I landed my first job last year . I led a cost conscious life in Grad School with a $600 income to pay for rent ,utilities and groceries . A full time job encouraged me to spend more .Few months into my job I was unable to track my expenditure and had huge credit card debts.
When my finance went messy, I had to come up with a strategy to combat my impulsive shopping nature .First of the few things I needed to do was
Track my expenses
Budget
Reduce expenditure one category at a time.
I cancelled all additional credit cards and stuck to one major card for all my expenses bought Microsoft Money and linked my credit card and checking account to it and tracked my monthly expenses . I budgeted all categories of my expenditure and decided to monitor my expenses Vs Budget every month.
This leads us to the first step towards investment.
Rule 1 :Save as much as you spend ( If you earn $3000 a month say $1000 goes towards your Rent + Car loan + Insurance , the remaining 2000$ needs to be split for expenditure and savings $1000 a piece).
2. Aggressively transferring money to a savings account (ING Direct 3.4% APR ) helps you save money.
The next few basic steps for investing are
3. Contribute the amount that your company matches into 401K every year .
4.If your company offers ESPP (Employee Stock Purchase plan ) use the full limit of this plan.
5.Every Investment plan should have a long term goal and a short term goal .Typical Short term goals are Investing money in the order of 5k -10k in mutual funds . Long term goal is to buy a house in 2-3 years with around 15% down payment.
Stocks , Mutual funds are good investments but one needs to collect a lot of data on those before attempting to buy .Investing Bible is a good book to get a heads start.Create a portfolio online and monitor it constantly , try to understand the factors that affect a stock price.
My friend Ashok has a website PROCUE which has lot of information in the finance section.He happens to be the source of all information that I provided in this post.
4 comments:
Sorry to be Negative, We tried to budget and track expenses for couple of months; they were the most depressing days of our lives thinking about how much we spend without much saving and that we have no control over it.
What we realized through this excercise:
- Earn more than you can spend
- Life is short, enjoy till it lasts
- Shit happens and it always happens to you
It is surprising and nice that young men of this generation talk about budgeting and saving!!
hey when did u bcom such a money saver ... guess u mite already bagged an financial expert job back home at ur dadz place :D
i cudnt agree with the essp (stock plan) part da... not all companies stock are worth buying .better bet cud b investing on ur own into mutual funds (better option than incvesting in stock eith no or less idea )
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