Financial Planning for Fresh Graduates!


Financial planning has become a need of the hour & many people have started working towards their financial freedom. However a beginner who has just received his first pay cheque may not think the same. In their 20’s when a person is making money, all they would like to do is splurge on parties, enjoying weekends, etc. But a fresh graduate should realise that there are some special goals one would like to achieve, study further or explore a different career path.


Financial planning is not only about investing and getting rich but also about making oneself financially independent. The balance between achieving life goals and equally enjoying the young phase of life is to be met. If one follows a basic financial routine and does some long term investments life would be more stress free and enjoyable at the same time.

We at would like to share with you a few “tips to follow” from the beginning of your career to lead a successful financial future.


Understand your CTC
CTC is the most mis-understood subject especially for the freshers. CTC is the “Cost to Company” and not your final home take salary. CTC includes your basic salary along with all the incentives, allowances, etc. the company will be paying for. When one joins a company it is necessary to discuss with the HR team and understand about the exact home take salary as each company has different terms about the components of a CTC. A beginner should not necessary fall for a job when offered a whooping amount of CTC or a hike in the CTC after a few months. A good looking CTC package may not be as good as you are thinking and you may land up getting half of it as your in-hand salary.

Some components of the CTC may also be beneficial for you. Employee Provident Fund deductions are a great forced investment. Medical insurance benefits included in the CTC also is a plus point as the employer is insuring for you hospitalisation.


Learn to save from your very first pay cheque
It is essential to start your SIP’s today. The amount may not be too large but with the magic of compounding this can be a very big corpus in the long run. A fresher may think that it is too early in life to start saving then spending the same on their pleasure. However a small amount of saving would not make a difference to their regular life and this saving might grow to a big corpus that can help one achieve a future goal. If one controls their impulsive expenses the same amount saved can be used as a SIP for achieving one’s financial goals.


Chalk down your financial goals
A financial plan can be made only when one has their financial goals decided. One needs to know what they want to achieve in life over a period of time. These goals can be in the short term or long term. Once the financial goals to be achieved are sorted one can start working on the same. The sooner these goals are decided the longer the time one gets to achieve them and this would also cost less, even a delay of 2-3 years may lead to investing double the amount for the corpus required to achieve the goal.


Start a recurring deposit now for a Contingency fund
A contingency fund is nothing but an emergency bank account which can be utilised incase of loss of income or loss of job. At the start of you career you would like to explore different companies or various aspects of a job. This may however lead to a phase of no income for a few months or one can also lose a job due to any reason especially during a recession. In this period a contingency fund can be utilised for one’s expenses atleast till you get another job. Thus apart from other saving, having a contingency fund with an amount of atleast 3-6 months of expenses is very essential. One should start a recurring deposit on the receipt of their very first salary.


Medical Insurance is a must
At a young age one may not require a Life Insurance Policy as they don’t have any financial dependents. This might be required after marriage and children. However a medical insurance is a must i.e. a mediclaim, critical illness or personal accident insurance. These policies helps one from a financial burden incase of any hospitalisation or diagnosis of a critical illness. A personal accident policy may pay the salary you would lose out on due to any kind of accident which doesn’t allow one to go for work.


Start planning for retirement early
Retirement Planning is a long term goal especially at the start of one’s career. However it is very much neglected in fulfilling other financial goals. One may think of saving up for other achievements in future and not land up planning their retirement needs. This would lead to a very financially stressful retirement phase as there is inadequate or no source of income. Thus while chalking down your financial goals retirement should be given a priority and also the earlier you start planning retirement, the lower the monthly investment required would be. One can also take advantage of their company policies for retirement like Employee Provident Fund, etc.


Keeping the above tips in mind at the start of one’s career, you will lead a financially independent life. As they it’s the ‘early bird which gets the worm’, so do start early with your financially planning, your financial freedom awaits you!!


By Namrata Shah.

The writer is working with as a Financial planner.


+1 #3 SAMEER SHENOY 2012-06-25 12:10
very nyc n must read article for every freshers....
+3 #2 Rahul 2012-02-04 05:24
Thank you for putting up such an awesome article!!
the same has helped me a lot
Thank You
+2 #1 Harish 2012-02-04 05:22
very unique article..
A must read for all freshers. Will definitely make my son read the same

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