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4 Ways To Kickstart Your Retirement Savings in Your 20s

If you are fresh out of college with a job, you are one of the lucky ones who has finally “made” it. You have a salary that is expected to pay for all your dreams. But somewhere, there is a risk of losing sight of one favor that you ought to do to yourself – your retirement planning. Kickstarting retirement savings in your 20s is probably the best decision you would take in your life. But even though it is such an important step, most of us graduate quite unprepared for this. We, at CashGyan and CAGRfunds, have always advocated Personal Finance as a mandatory subject that should be taught in colleges but it is not. Fear not! We have listed out three ways you can kickstart your retirement savings in your 20s.

Save 10% of your salary

When you are just starting out, you start out pretty much with a clean slate. Except maybe an educational loan. You are at a stage where you have the luxury of planning for your life’s oncoming big expenses like higher education and wedding. This means you can better plan now for how much you want to save for retirement. It is recommended that you save 10% of your salary exclusively for retirement. Set up auto-transfers to ensure that you don’t forget moving the money every month. This could be a monthly SIP that could earn you higher interest rates or just plain transfer to another account.

Save For Emergency

Apart from retirement, ensure that you are saving separately for an emergency. If you are not saving for an emergency, you are bound to dig into your other savings. Oftentimes, we don’t have exclusive savings for an emergency. It is important that you separate it out to avoid dipping into it for expenses. It is recommended that emergency savings should be three to six months of your salary. Goal-based investing is a smart way to get this started and if you go for short-term plans, the money is accessible immediately when needed.

Invest Now

As it goes in life, the 20s is the best time for taking bigger financial risks as well. So, go ahead and get yourself educated in the fundamentals of investing in the right way. There is also a steadier, lesser risk option of investing in Mutual Funds. Instead of your money lying around in bank accounts earning minimal interest rates, make it work for you. Investing in mutual fund is now convenient, seamless and technology friendly with companies like CAGRfunds. More importantly, it guarantees returns, in the long run, making consistent investment an attractive form of retirement savings.

Start an NPS account

According to pfrda.org, an NPS is an easily accessible, low cost, tax-efficient, flexible and portable retirement savings account. Starting with a minimum annual contribution of INR 6000, the funds contributed by you are safely invested as per the PFRDA investment guidelines by the PFRDA registered Pension Fund Managers (PFM’s). Utmost care is taken to ensure that contributions are not affected by the market fluctuations and the amount is protected. These contributions are locked up until the age of 60 years. Even better, NPS under Section 80CCD (1b) provides a further deduction of INR 50,000 for tax saving purposes.

Achieving financial independence is a remarkable milestone that is worth celebrating. But true financial independence is achieved when you do not have to worry about times when you may not have a steady income. Retirement comes at a delicate age where you would have more than one financial obligations and medical expenses don’t make it any easier. Also, life expectancy has been increasing along with the desire to retire early. This means one is expected to live for 20-30 years without a source of income. So, think out of the box and kickstart your retirement savings in your 20s. Your older self would thank you!

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How Smart Undergrads With New Jobs Are Saving Money To Study Abroad

While a lot of friends around you are satisfied with their new first job, you have your eyes set on something greater. You want to go for post-graduate studies in the best of colleges world wide. You are studying hard for your GRE or GMAT and you know that a score or an interview is not your biggest hurdle to land a seat in the esteemed international university. It is a big, fat wad of cash that would pay for your education. While an education loan is a pretty common option to go for, there are numerous ways to cushion your study abroad by planning in advance.

 1. Budget and stick to it

Budgeting is a sign of a healthy financial lifestyle and should be done irrespective of higher education plans. But if you do have a goal of saving money to study abroad, it is essential that you get on with budgeting. Plan your monthly expense, and then plan your budget around it. You can start planning with a spreadsheet or the numerous apps that are available now. The key of course, is to actually stick with it.

2. Grow your Money through SIPs in Mutual Funds

While we are on the topic of budget, one of the best ways to save some money without worrying about forgetting is setting it up to an auto-save mode. SIPs (Systematic Investment Plans) allows you to invest small monthly payments in mutual funds and these could be set up to deduct from your account directly. The rate of return on mutual funds is much higher than say, recurring deposits and if invested in tax-saving mutual funds (ELSS), then you can even save some on tax filing! Do we have to mention how satisfying it feels to see the money grow? Talk to your trusted financial adviser today.

3. Cook more at home

You probably are thinking when did we switch from saving to kitchen tips but have you ever tracked how much money you spend on eating out? It doesn’t matter whether you eat at a decent restaurant, or at the dhaba wala, the prices have soared significantly thanks to inflation. You can save considerable amount by cooking at home. A side benefit to cooking at home is good practice for your dorm life later when you actually move abroad for your studies. And really how bad could it be?

4. Invest with a goal in mind

Now that you are making some real savings with a good plan, how about investing them in mutual funds? Goal-based investing with mutual funds is a safe way to dip your toes in the world of investing. Plus, you are at a perfect age to get riskier with your money than anyone else older than you! Companies like CAGRfunds regularly help achieve financial goals through expert advice. Technology has made investing an almost hands-free experience.

5. Keep no credit cards

Or maybe just one for emergencies. Credit Cards are notorious for making us feel rich when we are not. The best among us have succumbed to the lure of the shiny new thing at the mall because credit card hai na. It is important to not let the plastic card ruin our lives with unplanned spending. While spending with the credit card doesn’t feel a pinch, the bills would definitely pack a punch!

