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The unanswered question of every student in the modern generation is, “How to be financially independent as a student?” The current generation is struggling with monetary challenges, especially in managing money and investing.
One of the main reasons for this is individuals’ lack of financial education. Students often become prey to scams executed by fraudsters, which are highly popular due to the absence of basic knowledge of finance.
All this can be prevented right now with proper guidance and strategies. Even though you may not have the basic knowledge to understand financial dealings, it is never too late to learn.
If you are struggling to generate a profitable income, then feel free to learn about how to make income while pursuing school or college. Becoming financially independent at a young age requires financial literacy and money-management skills.
This guide will cover all the required topics regarding financial independence, such as budgeting, savings, investing and earning—securing the risks of financial outbursts.
If you are struggling with how to meet your financial requirements, then do not worry; Finquo Versity has specially curated a comprehensive guide to attaining financial stability at a young age.
Becoming financially independent is indeed a challenging yet rewarding journey that demands dedication and willpower.
In a world overflowing with enticing commodities and persuasive marketing, resisting the urge to spend unnecessarily can be tough. When parents are struggling hard to provide for education, it feels irresponsible to ask for further financial needs from them.
As individuals, it is your responsibility to manage your financial needs yourself. Regulating and monitoring financial decisions consistently will ensure financial freedom.
However, financial independence starts with mindful spending, budgeting, and saving. It involves setting clear financial goals, educating oneself about personal finance, and possibly investing wisely.
Additionally, it requires a strong commitment to living within or below one’s means, avoiding debt, and consistently building an emergency fund.
By prioritising long-term financial stability over short-term gratification, anyone can take control of their finances and work towards a future of financial independence. Achieving financial independence begins with small steps.
Achieving financial freedom as a student involves taking control of your money. With Finquo Versity, you can learn about everything you need to know about financial freedom on our mobile/web applications. Right now, let’s go through this comprehensive guide to achieving financial freedom.
The first step to becoming financially independent is to understand the importance of becoming financially independent. Understanding the financial situation will help to navigate the course of action. During our 20s, we may not excel at dealing with financial situations.
However, it is our responsibility to gain the required financial education to overcome the struggles. Therefore, understanding the importance of becoming financially independent is crucial throughout the journey.
Gaining financial literacy is crucial for making financial decisions. Learning about money management at an early age in your career can improve your ability to deal with financial challenges.
Seek opportunities by enrolling in certificate courses that can not only enhance your money-developing skills but also navigate your financial opportunities. Learning the basics of budgeting, saving, investing, and debt management will help you build a solid financial situation.
In addition, staying up-to-date with financial trends and strategies ensures you seize better opportunities and avoid pitfalls. Investing your time in learning economics is an effective way to improve your financial knowledge, ensuring that you make informed financial decisions.
Creating financial goals is crucial for meeting financial stability. List out important things you need to clear out first, such as loans, mortgages, or any other pending amount to pay. Then, build a financial plan with clear timelines and amounts.
Set deadlines to pay the rent and debts so that you do not get behind on it. Define and elaborate on all the goals you need to achieve. Prioritise the financial goals by paying on time. Regularly adjust your timeline and goals as per your financial situation.
In this way, the gradual completion of each financial goal can pave the way to gaining financial sustainability.
Planning a budget based on the financial situation and earnings is essential to navigating your expenditures. A detailed budget can help you to easily track and record your expenses. Moreover, it will help to spend your money wisely.
Regulate the money flow to the needs according to the financial situation. Regularly monitor and analyse the budget every month to evaluate the expenditures. Adjust as per your financial situation.
This comprehensive approach will help to understand where the money flows as well as help to reduce unwanted expenses and utilise those funds for savings or investments.
Generating a source of income is important in sorting financial struggles. Having a source of income is like having wheels to attain financial stability. The potential earnings can be used to pay off financial goals. Money-making opportunities are available in plenty. The best-suited form of earning as a student is by doing part-time jobs, trading, dropshipping, or social media influencer.
Becoming a gig worker is another option for earning. Gig working is a nonstandard work arrangement that includes freelancing, self-employment, or temporary project work. Becoming a gig worker has the benefit of making enough money as well as gaining experience in the respective field of work.
At the same time, do not put yourself under too much pressure to earn from these passive sources. Focusing on the studies should be prioritised, as it could provide better career options. Graduating and getting a good-paying job can smoothen your financial struggles.
Once you begin generating income, it is important to monitor your expenditures. Spend wisely on things that are prioritised for your needs.
Practice living a healthy lifestyle by avoiding the consumption of alcohol and smoking cigarettes, and make sure to cut off unwanted expenses.
Cultivating the habit of saving the remaining portion of your budget can help you boost your financial stability and may not put you at financial risk in the future.
