In your twenties? Plan your finances!

India is a young country. Approximately 60 per cent of the Indian population is below 30 years of age. Asian Development Bank estimates India's working age group to top most others globally in the next two decades. This would comprise those between 15 to 64 years of age.

The large 'young and urban' population (the working population with purchasing power) adds to our country's economic growth enormously. It is the major driver of consumption as this young population has the ability (disposable income) and willingness to spend due to rising income levels (increasing instances of double incomes in most families). The increase in the number of nuclear families, easy financing options, increase in the population of working women continue to contribute to the increase in the domestic consumption propelling growth.

Meanwhile this 'young' segment continues to buy homes and select insurance, loans and retirement plans with little attention and relevant advice. For example, very few individuals start retirement planning when they are young.

We agree that planning for your future can be tough for anyone especially in this age of unlimited spending and investment choices.

So, InvestmentYogi has taken the seemingly overwhelming task of financial planning and broken it down for you in a few simple steps. With these pieces in place, you'll be well on your way to financial security.

www.investmentyogi.com is a one-stop personal finance website which helps in managing finances, investments and taxes through services like financial planning, online tax filing, budgeting and 'Ask the Expert'.

Illustration: Uttam Ghosh

Work out what your goals are. It may not always be career- or marriage- or children-centric. A goal can also be something you have been longing to do for a while. Is it trekking to Mount Everest? Is it going on a world tour? Or is it attending art lessons in Europe? Whatever your goals are, try measuring them in money terms so that you know beforehand the precise financial requirements to help you plan better and achieve them too! Saving for a car or a holiday is a great way to fast-track a sense of achievement -- and it sets up an invaluable habit -- saving. Save up ahead of time and you'll be in great position to make the most of your thirties.

Understand your money
Your parents may be trying to help you prepare your taxes, balancing your chequebook or managing your investments, but they will not be around forever to help you out. While there's no denying that your 20s is the time for experimentation, the fact is, you're not a kid any more. Once you start earning, your finances are your responsibility and there may or may not probably be a wealthy prince or princess waiting to sweep you off your feet. Why take a chance? Focus on learning the true value of money and how to be responsible for yourself. You need to succeed financially on your own.

Illustration: Uttam Ghosh

It pays to be prepared for the "what ifs" in life. For any age group maintaining an emergency fund is a must. During the start of your career, investing in health insurance is a necessity to protect you from the downside of a possibility of an accident, illness or disease that can burn a considerable hole in your pocket. House owners' insurance and auto insurance also require equal mention. Plus, if you have children, life insurance is an absolute MUST.

Stay away from debt
Debt is one of the biggest financial problems facing young adults. Live within your means. Can't afford something? Don't buy it. Learn to keep spending in check while you're young and you'll save lakhs of rupees over the years -- and save yourself a lot of stress, too. A monthly budget helps keep your spending in check and in the process, frees up money in your budget you never knew you had.

Borrow only to build your wealth. Pay off your credit card bills in full every month. Keep tidy financial records. Not only will you need a down payment to buy a house, you will also need an established credit history and a record of on-time payments. Building a good credit history in your twenties will ensure it's ready when you need to use it. Read in between the lines before entering into a contract and ensure you uphold it financially.

Illustration: Uttam Ghosh

When you are in your 20s, it is easier to focus on immediate and short-term needs. However, it's not so easy for young adults to start planning for their retirement seriously from their first job itself. After all, retirement is a long way off. Yet it is the most essential piece to one's long-term financial security. Unlike in the US, in India the government does not provide social security on retirement. An individual has to depend on his own investments for his retirement nest. When you're young, time is on your side. The sooner you start investing toward your retirement, the bigger the amount you accumulate.

Increase your social network
Join or create an online community. Increase your social network and learn from each other. Even if you are a non-finance executive, you can still improve your financial literacy by reading books, searching the web, joining a community or a club or talking to experienced people.

Financial planning serves the very important purpose of bringing discipline and clarity to your investment habits.

An ideal plan gives you a complete picture of your current investments and liabilities, your net worth, cash flow, goals and a specific plan to achieve those goals. When you are young you tend to live for the moment and do things as they come but it's very important to secure your financial future. At the same time it does not have to be at the cost of a good lifestyle.

The decisions you make today about your career, education, debt and retirement will stick with you and shape your future. So, invest in yourself. Start early. Start small. And ignore the typecast.

To end, a few lines from a poem by Juanita Bratcher:

Life can be enlightening
Indeed it can be challenging, too
It can be a roaring opportunity
But that depends on you

Never throw in the towel because things don't go your way
Just ride the tides of patience
And keep focused on your dreams each and every day

Illustration: Uttam Ghosh