4 Money Management Tips For Those With New Jobs

“Vishal boy! Those days were amazing!” he said.

My friend and I were reminiscing our younger days. “We had all the time, but no money,” he said. “I wish I could time travel and give our younger selves some money to enjoy more. We have money today, but no time.”

We laughed.

“We have money today, but what about a decade from now, when bigger responsibilities will demand 80 percent of our incomes?” I asked.

“I haven’t thought about that yet. Let’s cross the bridge when we come to it,” he said.

I hope it’s not too late for him when he reaches the bridge. Will it be the same for you?

Today, you’re starry eyed. You’ve got a good job with good money. You’re all set to climb the corporate ladder. Movies, dining, ‘wanderlust’-ing… after all, you only live once.

But while you overdose on fun now, are you prepared to lose it all when responsibilities increase? Or will you work thrice as hard and neglect your children (when you have them) just to earn enough to enjoy vacations and premium seats at first screenings of flop movies? After retirement, will you be at the mercy of your children for basic amenities like food, clothing, shelter and WiFi?

I hate to be the harbinger of bad news. But your current lifestyle will land you in bucket loads of trouble within a decade. You’ll always be short of money to do the things you enjoy, no matter how much your job pays you. You’ll keep making ‘sacrifices’, and complain that life isn’t fair.

But there is another way. One where you can have enough money to do what you like. You can make people you love live luxuriously without sacrificing too much along the way. You can be free of money worries for the rest of your life. All you have to do is something your peers don’t.

Behave responsibly with your money.

You’ve heard it from your parents and elders, right? “Be responsible with money.” But what does it mean? And how should you do it?

Below are 4 tips to handle your money wisely, and reap astonishing returns in the coming years.

Don’t Spend First

The difference between the rich and others is that the rich invest first and spend the rest. The others spend first and invest the rest. Money grows only when you make it work for you. It’s similar to a muscle which strengthens when you work out, and becomes weak if you eat more junk food and exercise less.

You’re young now, free from responsibilities like household expenses, children and more. Sow the seeds for a secure future. Develop a habit to invest 20 percent of your income in a Mutual Fund or similar investment vehicle. How will that yield huge returns? Read on.

Remember the Magical Law

Warren Buffett made 90 percent of his income after the age of 50, because of one magical money law – compounding.

Here’s how it works. If you invest only ₹5,000 a month in a scheme which offers 12 percent returns annually, your money grows by ₹7,200 at the end of the first year. Not a big amount, right? But the next year, the principle amount on which you get returns is ₹1,27,200 (₹60,000 + ₹67,200), which comes to ₹15,264. Thus, in 2 years, you’ve invested ₹1,20,000 and earned ₹22,464. That’s 18 percent growth, higher than any FD or savings account can offer!

But here’s the beauty. If you continue investing in this scheme for 5 years, you’ll invest ₹3,00,000. But your money will grow to ₹4,26,911, an increase of 42 percent! Do this for 10 years, and your ₹6,00,000 becomes ₹11,79,275, a whopping 96 percent growth!

All this for the discipline of just investing ₹5,000 a month, even when your salary doubles or trebles.

Invest in Skills

The corporate world no longer wants people who do what as they’re told. Plus, the abundance of manpower has caused a plateau in salaries for entry level jobs, even for MBAs.

Hence, don’t depend only on your job to earn a living. Invest in skills you can monetize. Enjoy drawing or writing? Learn graphics designing or content writing to pick up freelance gigs on the side. Enjoy playing music? Learn an instrument and start playing for a band, or coaching classes for others to learn the same.

This won’t just give you an alternate source of income. It will also divert your mind from frustrating events at work. It will ensure you’re not at the mercy of a horrible boss just to make ends meet. It will give you freedom to do what you love. Who knows, you could soon become an entrepreneur!

Value Time More

Money might seem like the most important currency in your life now. But the most valuable currency in the world is not money. It’s time. See, you can use time to make more money. But you can’t buy time even if you have all the money in the world.

The rich invest more in time. As a result, they make more money. It’s not the other way round. Be highly productive and do meaningful work instead of feeling like you’re running in circles. Always aim to create more time, so that you can focus on doing more constructive activities. They will enable you to make more money for less effort.

Life is long if you know how to live it. The fear of missing out may direct you to spend your money in enjoying material benefits. But if you can regulate your desire to splurge right now, you’ll reap rich rewards later. You’ll live on your own terms, leisurely and content. Your own house, your own car, a vacation wherever you want to go… you can have it all. You’ll never be at the mercy of others.

All you have to do is follow the above mentioned points with some self-discipline. After all, you only live once, right? Make the most of it.

Vishal is the founder of Aryatra, a venture to help individuals improve their productivity and live more fulfilled lives. He also is a digital marketing consultant helping businesses generate revenue from their online presence.