Congratulations! You are now in the second year of MBA and one year away from a job in corporate India. This is a good time to prepare financially for the financial life ahead. Let us see what are good things to do for a financially responsible start of your life!
a. Get a clear hang on your student loan amount, the installment amount, the rate of interests, and the terms of repayment. Do not assume that a big bank will not make mistakes. They do make tons of mistakes. Do remember that at the end of the day it is the guy sitting at the terminal…not the ‘bank’. So get your documents in proper shape.
b. Get your own credit card and be responsible while using it: Make sure that you buy only those things for which you can pay cash. Remember what you cannot afford paying cash, you ACTUALLY cannot afford by card as well! Do not postpone your problem, postpone your purchase and gratification.
c. Keep looking for part time / full time job opportunities…but of course complete your education – of whatever you have set out to achieve…
d. If possible save – from that part time job or from some ad hoc assignments that you do. You will suddenly realize that the emergency fund that you set up in the bank is extremely useful in case of an emergency!
e. Start searching for rental places near your new place of work. Real Estate is an imperfect market – so you will find a huge difference between a 1bhk, a 2bhk and a 3 bhk flat. So depending on the rentals decide to pool in with one or 2 friends. Pooling cuts down your rental costs, food costs, travel costs and of course entertainment costs!
f. Prepare a projected budget – remember to start the loan repayment as soon as possible. Take a rain cheque from dad / mom – it is smarter to borrow one or 2 installments from dad or mom instead of defaulting to the bank. This saves you the downgrades in your credit rating.
g. Start looking at term life insurance: No parent would want to use money got by the death of a child, but real life is stranger than fiction. So take a term insurance for a short period (assuming that premium is low). Once your salary increases you can enhance the protection.
h. If your professor tells you the world is waiting (dying) to give you a job, do not laugh, he is a professor cut off from the world.
i. MBA went completely out of fashion in 2008. It took professors about 4 years to find that out. It will take the students 3 more to know, and it will take their parents 10 more years to accept…
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