Disciplined spending and consistent saving are the keys to ideal saving.
Once you start earning regularly, prioritise paying off your debts and mortgages. Record and analyse the dues of all the loans and rents. Start by paying off the first one-reach due date to prevent a penalty.
Focusing on paying off before the due date to maintain financial goals. Monitor the budget and channel the additional funds, if any, to pay off the dues completely for once and all.
This will help you to source the incoming money towards investments, savings, or others instead of paying debts.
Monitor and regulate as per the financial plan. Closing the debts as soon as possible to come out of the credit trap. Make sensible decisions to bolster your financial career.
Investing options for students helps to build a source of income. There are several investment options available globally.
Gaining exposure to the stock market will further help to bolster knowledge on trading choices. Seeking guidance from platforms like Finquo Versity may help to improve knowledge.
Another option is micro-investing, which includes investing a small amount of money in reliable stocks. Researching thoroughly before investing will help identify the potential chances. Analysing the stocks will help secure the risks of the investment.
Furthermore, long-term investment is another great option. Investing in the long term has its own greater benefits. Investing for the long term often reduces the potential risk by balancing out the fluctuation in prices over the long haul.
One of the many advantages of investing long-term is the huge interest generated over a period of time. It provides numerous benefits that significantly improve financial security and wealth accumulation.
Student discounts are beneficial to reducing expenses. Numerous organisations from education, restaurants, transportation, entertainment, and others are offering coupons, vouchers, and discounts in favour of students.
Getting a discount on these daily necessities can help save the remaining budget. Moreover, academic software tools such as Microsoft and Adobe often come with slashed prices for students.
These discounts allow students to purchase these tools for affordable prices. Availing these student discounts will help to lessen the expenses and save more money. These offer benefits for students to avail quality products at low prices.
Developing effective time management skills to balance work and studies. Use the necessary tools to list out your schedule and prioritise your tasks. Establish boundaries between work and study.
Try to differentiate between work and study times. Prevent burnout and exhaustion from an overload of stress. Take advantage of tutoring services, study groups, and career counselling while managing work commitments to excel academically.
In addition to all these, avoid overspending or try not to live beyond your financial capabilities by spending more than you need. Always seek financial guidance for better clarity. Focus on your career more to ensure a better source of income.
Regularly practising and transforming these actions as a habit can be permanently incorporated into your financial lifestyle.
Consistency is the key to achieving long-term benefits. Blending these financial strategies into your daily life can, respectively, have a longer and more powerful impact on your financial security in the future.
These are some of the strategies that will help to attain financial stability at a young age.
As you have now reached the end of this, ‘How do I become financially independent as a student?’ Let us tell you that achieving financial stability as a student requires discipline, planning, and making informed decisions.
First and foremost, creating a budget is essential. This means tracking your income, whether from part-time jobs, scholarships, or allowances, and ensuring it covers your expenses, including tuition, books, rent, and daily necessities. It’s also crucial to be informed about financial aid options, student discounts, and low-interest loan opportunities.
By avoiding unnecessary debt and making conscious spending choices, students can lay the foundation for a stable financial future.
Ibnujala is a seasoned financial expert of Indian and Middle Eastern markets with an experience of over 15 years. His deep interest in neuroscience fuels his research in seamlessly blending finance and science. With a bachelor’s degree in law from India and an MBA from the UK, his diverse academic background makes him an expert in financial management and mentorship. In addition to being a seasoned investor and serial entrepreneur, he currently serves as the CEO of Finquo Versity.
Disclaimer: The information provided in this blog is for educational and informational purposes only and should not be considered as financial or investment advice. Stock market investments are subject to market risks, and past performance is not indicative of future results. Readers are encouraged to do their own research and consult with a licensed financial advisor before making any investment decisions. The author and publisher are not liable for any financial losses or damages incurred from following the information provided in this blog.
Uma Nair
Reviewed by Ibnujala
How important is money in an individual’s life? You must have heard people say that money can’t buy happiness or that money isn’t everything. If that’s how it is, why are almost all of our day-to-day activities in one way or another connected to money?
Zig Ziglar, a famous American author, once said, “Money isn’t everything, but it ranks right up there with oxygen.” Whether it’s the meals we eat, the clothes we wear, or the life and work choices we make, money influences nearly every aspect of our lives in subtle but impactful ways.
So, why is money important in life? Let us have a detailed discussion on it. Moreover, this blog will also guide you through the true value of money and how to use and save it. We will also discuss the emotional side of money and how it affects daily lives. So, let’s get into the depths of money.
Beyond materialism, money has an essence and value. Although material possessions are unavoidable, money offers a lot more value, like financial independence, peace of mind, the pursuit of dreams, and quality of life. Let us explore them in this section.
