You would definitely think to spend your early 20s without any bothering of money savings as you have lots of plans like visiting new places, having new experiences. Though it is not the time to worry because there is entire life ahead to think about this but still what is bad to save few and reduce some load for upcoming years.
The youth of India in early 20s should at least go for tax saving and deduct some amount from their expenses as The Income Tax Department allows you to save till Rs.1.5 lakh per year.
Don’t procrastinate till the last quarter
Do not postpone your investment decisions to the last months of the financial year as it will be difficult for you to take decision in a hurry and as a result you would make a wrong choice while planning your tax-saving investments. You must roughly calculate at the very starting of the year the amount of money you could save.
Avail all expenses that are tax exempt
Many of your expenses can get tax exemption which includes life insurance premium, home loan repayment and medical insurance where you are eligible to get exemptions under Section 80C. Be aware of such expenses to avoid tax. Once you are aware of such expenses, you may invest the left 80C amount to grow your money more.
Invest a good portion in ELSS funds
PPF and fixed deposits cannot earn inflation-beating returns. ELSS funds have equity exposure which allows you to do this. Equity might be risky but for a short period of time. But in long-term you will be able to earn very high returns.
Use tax-saving investments to fulfill goals
Tax-saving avenues are not the only way to invest for saving taxes. Tax-saving investments are for long run and help you in fulfilling monetary goals. Whether your motive is to buy a car, a house, for vacation and saving money for the same, you have the option to align tax saving investments and fulfill such goals with ease.
Keep track and stay on course
Make sure that you must regularly check on your investments in ELSS funds, funds performances and must go for the better options. Never leave to invest in ELSS even if it is a bad phase because it will give you profit only.
So keep in mind all the above six things in your 20’s so as to plan the tax savings investments and the expenditure. This will give you the better of two that is, money that you have saved and also money for your future.