India is incredibly a young country. Average age in India is 28, about 220 million Indians are in the age bracket of 10 to 19, gearing up for higher education. Almost 50% of the Indian population is under the age of 25 and about 10 lakh youth join the workforce every month.

As we speak in terms of numbers, it should be pointed out that the rate of financial literacy in country is less than 10% which includes youth. Hence, though they are earning more than the previous generation, their learnings towards investments is not very clear. Due to lack of financial knowledge they make certain mistakes which can harm them in the long term.

Here are few financial tips for the young who just started earning:

Start investing early

You might think that you don’t earn much that you can save but it is important to make it a habit.  Even if you put 10% of your earnings, it will make a lot of difference in terms of growing your money in the long term. In fact, some financial advisors are of the view, since the responsibilities are a few at this stage, young earners should put more share of their earning in investments.  

Invest more in equities or equity-linked products

This is the age where one can take risks as at this stage, you have ample time to recover from any losses. As you know, equities give best return in the long run. Therefore, take some risk and invest more in equity or equity instruments.

As per thumb rule, 100- your age should be invested in equities. So, if you are 25 years old then 75% of your investments should be in equities. Though you can invest more/less in equities as per your risk tolerance and financial situation.

Do not ignore debt instruments

At this stage the proportion of your investments in debt should be less as compared to equities but do not ignore this asset class. Debt instruments like FD’s, PPF acts as a hedge during trouble times when stock market fail to give you good returns. 

Build an emergency fund

This fund comes into use when you have pay for any unforeseen or unplanned event.  At least, six months of expenses should be set aside as contingency/emergency fund.  This fund is an absolute essential for all specially for the people who work as freelancers or don’t have a regular, fixed income.

Insurance is important

Be it life or health, never avoid insurance. It is not an investment but acts as a shield during the rainy days. Also, most insurance products are tax efficient but avoid ULIPs.

Investing for retirement goal

At this stage, retirement seems like a far away reality. But as millennials, many of us want to retire early and since most financial  products do not beat inflation, we might run out of money earlier than we think. 

Only way to grow money exponentially faster than you think is to start saving & investing early even if it is in small amount and let the power of compounding do all the magic. 

Goal based investments

You might already have started investing but can’t see your money move in the right direction, which is because you may lagging in planning.

Goal based investing is the most efficient way of financial planning. Even without putting much you can sail through every financial roadblocks through this approach.

Get a financial planner

Instead of scouting for advice at the wrong places get a financial advisor. They can make your every penny work.  

Take responsibility

If you live alone, stop asking for money to meet ends.  And if you are staying with you parents start contributing financially even if it is in small ways.  It’s high time for you to start taking responsibility.