Rather than a goal, money needs to be a tool that guides you through your day-to-day activities. As money has the power to influence the mental peace and well-being of individuals, it’s important that you know how to handle it properly.
Instead of making money and using it to satisfy greed, effective utilisation and saving of money offer more financial freedom and mental peace. With proper savings to meet unexpected expenses and emergencies comes financial security, offering an improved quality of life.
“Money is better than poverty, if only for financial reasons.” – Woody Allen, American filmmaker and actor.
As mentioned earlier, money plays a vital role in meeting our basic needs. Whether it be food, shelter, healthcare access, or basic education, money is important in all these cases. Without sufficient money, even the most basic needs feel like a burden. So, money ensures the basic needs of individuals.
The same is the case with emergencies. Life being so unpredictable, people can encounter emergencies like health issues, job loss, or a family emergency, which can put them in a crisis. However, having money can significantly ease the burden of such situations. So, money not only buys things but also offers emotional stability and peace.
In the previous section, we talked about the basic needs that money fulfils. But is life only about basic needs? Money is not only for basic needs and survival, but it is also for growth and personal development.
Once the basic needs are met, you can use your money in various investments like equity funds, FDs, or other deposits. It can also be used to sign up for a course, get assistance from a coach, buy books, travel, or go for therapy. These are investments that help improve productivity, enhance happiness, and support long-term well-being.
As Henry David Thoreau, a famous American essayist, poet, and philosopher, said, “Wealth is the ability to fully experience life.” That couldn’t be more accurate, right? Although we talk about financial freedom, money also offers more. With sufficient savings and wealth, you will have the power to decide how to live your life.
You can take a break from your career, spend more time with family, go on a trip, or relocate to a new place without panicking over your next payday. Moreover, you will gain the ability to support friends and family with reduced financial stress. So, isn’t it one of the greatest positives of money to gain control over time and life?
Money helps you engage in philanthropic activities and donate to charitable and good causes. These donations help support communities and make meaningful changes in society. So, with these activities, money transcends far beyond materialism.
Money serves as the driving force that fuels our chase for dreams and passions. Although it’s often said that money is not everything, it does help gain access to resources that help you secure your dream job, take a trip to your favourite destination, or begin a business of your choice.
However, even though money opens doors to your dreams, you also need to seize the right opportunity and have sheer determination to convert those dreams into reality.
Financial stability is very essential, isn’t it? Is it just about keeping your bills and payments? No, with financial stability, you experience changes in how you perceive life, shifting from survival to growth. Let’s have a detailed discussion on it.
Once you start receiving a consistent income or your finances are more stable, you will be able to make stress-free decisions, whether they be related to your career, lifestyle, investments, or entertainment.
With a stable financial status, you will be able to focus on your long-term investments and savings rather than worrying about the immediate expenses and needs.
If you are financially stable, you will be open to more opportunities. Apart from living for your needs, you will be able to take calculated risks to begin a business or convert your passion into your profession.
However, to gain this level of financial stability, you should be aware of financial aspects. So, improving your financial knowledge with expert assistance is essential. You can seek help from platforms like FinQuo Versity to improve your financial knowledge, as they offer educational resources, financial courses, and other sources; they provide help with all aspects of finance, including budgeting, saving, and investing.
As we have discussed so far, money has various practical benefits, such as better opportunities, security, and personal growth. However, it also has an emotional side. Money largely affects the emotional aspect of individuals, for better or for worse.
While financial stability offers a sense of confidence and opportunities to invest in oneself through personal development, some people consider it a symbol of self-esteem. Although this might be good at times. It can also lead to anxiety, shame, and a feeling of failure when encountering a financial struggle.
While money opens doors to opportunity, unequal access to financial resources still creates barriers to education, career growth, and upward mobility, contributing to broader inequality of opportunity.
Furthermore, money can also be a reason for disputes and disparities in a family, especially when the concepts of saving, spending, and investing are different among partners. So, it is not only about learning how to earn, spend, save, and invest money. It is also about learning how to deal with the emotional aspect of it.
We have already discussed the importance of money in our day-to-day lives. So, it is clear that money does have a role in the happy life of an individual. However, is there a limit to the money we need?
Although money brings happiness, it does not mean that money is the presiding factor in making someone’s life happy. A sufficient amount of wealth that helps to meet the needs and offer financial stability is important for every individual. It is only then that people will be able to seize opportunities and lead their desired life without worrying about daily expenses and needs.
However, even though more wealth offers more luxurious lifestyle choices, it does not guarantee a happy life for everyone.
A survey was conducted by Ipsos back in 2019 on whether more money brings happiness to people. While 45% of participants shared that more money gives them the greatest happiness, 13% of respondents were against this statement. So, this survey reveals that more money is sometimes too much money, at least for some of us.
