5 Financial Challenges You Face At The Beginning Of Your Career

By BankBazaar | November 15, 2017

Can you sail through these 5 financial challenges you might face early on in your career? Read on to find out!

5 Financial Challenges You Face At The Beginning Of Your Career

They say that life imitates art, and any Bollywood movie that portrays Salman Khan as the hero makes life seem extremely easy since he tends to get everything he wants and almost always gets away with anything under the sun.

Just like many of you, Rishabh was also a huge fan of Salman Khan. He always excelled in studies and sports, and after graduating from a premium B-School, he was placed as a consultant with a top corporate company in Mumbai. While his parents were obviously delighted, his financial situation was a bit precarious.

Here are five financial challenges he faced at the beginning of his career. This should give you a fair idea of what awaits you in the ‘real world’, especially if you find yourself in a similar situation.

Education Loan

In Rishabh’s case, pursuing a management degree from a premier institute came with a heavy loan burden. He took Rs.15 lakhs in the form of an Education Loan, which he had to start repaying as soon as he began his new job.

Having taken the loan at 10% interest for a period of 10 years, he had to pay approximately Rs. 20,000 per month to repay it. Although he landed a fairly lucrative pay package due to his educational background, it was still a hefty amount to pay every month, especially without taking any of his other expenses into consideration.

Additional Reading: Education Loan – A Quick Overview

High Rent in Metros

Living at home with his parents, Rishabh never really gave much thought to the Home Loan EMIs his parents were paying for their house. But, since he had to relocate to Mumbai and find a place to live close to his office, he had to start taking living expenses quite seriously.

Despite sharing his new apartment with a colleague, he had to pay Rs. 10,000 every month, which included rent, electricity charges and maintenance fees. This, coupled with his Education Loan repayments, placed considerable strain on his finances during the early stages of his career.

Additional Reading: Common Rental Scams And How You Can Avoid Them

Travel and Food Expenses

In order to commute easily to his office, visit his parents every weekend and travel better within the city, Rishabh had to buy a vehicle to help him get around.

Since he couldn’t afford to buy a new car, he took a Car Loan. However, a new car calls for monthly expenditure on petrol. Assuming Rishab travelled about 10 km a day (to and fro) and more on weekends, and spent around Rs.100 a day on petrol, his fuel expenses totalled to around Rs. 3,000 per month.

When you add this to the Rs. 250 he spends every day on food, he spends approximately Rs. 10,000 per month on food and travel alone.

Additional Reading: 8 Ways Foodies Can Save Money While Eating Out

Lifestyle Expenses

Good jobs tend to come with certain lifestyle expectations, dreams and the pressure to achieve it all. The latest gadgets, branded clothing, and weekend trips are generally coveted by most young people, and Rishabh was no exception.

However, he still set aside a certain amount every month to send to his parents to prove that he was financially responsible.

Additional Reading: Top 7 Lifestyle Credit Cards In India

Savings and Investments

On one hand, he needed to maintain his lifestyle, and on the other, he needed to ensure that he wasn’t squandering all his money. Since he expected life to get more demanding as time went by, he decided to start saving up so he could invest some money every year.

He invested in Mutual Funds and also acquired a Life Insurance policy so that he would have something fall back on in future.

Additional Reading: Why Debt Funds Are A Good Investment For Beginners

Since Rishabh just started his career at that point in time, he was confident that things would get better as he climbed the corporate ladder and gained more experience. But, would he be left with enough money to meet all his expenses every month?

Illustration

Let us assume Rishabh’s salary was Rs.65,000 per month.

His approximate expenses per month (in INR):
Education loan 20,000 (Rs. 15 lakhs at 10% for 10 years)
Rent 10,000
Commutation and food expenses 10,000
Lifestyle expenses and others 10,000
Insurance and investments 2,000
Car loan 5,900 (Rs. 3.5 lakhs loan at 10% for 7 years)
Total expenses   57,900

From the table above, we can see that Rishabh just about managed to meet his expenses every month. However, not everyone will find themselves in the same position as him, which is why it is extremely important to plan your finances and chalk out budgets according to your income as well as your lifestyle.

Additional Reading: Financial Problems Of Youngsters And How To Overcome Them

Many young Indian professionals find it challenging to make ends meet during the initial years of their career. But, with the right attitude towards saving, investing and most importantly budgeting, the early years of your career could set you up for an extremely bright and fruitful future.

If you’re looking for great financial products to help you navigate through financially choppy waters. Whether it’s a Credit Card to help save on fuel, Mutual Funds or Fixed Deposits to help with your investments, a Car Loan, Personal Loan or even a Home Loan, we’ve got a ton of options to choose from.

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