Finally, you have been able to convince your parents to let you move to an alien city! Soon a new world will be opening for you
A world with a lot of space, a lot of freedom and a world where you are going to discover yourself and prove your worth to the rest of the world! But nothing is absolute in this world!
With freedom, comes responsibility. A responsibility towards yourself and your loved ones!
You will get a thousand and one advices from your parents, relatives and well wisher about safety, the challenges you will face, and understanding and dealing with the greys of life!
Among all these sessions, there is one that is although very important, but is not taken very seriously by various advisors:
Money Management
Tasks like house hunting, paying rent on time, managing daily expenses, watching movies, travelling to work, spending on food and after all this (if you are moving out for a job) sending some money back home can take a toll on your finances.
Experts recommend a simple process of backward calculation for managing finances. It is only after spending money for living expenses, investment and savings, should you think of buying those fancy makeup kits and mobile phones. So first, allocate money for the must-dos and then spend whatever you are left with.
Some of the unavoidable expenses are:
Rent
In a new city, it may be very difficult to find an affordable place to live in. Generally, it is safest and most economical to live as paying guests or share a rented apartment with other women. Make sure that not more than 20-25% of your salary is spent towards rent of the house.
Try and share your house with a few more women so that the monthly rent can also be shared. You also have an option of staying as a paying guest. Here you may not have to pay deposit and the monthly rent is also less.
Miscellaneous Expenses
You would need to set aside at least 20-25% for your daily expenditure like food, travelling, entertainment and so on. Most of us spend our money on little things, which we do not remember. Try to get a grip on your expenses, which may help you to be left with a good amount at the end of the month.
Savings and Investments
After all that you have spent for necessities, you need to try hard and save some amount at the end of the month.
According to Financial Planner Mukesh Vora,"Although, savings may differ from person to person, you may try and at least save 20-25% of your income,". You can then use these savings in various ways like for buying a home or sending it back home.
Like most of the experts say, you must start investing from the day you start earning; it is time that you take this seriously.
Mediclaim and Emergency Corpus
For living alone in a city with a very limited financial support system, it is always advisable to have a reasonable part of your income for emergencies. And this is not to be clubbed with your savings.
You can start by setting aside 5-10% of your monthly salary to build this emergency corpus.
To make money management easier, you should keep your savings, investment and living expenses aside in the beginning of the month and plan out your budget with rest of the money. Penning down all your expenses will help you to know and get a grip on the various miscellaneous expenses.
Once you have a good grip on your finances, you may be left with a lot of money after allocating for the above. That money can help you fulfil some fantasies like buying a simmering outfit or the latest mobile phone. For instance, by cutting down on some daily travel expenses, you could bring down that allocation from 20-25% to 15-20%. That will give you an extra 5% to buy what you like! Isnt that amazing?
Referencing: www.moneycontrol.com
