Money lessons for start-up employees

Working in a start-up can be exhilarating. After all, being part of a team that is working on building something new can be exciting and challenging. However, it leaves little time for one’s personal finances. With the high-salary culture, planning for the future takes a backseat. But with the uncertainty associated with start-ups, it is imperative that employees get a good hold on their finances.

Keep expenses under control

Working for a start-up could mean lower employee benefits and a lot of job uncertainty. In such a situation, keeping expenses under check and budgeting are mandatory. Remember, most start-ups are based in Bangalore, Gurgaon and Mumbai, where the cost of living is high. Keep in mind the 30/30/40 rule on your salary – 30 per cent towards expenses, 30 per cent for loan repayment and 40 per cent directed at savings. High savings keep you prepared for any contingency. Savings also need to be used to build an emergency fund, which can be used in case of a job loss. Many times, things don’t work out or the start-up is not able to secure funding and the emergency fund will be useful when you are between jobs.  The emergency fund should be able to cover six months of your expenses. You can invest in ultra short duration or low duration debt funds to build the emergency fund. Getting external medical insurance cover would also be a good idea, to ensure you have continued medical cover irrespective of your employment status.

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