Therefore, more than an abundance of wealth, humanitarian values, healthy living conditions, mental well-being, a loving family, an independent life, and more are valued by many.
So far, we have discussed various aspects and the importance of money in life. Given everything we’ve explored, would you say that money is the most important thing in life? Yes, money does have various benefits. It supports personal growth, offers freedom and choices, helps to pursue dreams and ambitions, and aids philanthropic activities.
However, to enjoy these benefits, it is important to have an understanding of one’s income, plan expenses accordingly, maintain proper budgeting plans, and avoid unnecessary debts. Is that all? No. Along with proper money management, people should also be able to deal with the emotional aspects of money to better enjoy its benefits.
The famous Irish author and poet, Oscar Wilde, once quipped, “When I was young, I thought that money was the most important thing in life; now that I am old, I know that it is.” So, remember, the role of money in our lives is huge, but the ultimate aim is to understand the true essence of money and use it as a tool that helps improve freedom, quality of living, and mental peace.
Uma Nair is a professional content writer with over 3 years of experience and a strong foundation in crafting engaging and informative content across diverse domains. Over the years, she has dealt with various niches, and her growing interest in finance has led her to explore the world of financial writing. As an English Language and Literature postgraduate, her educational background supports her ability to convey complex topics in easy and accessible content. In her free time, she stays updated on industry trends to continually enhance the value of her content.
Reviewed by
Ibnujala is a seasoned financial expert of Indian and Middle Eastern markets with an experience of over 15 years. His deep interest in neuroscience fuels his research in seamlessly blending finance and science. With a bachelor’s degree in law from India and an MBA from the UK, his diverse academic background makes him an expert in financial management and mentorship. In addition to being a seasoned investor and serial entrepreneur, he currently serves as the CEO of Finquo Versity.
Disclaimer: The information provided in this blog is for educational and informational purposes only and should not be considered as financial or investment advice. Stock market investments are subject to market risks, and past performance is not indicative of future results. Readers are encouraged to do their own research and consult with a licensed financial advisor before making any investment decisions. The author and publisher are not liable for any financial losses or damages incurred from following the information provided in this blog.
Uma Nair
Reviewed by Ibnujala
Have you ever thought of starting a business of your own? Who doesn’t? Most of us have dreamt of becoming entrepreneurs at least once in our lives, especially women. You might have felt that you have an incredible business idea, but are confused about where to begin.
You are not alone in it. Most people, especially women, forbid themselves from starting their dream business only because of the chaos and confusion of the initial days. Let us tackle it now.
You do not always need degrees, except for specific businesses related to law, finance, or tech, huge investments, or well-established office space, to begin your business journey. Then, how to become a businesswoman? It is about seizing the right opportunity, learning from your mistakes, and staying consistent in your work.
In this blog, we will walk you through the steps involved in beginning a business and the government policies and schemes that benefit women entrepreneurs in India. We will also discuss some popular businesswomen as well as some business ideas women can consider.
As Michelle Obama wisely stated, “Success is only meaningful and enjoyable if it feels like your own.” With that in mind, let’s explore business ideas that not only generate income but also leave a meaningful mark on society.
Achieving success as a businesswoman is a challenging journey. It’s a long and persistent journey that requires ambition, passion, strategy, consistency, and resilience. Whether you are starting from scratch or taking up a corporate business, it is important that you have clarity in your plans, a well-developed strategy, and bold decision-making skills.
If you’re just starting out in this field, it’s natural to feel overwhelmed with questions and uncertainty. But you need not worry, as this section will offer a step-by-step guide that helps you be a smart businesswoman. Remember, no matter what your educational background is, if you have the itch and taste for entrepreneurship, proper guidance and planning can help you excel.
So, let’s get into those details.
Doing things that you love helps you excel and enjoy what you do. So, passion has a crucial role in your business success. In a highly competitive world, you need to be passionate to reach the top. Therefore, the first step in building a business is finding your passion.
However, finding your passion might not be as simple as it seems. While some have a clarity of what they like and what they want to do, others might lack this clarity. But let us help you identify them.
Improving your financial knowledge is essential before starting a business. With the right knowledge about budgeting, saving, and investing, you can tackle the potential financial challenges you might encounter in the future.
However, not many people around us are financially educated. So, seeking help from platforms like FinQuo Versity will be beneficial. They offer various courses, educational resources, and other materials that improve financial knowledge and literacy.
Your skills and expertise are the key factors that help you be a strong businesswoman. Before starting your business, make sure that you have polished your skills to meet the requirements of your business. Be confident about your knowledge and expertise.
Explore the various courses, certification programmes, webinars, and other resources that help you upskill yourself. Think of the possible ways that help you mould your skills through practical scenarios and real-life situations.
