As you leave the comfort of your undergraduate days behind and embark on adulthood, you will realise that financial management is a necessity, not just a desirable skill. Good financial management is how you strategically plan and organise your personal finances to ensure that you meet all your obligations, such as student loans and rent. It is also making sure that you are able to save up for your future. In the long run, this will ensure that you secure your financial stability.
A good way to begin developing this skill is to educate yourself by reading up on relevant materials. Take some time to read books and articles about financial topics that you may be interested in, such as the different types of investments, savings, insurances, and so on. Banking and finance can sometimes come across as intimidating sectors because of all the financial jargon, so it would be a good idea to slowly expose yourself to them and build financial literacy through your reading.
You should also practise proper financial management and budgeting in your day-to-day life. Draft a monthly budget, with all your obligations clearly listed out and how much of your monthly salary will be allocated to each commitment. Make sure that your budget is a realistic and beneficial one. For instance, it would not be advisable to set only 5% of your salary for your student loan and 25% to clothing and entertainment. Once you have everything listed out, make it a habit to track your finances so that you know where your money is going. You can make use of mobile apps like Fast Budget to help you out.
Another good financial management habit to develop from the get-go is the practice of tackling your loans as soon as you can, and of paying them promptly. This is because interest rates can accrue over time, and the longer you ignore your student loan, the more you will have to fork out for the interest rate. Paying off your student loan on time can also contribute to a healthy credit score, which will be beneficial when you apply for other major loans in the future, such as a house mortgage.
Lastly, if you are eager to get your feet wet and fit another commitment into your budget, then it is never too early to consider making some investments. Not only can this help you familiarise yourself with the economic climate of your country and the basics of financial management, but it might also even help you earn some returns. Some good options for fresh graduates are fixed deposits, unit trusts, mutual funds, and investment-linked insurances. These investments typically pose lower risks and can help build your confidence as a budding investor. Eventually, you may consider partaking in more substantial investments, such as stocks and securities.
Financial management does not have to be an intimidating subject; it is all about getting yourself informed. By practising good financial habits at an early age, could help you achieve a better financial status in the future such as achieving financial freedom or retiring early. Get your friends to join in as well; nothing can be more encouraging than surrounding yourself with like-minded people.
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