students to take advantage of the power of compounding, which can significantly increase wealth over time.

Creating a budget is crucial for everyone. It allows them to track their income and expenses and make informed decisions about their spending. To create a budget, students should list all their sources of income and their fixed expenses (such as rent, utilities, and groceries). Then, allocate a portion of their income for variable expenses (like dining out, entertainment, and shopping). Finally, set aside a