Apart from the subject knowledge, let’s have a quick look at the important skills you need to thrive in the business world.
After identifying your passion, you have to finalise a business idea that suits your interest and passion. Conduct a detailed analysis of the market trends, targeted audience, and audience acceptance before finalising your business idea.
Additionally, consider whether your product or service taps into a passion or provides a solution to a particular issue. Furthermore, consider the following points:
On the other hand, if the product has a growing market, you can earn potential benefits over time. So, before choosing your business idea, analyse these factors.
Remember, a strong business plan must feature a Unique Selling Proposition (USP) to make your business stand out from the rest. It has a major role in influencing your target audience. So, ensure that you select your USP efficiently.
Once you have settled on your business idea, the following step is to develop a well-structured and impactful business plan. This helps to navigate the potential challenges and complexities in your business journey.
Take a look at a small guide on developing a solid business plan.
The next step is to fund your business. Strong funding is essential to begin a business from scratch. As mentioned earlier, prior financial management helps you identify your funding needs. If you’re planning a scalable startup with long-term growth potential, you can also consider approaching Venture Capitalists (VCs) who fund early-stage, high-growth companies.
Here are some common funding methods you can opt for.
Registering your business is also important. However, not all businesses need an MCA registration. Private Limited Companies and LLPs must be registered with the MCA before launching. However, sole proprietorships and partnerships may not require MCA registration. They can start with minimal registration, like UDYAM, GST, etc.
However, ensure that you have all the necessary documents before registering. Do not forget to register for GST and other tax implications, as they may cause complications in the future.
Below are the things to consider while registering your business.
Scaling your business is important. However, instead of starting big, it is always advised to begin small with a Minimum Viable Product (MVP), with the help of seed funding, and then scale the business to greater heights.
Begin at a smaller scale and analyse the market trends and customer reactions. Later, establish a proper business plan and growth strategy, and then scale your business to reduce risks and losses.
Marketing or promoting your business is very crucial, as it attracts more customers towards it. So, you have to prepare a proper marketing strategy that includes trending ideas, with the necessary tools, campaigns, social branding and online platforms.
Consider the following marketing strategies to expand your business’s reach to a wider audience:
Similar to building and establishing your business, it is also important to maintain a proper work-life balance. You have to make sure that you set rules and prioritise both your personal and professional life equally. The points below might help you with it.
The Indian government offers various programmes and grants that help increase startup opportunities among women, helping them become businesswomen who lead others. Let’s have a quick look at them:
Stand-up India scheme is an Indian government initiative that offers loans and assistance for women, Scheduled Castes (SC), and Scheduled Tribes (ST) to start new businesses. According to this scheme, the eligible people can gain loans ranging from 10 lakh rupees to 1 crore rupees.
This scheme is developed mainly for greenfield enterprises. Furthermore, according to the official website, borrowers need to provide at least 10% of the project cost to be eligible for this scheme.
Pradhan Mantri MUDRA Yojana is a governmental programme that offers loans for women business owners. This grant has various schemes customised for different businesswomen, like micro-business owners, Small and Medium-Sized Business (SMB) owners, and ambitious entrepreneurs.
Based on the businesses, the grant amount also varies from 50,000 rupees to over 10,00,000 rupees, ranging over different categories such as Shishu, Kishor, and Tarun.
An initiative by the Small Development Bank of India (SIDBI), the Mahila Udyam Nidhi Scheme was introduced to encourage the entrepreneurship of women. This plan, which offers up to 10 lakh rupees, was first launched by Punjab National Bank by SIDBI and later expanded to other lending and financial institutions.
Connecting and interacting with like-minded people will be beneficial in your career, especially when building a new business from scratch. There are various women entrepreneurs who have excelled and set an inspiration for upcoming budding businesswomen. Let’s discuss some of these people.
A popular name in the Indian business world, Falguni Nayar is a strong influence for budding businesswomen. Falguni Nayar, the founder of the well-known Nykaa Fashion, left her investment banking career and started her brand when she was 50 years old.
Oprah Winfrey is highly regarded as a prominent personality in the world of media. Starting off as a TV personality, Winfrey turned to entrepreneurship in 2000 by co-founding Oxygen Media. She hosted her talk show until 2011 and now serves as the CEO of the Oprah Winfrey Network (OWN).
Whitney Wolfe Herd is an inspiring businesswoman who became a prominent figure in the male-dominated tech industry. She started off as the co-founder of Tinder, a dating app. But later left Tinder and began her own company, Bumble.
Upasana Taku, a well-known Indian entrepreneur, has played a significant role in driving the fintech revolution in India. She co-founded MobiKwik, a digital platform focused on facilitating online payments. Upasana made a large impact in India through her initiative, proving that women entrepreneurs can excel in the fintech field as well.
