5 Important habits to develop in 20s for a wealthy future

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5 Important habits to develop in 20s for a wealthy future

  • Highlights

  • Capitalizing on financial independence during your 20s

  • Avoid borrowing money & track expenses with an app

  • Be accountable for the money you lend & spend

Financial freedom comes with behaving responsibly with money. When you are in your 20’s, and working at your first job, the thrill of wanting to spend what you earn is quite natural. But, this also the right age to start managing your money smartly. Prepare for a secure future by starting to save and invest carefully.

Here are some smart habits to develop to carve a path towards building your wealth.

1. Avoid the temptation to borrow money

· Borrowing is a habit that can grow into an addiction if it is not kept in check. When you’re in your twenties, you need to stop using your family and friends as a fall-back for monetary needs.

· Say no to casual borrowing, which due to its lack of interest and late fee penalty, makes it harder for you to gain financial independence.
· True financial independence is only achieved when you stop borrowing and learn to manage your expenses based on the pay check that you receive.

2. Use an app to track your expenses
· Technology has made it fairly easy for you to keep a tab on finances. You can use a app like Walnut or mTrackr to draw up a monthly budget. This will help you get an overall view of your income and you can adjust your expenses depending on the figures.
· Track your spending behavior to cut down on unnecessary expenses. Effective money management via an app will also ensure that you don’t overextend your finances.
· Having an auto payment system set for your house bills like rent and electricity is a good way to keep yourself from forgetting to make important payments. The auto-reminder option on the app will also help you save before you spend.

3. Don’t spend all the money you earn
· The best way to ensure you are not spending everything you earn is to invest. You can choose fixed deposits or SIPs to invest slowly yet steadily and gain returns.
· Coming up with plans for your future, like buying a house in your thirties or purchasing a vehicle for yourself in 5 years is a good way to ensure that your savings become more focused.

4) Understand how to save tax
Not utilizing every tax-saving option available to you may lead to loss of thousands of rupees per year. This is money that could have been invested systematically towards the achievement of life goals.
In 2018, make a resolution to stay updated on all the taxation norms, specifically those that affect your savings. For example, if you invest in Equity Linked Saving Schemes, you can create long-term wealth and save tax under Section 80C. There are many such options to explore, most of which offer tax benefits.

Additional Read: 5 Smart Financial Steps Young Adults Should Take In 2018

5) Invest in fixed deposits
Fixed deposits (FDs) deserve to be a part of every investor’s portfolio. They offer a great combination of safety, stability, and good returns. Fixed deposit interest rates are much higher than savings account interest rates, which usually provide just 4% interest on your money.
FDs provide a flexible tenor up to 60 months, and an online FD calculator for precise and easy estimation of returns. You can also choose between a cumulative or non-cumulative fixed deposit, depending on whether you require periodic returns. A fixed deposit is an excellent all-round option for all types of investors.

Additional Read: How To Manage Your Money More Effectively?

Since the year end is a time for reflection, take some time to welcome 2018 with a well-defined financial plan. As a part of your New Year’s resolution, be sure to check whether your savings are at par with the investment options you have considered. If not, it may be a good idea to make certain changes in your investment portfolio.

Reason to invest in FD

These 5 habits will go a long way to ensure that you are not only financially self-sufficient in your 20’s, but also at the top of the ladder throughout your life.

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