5 Money Mistakes I made in my 20s
Breaking the mindset and years of practice
Like many other Indian kids at the end of my visit to my grand parent’s house every summer and winter vacation, I received money from my relatives. In our culture, this was a sign of love. Usually, the Kid’s parents take the money and save it for a “Rainy day”(and never return it) or the kid gets to keep it. I was one of the lucky ones, who got to keep it. I remember dividing the money and spending a portion of it on buying chocolates and hiding the remaining in my cupboard.
When I grew up and started working, I was living paycheck to paycheck. If I had surplus money at the end of the month I would keep it aside for a rainy day or an emergency. I would write down and document my spending & savings at the end of each month in a notebook. This helped me analyze the pattern in my spending and liabilities. I started refraining from futile spending and started investing. I thought I was doing a good job with my finances but as I read more books and blogs about money I realized that this was just the tip of the iceberg!
But it was a start!
Let’s Jump into it..
1. Not making a monthly Budget — To save money, I would try to reduce my monthly expenditure copiously for a couple of months and eventually binge-spend the following month.
- Making a monthly or weekly budget helped me recognize and partition my income according to criticality.
What money is coming in? Where is the money going? How can I contribute toward my financial goal?
2. Fear of getting a credit card — I always thought that credit card money was not “Earned” but borrowed and that this was not righteousness. This was engraved in my mind at a young age as the people around me, friends & family had a tough relationship with credit cards. Also, the portrayal of the usage of credit cards in multiple movies seemed so sinful.
- Credit cards might be tempting for all the wrong reasons but by choosing the credit card that fits your spending type you get discounts, cashback, and reward points. Credit cards are safer than debit cards in case of fraud and you can always use them for emergencies.
3. Not starting to invest at a young age — During the early stages of my career, I had the desire to start investing but always felt that I was running low on money. The money that I saved in the cupboard was strictly emergency money which I never used.
- Keeping inflation rate in mind, start small. Aim to put at least 5% of your income towards investing to get accustomed to it. This first step would bring you to learn more about investment and prepare you to invest more.
4. Spending money to impress people or myself — I love styling myself. I liked that new clothes made me feel confident and I was more than comfortable with starting up conversations with strangers, and leading meetings. It made me feel like I was keeping my best foot forward.
- I realized I have more clothes than the number of days in a year and most of the clothes were stacked at the back of my cupboard with the tags attached. I started learning about being a minimalist through videos and podcasts. By practicing this over the years, I realized that I had the same level of confidence regardless of the clothes I wore. Being outgoing was already a part of my personality! I believed more in myself. All the principles and values that I followed in life changed for the better.
5. Not being in charge of my own money — Always handle your finances efficiently. This gives you more confidence, independence, and more power.
- Read books and articles, listen to podcasts, attend seminars, chat with financial experts, and make sure you gain new financial knowledge. The earlier in life you learn about money, the better off you will be financial.
“Money is a powerful tool, and the best thing it can buy us is our freedom. This can mean different things to different people. To some it can mean sitting on a beach somewhere with a cold drink in hand, while to others it can mean spending more time with family and friends.”
Start small, stay consistent.
