Whether you believe it or not, you are never too young to start saving. As a matter of fact, the whole idea of getting your child a piggy bank is to instil in him the idea of savings from the very time he starts identifying the need of using money to buy things that he wants.
It is true that savings don’t come naturally to most people because the idea of earning is to be able to spend. However, if from a very young age, an individual learns the importance of savings, there can be nothing that can stop him from enjoying the fruits of his efforts at the time when he loses the physical ability to earn.
Introducing the importance of saving to the youth
It wouldn’t be wrong to state that the youth comprise the majority of the Indian population and that being said, there has been an increasing inclination of the working class to shift towards the youth.
With more and more young graduates finding their dream jobs too early in their lives, the youth of today is enjoying better earnings in their initial years of career. This has relatively reduced the real value of money in their eyes and typically, an average youngster ends up spending all his earnings as they feel their needs are met.
It is, hence, extremely important to introduce the idea of savings in young minds by inculcating in them the uncertainty of jobs and health.
The youth of today have to understand that people who start saving at a young age have an enormous advantage over others as their life moves on.
How can you start your savings when you are young?
Not every person wants to work till he is reaches the age of 60. Yet, the fact remains that most people continue working hard in their old age simply because they cannot afford to not work.
While it may seem difficult, the idea of retiring young and leading a happy and peaceful old age isn’t something that is absolutely impossible.
You can follow your dreams of retiring young with some perseverance and with persistence on discipline in leading a balanced life. Here are some feasible, doable steps that you can start immediately if you are in your early 20s so that you enjoy not just now but also your late sixties.
Step 1: Decisions, decisions and decisions
Saving money for the future is more about some right decisions than just putting money aside. The fact is that your savings should not stagnate, but grow too. This implies you need to figure out a lot about your career graph and your investment tools. Here are some important decisions that will change the course of your investments.
a. How young is really young?
Among the various decisions that you will take that will have a big impact on your life’s earnings and savings, the first most important decision is to understand how young is really young on when you want to retire. Here, you need to be very practical with your estimation.
If you are 27 and do not have any net worth to yourself, you cannot imagine you could retire when you are 30. The younger you want to retire, the younger you would need to start your savings because that’s what you are going to rely on when you do stop working.
b. Manage your finances right
Before you start planning your savings and which investment tools are ideal for you, you need to understand how you truly manage your money. There are several people who may have win lotteries, but lead miserably poor lives.
It all goes down to managing your money not how much you earn when you are looking at learning how to start saving young. Work on a budget and be very disciplined with your spending – these are the basic things that you need to incorporate in order to start savings young.
c. Get yourself the right educational qualifications
Quality education always goes a long way in ensuring that you have a more reliable future ahead. When you have a college degree, you are in a better position to decide your career moves and take positive steps towards creating a brighter future.
Young individuals should consider their education as an investment in their future and work towards utilizing their education in their professional growth. With the right education comes the right decision-making skills that can help young individuals to save their earnings for their brighter future.
d. Save early for a happy and content retirement
There is a very simple idea behind your investments – the earlier you start; the sooner you can stop working. Inculcate the habit to save and save regularly. Consider easy investment tools such as the SIP mutual funds that encourage regular savings.
When you get in the habit of saving regularly, you will discipline yourself in your financial spending habits and carve for yourself a financially secure future.
Step 2: It is not about saving but saving right!
While savings as a habit needs to be developed, in order to get the right benefit out of it, you need to learn how to start saving right. Here are some things young savers should keep in mind.
a. Get-rich-quick scams are just that, scams!
Just like there is no shortcut to success, there is no shortcut to a savings plan. Don’t get fooled by easy money scams as there is nothing as easy money. It is for nothing that people refer to their savings as hard-earned money because it is really not an easy task to accumulate a life’s savings. When you start young, you are likely to do much better.
b. Purchase appreciating assets
The youth are typically driven by their fantasies. The young working professionals start making good money in the initial years of professional life and the next thing you find then doing is buying expensive cars and other such assets that tend to lose their value as time passes.
These are known as depreciating assets. For those who want to start savings at a young age, investment in appreciating assets such as real estate and stocks is a more sensible recommendation.
c. Work at creating a passive income source
There is nothing as wonderful as having a passive source of income to cover all your bills. You can invest in a business or have your own blog with advertisements that will generate income. Evaluate your interests and identify options that you can monetize.
When you start young, you will have a long time on hand to grow your passive income and this will eventually contribute to your plan on savings.
Using these measures, you can begin saving from a young age. Remember, it all begins with the piggy bank and continues into early and middle adulthood. Those are the years you should be saving the most so that later in life, you have built a nice little nest egg to retire without worries.