Before winding up this blog, let us discuss some of the top business ideas that can offer a side hustle or startup opportunities for women in India. From home-based businesses to small-scale and startups, the opportunities are endless in our contemporary society. So, let’s have a look at them.
Building your own empire in the business world is not a distant dream anymore. With the right mindset, strategic planning, and proper mentorship, you can also become a successful businesswoman, breaking all the conventional barriers and stereotypes.
We hope this blog has given you a comprehensive guide on how to begin your journey to be a successful female entrepreneur. Additionally, we have also discussed the government programmes that help women entrepreneurs in the country, the success stories of some inspiring businesswomen across the world, and some interesting and beneficial business ideas.
Many women hesitate to begin their entrepreneurial journey due to the fear of failure or intense competition. But with the right support system, you can overcome self-doubt and avoid burnout while building a fulfilling career.
However, remember, success is not something that can be achieved overnight. It needs sheer passion, consistency, and hard work. So, whether it be flagging off your business journey or business scaling, it’s the small but persistent work that counts.
Uma Nair is a professional content writer with over 3 years of experience and a strong foundation in crafting engaging and informative content across diverse domains. Over the years, she has dealt with various niches, and her growing interest in finance has led her to explore the world of financial writing. As an English Language and Literature postgraduate, her educational background supports her ability to convey complex topics in easy and accessible content. In her free time, she stays updated on industry trends to continually enhance the value of her content.
Reviewed by
Ibnujala is a seasoned financial expert of Indian and Middle Eastern markets with an experience of over 15 years. His deep interest in neuroscience fuels his research in seamlessly blending finance and science. With a bachelor’s degree in law from India and an MBA from the UK, his diverse academic background makes him an expert in financial management and mentorship. In addition to being a seasoned investor and serial entrepreneur, he currently serves as the CEO of Finquo Versity.
Disclaimer: The information provided in this blog is for educational and informational purposes only and should not be considered as financial or investment advice. Stock market investments are subject to market risks, and past performance is not indicative of future results. Readers are encouraged to do their own research and consult with a licensed financial advisor before making any investment decisions. The author and publisher are not liable for any financial losses or damages incurred from following the information provided in this blog.
Uma Nair
Reviewed by Ibnujala
Have you ever wondered how to save money with a 20,000 salary, with your bills, EMIs, and other expenses waiting for you? If so, you are not alone. While a 20k salary presents challenges, it also encourages smart budgeting and creative ways to manage rising living expenses.
But what if we told you that you can save a small portion of your salary for your future needs and emergency expenses? Yes, whether your salary is 20k or 200k, making minute changes in your spending habits, budgeting techniques, and lifestyle will help start your saving habit.
This guide will walk you through practical methods and strategies to help you manage a ₹20,000 salary effectively while building your savings. Wondering about the best ways to save and invest on a limited income? Don’t worry, we’ve got you covered.
Ready to make every rupee work smarter for you? Here’s how you can make the most of your ₹20,000 salary and turn it into a tool for financial progress instead of a limitation.
People normally think that it is impossible to save money with small salaries. But is it true? Is it possible to save money from a 20,000 salary? Yes. According to financial experts, with methods like the 50/30/20 rule, save-then-spend rule and other strategies, saving money with a 20000 salary is possible.
However, it takes discipline, planning, budgeting, and a little bit of lifestyle changes to achieve this goal. You need to plan your spending, initiate smart investments like mutual funds, PPFs, PFs, and more, cut short unwanted expenses, and more to budget a 20k salary.
Although salaried people might find these changes and strategies a bit difficult at first, in the long run, these savings will be helpful in maintaining emergency funds and additional savings. Interestingly, Gen Z and millennials are slowly picking up these habits, turning into budget-conscious individuals.
In the coming sections, let us discuss the different savings strategies, investment plans, and budgeting methods that help make saving money from your salary more effortless.
Identifying and categorising your monthly expenses and spending are essential to improving your savings. This helps you recognise where you might be overspending and identify unnecessary costs that can be trimmed or avoided altogether.
Once these expenses are identified and your spending is categorised, you can better strategise budgeting methods like the 50/30/20 rule and the save-then-spend rule.
Here are some points that will help you identify and categorise your spending.
Keeping track of all your expenses is essential to identifying and managing your spending and savings. Keep a diary or a mobile application to note down all your expenses. Include everything, including the small expenses like buying a snack or recharging your mobile phone.
Splitting the expenses into needs, wants, and investments will help improve your savings strategies. Through this method, you can identify your unavoidable as well as unnecessary expenses and manage them accordingly.
Set limits for every expense, like needs, wants, and savings, and stick to those limits. You can make use of money management apps like Mint, You Need a Budget (YNAB), Money Tracker, and more to easily set and manage spending limits.
