As you start earning money, it'll not take a lot of time to realize that earning money isn't a big deal. Thanks to what you have learned in school and college. But you may soon realize that you lack the skill of spending and saving money carefully.

If yes, there is nothing to worry about as initially, almost everyone faces it. However, continuing things the same as they are is what to worry about. So, to make sure that you are managing your money wisely, read these ten tips carefully.

1.   Create a realistic budget

First thing first, set up a budget for your expenses. A common mistake that young people make is to spend as per the current requirement. But many times it results in expenses that were not necessary and those that are necessary remain unpaid. So, you get to manage money from somewhere else to pay them. However, with a budget you can plan your expenses leading to a well-controlled spending patterns.

2.   Draw a Clear Line - Needs vs Wants

Being a young professional who just started earning money, sometimes determining what's a need and what's just a want comes as a task. To get help with it, make a list of expected expenses. First, pick up those expenses that should be paid at any cost. It includes any kind of bills, groceries, rent Etc. Now, what you'll be left with is most probably your wants like an oven for your kitchen.

3.   Start Savings ASAP

While spending for your present needs and wants is important to survive, looking forward to the future is also crucial. Hence, you should start saving as soon as you start to earn. What most young minds think is that they have a lot of time to save and indeed they do have it. But what they don't realize is the power of time in compounding and we'll be coming to it shortly.

4.   Use the 50-30-20 rule for budget

Okay, so we have sorted needs, wants, and savings but how to split my earnings for these three? Here comes the 50-30-20 rule. This rule by Elizabeth Warren says that you can spend 50% of your income on your needs, 30% on your wants, and the remaining 20% on savings. So, now you know the proportions as well.

5.   Compounding × Time = Exponential Growth

Look I'm assuming that as a young mind, you know what compound interest is? So, when you do savings in assets like stocks, SIPs, and Mutual Funds, the math is done with compound interest. Hence, time plays an important role. You would not believe that if you put ₹2000 monthly at 8% for 10 years the corpus will be more than ₹3 lakhs. On the other hand, if you put ₹4000 for 5 years on the same interest, you'll make only ₹2.8 lakhs. See that difference, this is the value of time and consistency.

6.   Try to be Debt Free

While compounding is good for earning money, it's bad when you take out a loan. Getting a big amount at once and paying it off in EMIs sounds good, but mostly you pay an interest half or equal to the amount you borrowed. So, keep it as an emergency option only.

7.   Create an emergency fund

Even an emergency can be handled without a loan, if you also start an emergency fund. By putting a small amount of your income into this fund, you can make yourself ready for any emergency.

8.   Plan your Retirement Early

50 to 60 is the age when you better be playing with your grandchildren instead of going to a job, right? So, you must start planning for your retirement as early as possible to retire early yet with a huge corpus as compounding works here as well.

9.   Be a Tax Savvy

Young and aspiring minds don't take very long to earn an income that comes under a tax bracket. But blindly paying tax is equivalent to wasting your money. Thus, be tax savvy and know how you can save money with valid tax deductions.

10.                  Keep Learning the Finances

Unless you have studied finance, you may lack the knowledge of finance. But there's nothing to worry about as learning it now has its benefits. You can learn the concepts that really can help you and make practical learnings with real money.