At 24, Ananya landed her dream job in Mumbai, earning a handsome salary and enjoying life to the fullest. Weekends were reserved for brunches, online shopping sprees, and the occasional impulse trip to Goa. She felt invincible—until a sudden health emergency left her scrambling for funds. Realising she had no savings, investments, or even health insurance, she was forced to rely on her parents for help. This financial wake-up call made Ananya rethink her money habits and prompted her to take charge of her finances.
Ananya’s story isn’t unique. Laying a solid financial foundation is crucial for all young women to achieve their long-term goals.
Women, on average, live longer than men and therefore need to save more for retirement. Despite this, a 2023 report from the World Economic Forum highlights that globally, women still earn less than men, with an even wider gap for women of colour. It’s time to take charge of your financial future and bridge this gap.
To help you get started, Chartered Accountant Abhay Asknani offers these actionable steps for financial success in your twenties:
Here are five actionable financial tips to get the ball rolling:
1. Maximise Employer Benefits: Many companies provide perks like health insurance, Employee Provident Fund (EPF) contributions, or even wellness reimbursements. ’Take full advantage of these’, advises Abhay. For instance, check if your employer offers a matching EPF contribution – not utilising this is like leaving free money on the table.
Additionally, look out for other benefits such as education reimbursements or subsidised gym memberships. These can save money while contributing to personal growth or well-being.
2. Build An Emergency Fund: An emergency fund is your safety net for unexpected expenses, such as medical emergencies or sudden job loss. Aim to save at least three to six months' worth living expenses. ’Set up a separate high-yield savings account for this,’ recommends Abhay. ’The goal is to access funds quickly without disturbing your regular savings.’
3. Budget Smartly Without Sacrificing Joy: Budgeting doesn’t mean cutting out all the fun. There are Apps that can help track your spending. ’Identify areas where you can trim costs, like unused subscriptions,’ suggests Abhay.
Simultaneously, allocate funds towards things that bring you happiness, such as dining out or short trips. ’Balance is key. If you’re too restrictive, you might abandon your financial plan altogether,’ he adds.
4. Leverage Tax Benefits: Tax planning is often overlooked by young professionals. ’Many women miss out on tax-saving opportunities," notes Abhay. Deductions under Section 80C, such as EPF, Public Provident Fund (PPF), or tax-saving Fixed Deposits, can lower your taxable income significantly.
Additionally, you can claim deductions for tuition fees, home loan interest, or health insurance premiums under Section 80D. ’Effective tax planning can free up funds to reinvest or save,’ Abhay advises.
5. Tackle Debt While Investing: Should you clear debts first or start investing? ’You can do both,’ says Abhay. Prioritise paying off high-interest debts, like credit card balances, while making small but consistent investments in an SIP (Systematic Investment Plan).
Starting early with options like National Pension System (NPS) can also strengthen your retirement corpus. ’The earlier you invest, the more time your money has to grow,’ explains Abhay.
Managing finances in your twenties can seem daunting, but it’s the ideal time to build a strong foundation. Start with small steps. Don’t shy away from investing, even if it’s a modest amount.
As Abhay wisely points out, ’Financial planning isn’t just about numbers; it’s about achieving the peace of mind that comes from knowing you’re prepared for whatever life throws your way.’
