Year was 2008 and I was in my final year of my MBA finance. Quite an exciting time. Particularly for two reasons.
- It was my final year of studying! I thought this was the last exam for which i have to study. No studies now, ever again!!! (i was so wrong)
- I will finally start working. Earn money, spend on things I want to buy. There was a list of things I wanted to do but couldn’t because of financial constraints. I could do all of those things now without any restriction (again wrong)
It is very exciting to finally spread your wings and fly in the direction that you want. I was only one of the lucky few who got placement from the college campus.
It was a decent role with a decent pay. I still remember the day I got my first salary. I was thrilled. Amount was so much bigger than the pocket money I used to get. I wanted to buy a new phone, eat tons of junk food, go out with friends to places I couldn’t afford.
I spent most of my initial months salary on things I was not able to do or afford all my life. But fortunately, I lived in a time when things were still controlled. It feels like ages but facebook was very new and i couldn’t compare my lifestyle with my peers.
A simple touch screen phone and a burger at McDonalds could also keep me satisfied.
I see now college freshers spending money on cars, international vacation moment they are out of college
YOLO – You only live Once – this is the motto of many. Spending money on your desires is ok. Especially if you have studied hard to get yourself a good job- you deserve to pamper yourself.
However, you should take care of these things
Get rid of student loan as soon as possible
In our times fees for professional studies were not that high (relatively). Times have changed and getting an MBA from a good institute costs more than 10 Lakh rupees.
So if you have taken a student loan for your higher studies – First thing first – get rid of your student loan.
Set yourself a target but it shouldn’t go beyond 3 to 4 years.Student loans have higher interest rates which will dent your capability to save and invest for your future.
Further as you have to keep yourself in good financial condition for additional responsibility in life as you grow old.
Bad Debts
Say no to bad debt.
What is bad debt- any loan that is not taken to build an asset. For example student loans, Home loans can be good debt as you build your career, asset using it.
Personal loans, Bank overdraft facilities are bad debts. Especially when they are used to buy things which are not required. For example, taking a personal loan to go on a foreign vacation is a very bad idea.
Personal loans have the highest interest rate of any kind of loan. They are toxic and should be avoided at all costs.
Pay credit card in full
Moment you are employed with a reputable company you will be chased to get a credit card. . Credit cards are immensely beneficial but can also lead to overspending and bad financial discipline.
I have seen many of my friends especially during their initial part of their career using credit cards as a loan facility.
They did not pay the credit card bill in full and were paying an interest rate of 36 % per annum. Many failed to pay credit card bills even when they had money in the bank.
It is an expensive mistake to make.
Zero Cost EMI’s are a trap
Zero cost EMI has been a wonderful innovation in the financial world. It gives you the benefit of making bigger purchases without paying interest.
This has given rise to unnecessary spending especially among the youth.
Many think ‘I can buy a 1,00,000 Rupees iPhone and pay monthly interest free EMI for next 2 years so I can afford it’.
Even though you don’t pay interest, you still are overspending.
Avoid International Vacations
Instagram and Facebook have made it fashionable to go on international vacations. There is nothing wrong with going on vacation but you have to ensure you can afford one.
I have seen a lot of cases where a single foreign trip is worth their half year salary.
India is a beautiful country. Why not try visiting these beautiful places in India first. You can plan your International trips when you can easily afford them later in your career.
Start investing now
Not many start their investment with their first salary. Pay yourself first is a Moto college freshers should live with. Earlier you invest the better it is to achieve financial freedom in the later part of your career.
Avoid Investment cum Insurance products
Strictly avoid any insurance cum investment products. Such products will create a serious dent on returns of your Investments. If approached by your friend or relative to buy any LIC policy or any such product, just say no.
Get financial literacy.
Invest some time and learn about different investment products. Learn about Personal Finance as much as you can. This will help you in avoiding traps that are detrimental to your financial health.
Initial year will set the tone of your financial disciple for years to come. Having the right mindset is essential at the start of your career. Setup goals for yourself and work towards them. But also ensure you enjoy these initial years. Fun doesn’t last long especially as you grow up in your career.