Moreover, if you are a credit card user, limit yourself from using them extensively. Additionally, ensure that you pay off the credit card debts on time to avoid interest.
Once you set spending limits, split expenses into different categories, and track every expense, you will be able to identify your unnecessary expenses. So, continuously evaluate these factors on a weekly and daily basis to identify your spending and curb impulsive spending habits.
The 50/30/20 rule is the most beneficial budgeting method you need to know for effective money saving. This widely used method makes saving easier by dividing expenses into three categories: needs, wants, and savings.
Under this approach, an individual’s post-tax income is allocated as 50% for essential needs, 30% for personal wants, and 20% for savings.
No matter what the salary of an individual is, experts suggest that following this rule will help effectively save money for the future.
However, what are these needs, wants, and savings? Let us break this concept down into more detail.
This rule suggests keeping 50% of your salary for your needs. These needs include the unavoidable expenses in a person’s life. Some of these expenses include:
So, if your salary is 20,000, according to the 50/30/20 rule, you can use 10,000 for your needs. The rest 10,000 will go for other expenses and savings.
The next category is for the wants. While needs are the unavoidable expenses in a person’s life, wants are add-ons that improve the lifestyle of an individual. This can be engaging in your favourite hobby, going to a movie, and more.
These are activities or expenses that we need in life. However, they are not essential or unavoidable. According to the 50/30/20 rule, 30% of the salary or after-tax income can be devoted to these wants.
So, a person who has a monthly salary of 20,000 can use 30% of it, which means 6000 per month for the additional expenses. From this amount, a small amount can also be used for cheat spending, which can be used to treat yourself occasionally.
Some of the major wants can include:
The last 20% of your salary should be used for savings or investments. According to expert opinion, an individual should have at least 3 months or more of emergency savings. This will help them manage any unexpected financial needs like medical expenses, car or house maintenance, and more.
Moreover, these savings will also help achieve major goals like buying a house or a dream vehicle in the long run. So, individuals should invest in savings instruments like mutual funds, fixed deposits, digital gold, Unit-Linked Insurance Plans (ULIP), and others to improve savings.
So, if your monthly salary is 20,000, you should save 4000 a month, according to the 50/30/20 rule.
However, sticking to this rule might not always be possible. Considering the living expenses and other needs, especially in metropolitan cities, people might have to make slight adjustments in this rule, making it a 60/20/10 or something else, based on the expenses and emergencies.
Before getting into the details of the various investment plans, let us have a quick look at ways you can reduce spending and save your money.
We have already discussed the 50/30/20 rule and the necessity to save 20% of your salary. But how do you actually set aside this money, and where should you keep it? This part will address those questions and provide you with clear guidance. Here, we will discuss some prominent savings plans that you can adopt based on your available capital and risk tolerance capacity.
Mutual funds are a good savings option for investors. Here, money is pooled from different investors and invested in securities like equities and bonds.
Mutual funds are of different types, such as
Have you heard of SIP? SIP, or Systematic Investment Plan, is a method for investing in mutual funds at predetermined time intervals. According to this plan, an investor can choose a specific mutual fund scheme and invest in it automatically, preferably every month.
The major benefit of SIP is that investors can begin their investment with as little as Rs. 500 in most cases. This plan does not require huge amounts or lump sum investments. So rather than investing in mutual funds with a huge one-time investment, people can opt for small amounts at regular intervals, offering a higher return.
A savings plan available in different forms like perpetual SIP, flexible SIP, and top-up SIP, this program makes investors more disciplined, offers compounding benefits, and many more. However, although a relatively safe investment option, SIP is also subject to market risks, volatility, and underperformance of selected mutual funds. Therefore, ensure that you select funds that match your risk appetite.
Public Provident Fund, or PPF, is yet another investment plan that allows long-term investments with small investments at fixed intervals. This is one of the most common investment plans chosen by individuals who seek high yields in a better and safer way.
Once a PPF account is opened, investments will be made at regular intervals, and the interest will be compounded. This method is considered comparatively safe, as it is mandated by the government, offering guaranteed returns.
Additionally, investing in a PPF offers tax advantages under Section 80C, with a minimum contribution of Rs. 500 per financial year and an annual limit of Rs. 1.5 lakh. However, investors should look for potential risks like changes in government policies. Limited liquidity, lower returns compared to market-linked investments.
Fixed deposits (FDs) are commonly viewed as among the safest choices for investing. Here, people begin an FD account in banks or financial institutions, where they deposit a specific amount of money for a predetermined tenure.
Investors receive a fixed rate of interest on their invested principal. However, this interest will not change over the period, and hence the interest rates of different banks should be compared before finalising the platform for investing.
