I would like to put across a few financial mistakes we make at our 20’s. Trust me even I have done a few blunders which took a few years to realize. If at all you, the next generation should able to overcomes these financial mistakes. There are a few financial mistakes to avoid in our 20’s.
Even before joining a job, you would have made a list of things to buy with your first month’s salary. Because buying something out of our earned money gives special pride, yes we all been there and done that.
At the age of 23, you finally get into a job and start earning. After two months of earning you already bought the new phone, headphones, watch, or whatever you had on your list. If you dint have the money you would have got it through credit card and convert it to an EMI.
So instead of saving money, you would have made all plans to spend it through EMI’s, weekend shopping, movie nights, dinner dates, and traveling.
After 2-3 years into the job, buying a car or bike is very important because status in society needs it.
By now you would have made enough recurring expenses through EMI’s and loans. More than 60% of your salary would have gone every month for your expense.
Suddenly after a few years into the job at the age of 26, you would get a thought that you don’t have enough balance in your account. Then you decide to save all that money left after your expense. Actually, it should be the other way.
“First Save and then spend” – The golden rule
Anyway, you will save some money, sign up for RD and FD and do some investment in gold and insurance plans because some relatives say it is good for tax saving.
Instead of systematic investment you try to do all at once and end up losing all your cash balance.
As years go you end up having a life partner because that’s how the Indian social system works. Now you and your partner earn and bring double income to your family. You will find your inlaws or relatives explaining how it is high time that you buy a property.
So without any pre-calculation, you would put all your life savings and liquid cash on the initial payment and buy a house with a loan.
Congratulation, for the next 20-30 years you have added a huge amount to your recurring expenses.
Now you are 33 years old with lots of EMI’s, car loans. housing loan.You have children, monthly expenses, medical expenses. You have all FD’s PPF and many investments for which the returns are more than the interest you pay for your loans.
Without any financial goals, you end up circling life with EMI’s and loans and a way to overcome your expense with a high salary job rather than making investments where money makes money.
Most of us follow things blindly, it is high time that you put the use of that simple interest and compound interest you studied in school.
To attain financial freedom you should know how money works, and how to make money work for you.
