5 financial rules young earners who have just started earning should abide by

Make sure you have one core account that receives your salary income and can be used to establish your financial status easily. From simple visa applications, to loans big and small, you will need a verifiable proof that your income is steady and hopefully growing with time. Do not treat the bank account as a convenience, but as a record of your financial life.

Text: Uma Shashikant, ET Wealth

Mentally tabulate your expenses as a percentage of your income. This is an easier way to budget than evaluating absolute amounts. Your basic wellbeing in terms of not being anxious about your finances is possible only if your income comfortably covers these expenses. Ideally, your mandatory expenses should not be over 60% of your income.

It takes a while to settle into the joys of earning and the responsibilities of spending a limited amount while the choices to spend are far too many. Even if your bank is willing to offer you a credit card, use a debit card until you have a steady surplus in your bank account.

File your tax returns and be diligent about report ing all sources of your income and paying what is due. The taxman is only concerned about your sources of income, and whether your assets match those declared incomes. How you spend your money is your choice, once you have declared your income and paid your taxes. Do not fall into the trap of assuming that paying taxes is naïve.

If you assume that you will save whatever remains after spending, you might end up with nothing. Begin small. It could be a small contribution on a monthly basis to your PPF account; it could be a recurring deposit with the bank; or it could be an SIP with a mutual fund. Make sure you have contributed to these savings before you begin spending, so you spend whatever is left after saving.