RDs, or recurring deposits, are similar investment options to those of FDs. They are also small investments made for a fixed time frame with monthly or predetermined investments. Once the determined time frame ends, the investors will get the invested money and its compound interest.
Recurring Deposits (RDs) typically offer higher interest rates than Fixed Deposits (FDs) and come with more flexible terms regarding tenure and investment limits. Moreover, RDs have more liquidity, and investors can withdraw their investments before completing the tenure with minimal to no penalties.
Unit Linked Insurance Plan (ULIP) is an investment plan that offers dual benefits. It serves as insurance and an investment by providing life coverage as well as the benefits of investing in the stock market or debt funds.
The payments made on ULIP are split into two parts, where one goes to life insurance and the other to the investment in mutual funds like equity, debt, or hybrid. This plan allows investors to switch between the investments, helping them gain the best ULIP plans.
Although ULIP is flexible and offers various benefits, it has a lock-in period of five years, during which the investors are not allowed to make any withdrawals. Moreover, this plan is also subject to market volatility, additional charges, and lower death benefits compared to term insurance.
Moreover, people with a 20,000 salary might at times face difficulties in maintaining ULIP due to its lock-in period and charges. So, they can also opt for term insurance and mutual fund SIPs over ULIP.
A Certificate of Deposit (CD) is an additional savings vehicle that individuals can utilise. It functions as a savings account where you can deposit money and earn interest on your funds.
Unlike standard savings accounts, CDs have specific restrictions, including limited flexibility. The investments made through this plan cannot be withdrawn before completing the tenure, as it will cause penalties. Moreover, this is widely used in foreign countries.
Another option to consider besides CDs is a high-yield savings account, a widely used Indian alternative. As the name implies, this scheme offers a greater interest return on your investment. However, these accounts demand a huge initial investment.
Offered by the Pension Fund Regulatory and Development Authority (PFRDA), the National Pension System is a good savings option for those with a budget of 20k salary. With this investment option, individuals can make systematic investments with their salary, focusing on their retirement life, which helps build a retirement corpus.
Any Indian between the ages of 18 and 70 can invest in NPS. linked with the market, this plan is a voluntary scheme that offers tax benefits. Moreover, NPS is flexible and can be managed from anywhere in India, even after changing jobs or locations.
Now, you might be clear that investments need not be huge to begin a savings plan. Even an Rs. 20,000 salary is good enough to start saving for the long run. However, in order to have monthly savings, it is important that you follow a disciplined budget plan by cutting off unnecessary expenses.
Along with following the 50/30/20 rule, the save-then-spend rule will also help individuals develop a good saving habit. However, if you are still in doubt about the investment plans and strategies you can adopt to improve your savings from your 20,000 salary, you can seek help from experts and financial managers.
Several identified platforms, like Finquo Versity, offer guidance and assistance in financial management and budget planning. The various courses, webinars, and discussions provided by these platforms will help you increase your financial literacy and, in turn, make the maximum savings from your salary, no matter how big or small it is.
So far, we have discussed a whole lot of things, from budgeting to saving and investing. We hope that this blog has helped you identify the important points that help you identify your expenses, cut short the unnecessary ones, and know what to look for while investing.
Moreover, we have already elaborated on the 50/30/20 rule and the various investment plans that anyone, whether they are a salaried individual, a youth, the Indian middle class, or a millennial, can follow. Furthermore, you can also consider diversifying your investments by investing in digital gold and other latest options.
So, although the question of how to save money with a 20,000 salary might loom in your mind as a challenging task, with the right planning, mindset, and disciplined approach, you can make your savings plan and long-term goals possible. Therefore, start small but engage in smart investments with the right tools, expert advice, and an attention to detail.
Uma Nair is a professional content writer with over 3 years of experience and a strong foundation in crafting engaging and informative content across diverse domains. Over the years, she has dealt with various niches, and her growing interest in finance has led her to explore the world of financial writing. As an English Language and Literature postgraduate, her educational background supports her ability to convey complex topics in easy and accessible content. In her free time, she stays updated on industry trends to continually enhance the value of her content.
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Ibnujala is a seasoned financial expert of Indian and Middle Eastern markets with an experience of over 15 years. His deep interest in neuroscience fuels his research in seamlessly blending finance and science. With a bachelor’s degree in law from India and an MBA from the UK, his diverse academic background makes him an expert in financial management and mentorship. In addition to being a seasoned investor and serial entrepreneur, he currently serves as the CEO of Finquo Versity.
Disclaimer: The information provided in this blog is for educational and informational purposes only and should not be considered as financial or investment advice. Stock market investments are subject to market risks, and past performance is not indicative of future results. Readers are encouraged to do their own research and consult with a licensed financial advisor before making any investment decisions. The author and publisher are not liable for any financial losses or damages incurred from following the information provided in this blog.
Uma Nair