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How To Plan Finances After Marriage (And Still Love Each Other)

Marriage is a game changer on many levels. New dreams, new goals and new relatives – all shiny and with a bucket load of expectations. Amidst this, you and your spouse will continue to build a new life together, the one filled with love and tenderness. While for some enlightened couples, managing their combined finances is a piece of cake, for a lot of us it is the biggest thorn to be carefully pruned. Financial discussions have often led to higher decibels in the household in newly-wed couples and they continue to be so until sorted out. So, how to plan finances after marriage and still love each other? Here’s how:

 1)Be Honest and Share Your Current Financial Situation

Marriage is a fresh start, or at least could be treated as one. The best way is to share your financials with your spouse with honesty and respect. If you could do this before marriage, it’s better. Often times with arranged marriage, it may not be possible but every effort should be made to get this important discussion started as early as you can. Start talking about your income, debts, and other savings and expense habits.

2)Set Down Goals

Now that you are married, you might have some dreams together – a house, an international vacation, a car, higher education, etc. Each of them needs significant investment that needs to be planned. You also have the inevitable retirement goal as part of your long-term financial planning. Write down all these goals and review them often. Doing this at the beginning of the marriage gives a clear idea of what path to financial management you need to do together for meeting those goals. For example, if you both plan to retire at 40, you have to earn and invest aggressively, save more and spend less now to accomplish that.

 3) Decide on Bank Accounts

You are not required to have a joint account just because you are married. However, one can use a joint account as a common pool, or goal-specific account while maintaining separate accounts for independence. For example, if you plan to buy a house together in five years and decide to save Rs 5000 each every month, then set up a joint account so that both can deposit Rs 5000 in it. It not only acts as a pool both are responsible for but also brings in the team spirit in marriage.

 4) Create a “family” portfolio

`Before marriage, you and your spouse had your own investment portfolio that perfectly met the needs of your goals then. In fact, you might have also invested keeping some long term goals in mind like retirement. Post-wedding is an excellent time to take a look at both of your portfolio and combine them for your money to grow for common goals. An example of a common goal is buying real estate. Combining your portfolios in to a “family” portfolio is important as it will help you plan better and define your appropriate asset allocation. Get in touch with a good financial planner to run an end to end planning exercise and kick start your family investment journey.

 4) Don’t Forget Emergency Fund

No matter what your goals are as a couple, ensure that you set up an emergency fund. An emergency fund is a financial cushion for you and your spouse when something expensive and unexpected strikes like an accident or job loss. Having money to rely on is a great stress relief and will reduce strain on your marriage at particularly bad times. Aim to save at least six months of income in your emergency account.

 5) Plan and Track a Budget

Easier said than done, but planning a budget with your spouse is one of the smartest thing you would do in your marriage. It sets financial behavior expectations from each other while helping you both visualize how it helps you get closer to your goals. Planning a budget is not rocket science. Once a budget is set, track it every day to ensure you are on plan. You can use the numerous apps that are available on your phone to do it seamlessly. Or do the old-fashioned way on paper and pen and spend some quality time away with your spouse from the white screen.

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What To Do With Your First Salary?

First salary is special for everyone. It establishes an individual’s earning footprint and we all only hope that it goes uphill from there. The sense of freedom that comes with a first salary is unparalleled. So, it is only right that we make the best of our first salary. Fun fact: We have too many plans with it! So, if you are feeling like a deer in the headlights, you are not alone. That’s why we have put together some ideas that would make you make the most of your first salary.

 1. Save 20% of Your First Salary (and every salary thereafter!)

First things first. Of all the dreams that you have with your first salary, going broke isn’t one. And the smartest people around you would ensure that their savings account is filling up and zipped tight right from their first salary. But how much to save? Make the math easier and save 20% of your salary. Contact the bank that holds your salary account and set up an automated transfer of 20% of your monthly salary to a separate savings account. As long as you do that, you never have to worry about going bankrupt again.  And oh, if you want to grow it further, try investing in Debt Funds that could provide a relatively low growth but steady enough with lower risk. You can even start small.

2. Buy Something For Your Parents (Or Even Better Give Them The Rest Of The Salary)

Remember all that you have put your parents through growing up? It’s payback time honey! Needless to mention, your parents deserve it. Most parents are fine just knowing that their child has a job now that doesn’t involve being chased by police, but you should know better. They have sacrificed enough for you. Perhaps, you can part with some of your salary to buy some thoughtful gifts for them? And while we are on the topic of parents, if you were day dreaming while they dutifully imparted financial lessons to you, here’s your chance at a refresher.

 3. Pay Off Debt (And Make a Habit of Staying Out Of It)

I know it’s not easy to pay off education loan with your first salary but you can make a start right away. Make your parents proud and start paying it off without asking your Dad to do it. And if you have borrowed money from anyone else, paying them off is the best thing you can do with your first salary. You will be proud, stress-free and guess what, all ready for the best part of earning your first salary. Oh, and did we mention about making a habit of NOT taking any more unnecessary debts?

 4. Spend On Yourself (But Don’t Get Credit Card Debt!)

After all the good deeds you did with your salary, now is the time to finally pay yourself. Remember those million odd dreams you had with your first salary? The ridiculously expensive phone, that designer bag, or that Bose speaker that you probably won’t have time to listen to are still at the closest mall around you. They are waiting to come home with you. Free the reigns and treat yourself. You totally deserve it! Just don’t get into Credit card debt, will ya?