Financial mistakes you should avoid in your 20s and 30s

All of this is personal experience. I write this begrudgingly as someone who was never financially literate nor received any good financial advise all through his life.

So why read right? I am not a financial guru who has made millions? What kind of useful info could a 35-year-old dude who has made a lot of mistakes possibly tell you ?

That is where you are wrong. I know, because I made the same mistake. Financial gurus do not reveal any ‘secrets’. There are umpteen reasons why, but more often than not, these ‘Gurus’ are in it to make money themselves. Most of them really don’t give a damn about you and I am pretty sure you would agree with me when you are my age.

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I mean you could literally read all the financial self-help books there are and not gain any concrete knowledge. A lot of them are very arbitrary with no specific strategy or guideline, which means you cannot action on them the way you want to. At the end of each book, you are left with more questions than answers.

That doesn’t mean you shouldn’t read books, please do. But make sure to take actionable leads from each finance book that you read or implement specific strategies that you derive from them.

Anyway, that is long enough to get started. Lets get into the meat of the matter:

Let’s do the ‘don’t s’ first.

No credit cards

Right now I know every dude and their mothers will tell you the credit cards are bad news. But I see a new wave of online shoppers taking credit cards for free gifts, ‘points’, ‘coins’ or cashbacks(?).

Nope. Don’t do it. Credit cards, as attractive as they are, will always be bad news. Now some cool sales guy might convince you that you are a hot shot and that you can easily handle cards as long as pay your bills. But no, he is the one getting paid to sell you the cards. Take a cue from him and make sure you do something that earns you money.

If you’re still convinced that you need credit cards, go ahead get them. Prove me wrong and earn the right to use them. Nothing wrong about responsible spending.

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No expensive cars

In fact if you know that one gear head who knows everything about cars, take the dude and get a used car. Or don’t get a car at all. Cars are shitty expensive and most of the time, they aren’t worth it. Yes, there was that onetime you got stuck in the rain when you yearned to have your own wheels. But trust me, cars, esp the more expensive ones — totally not worth it.

If that girl you’re getting married to, wants you to buy a car. Or if that guy you want to marry demands that your daddy gets one for him. Drop the idea. Of Marriage that is. How in the world is an expensive car going to help a marriage?

Learn cycling. Get a two wheeler if you are hell bent on getting your own ride. You can always take the uber or Ola otherwise.

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No expensive gadgets, mainly electronics

When is the last time you thought about getting something so expensive you thought twice, thrice, 15 times and still went ahead and got it. Do you really have it? Is it still working? Do you value it? If your answer was yes, well done! Do the same due diligence next time too.

No? Then don’t do it next time. Buying electronics is addictive. If you are still thinking, ‘hey I use it just so that I make my life easier’. No they are not making your life easier, they are just costing you more money and making you lazier.

Here is a hack that works for me. Next time you want to buy something unnecessary — Open it on amazon. Think about it for a long hard moment. Then invest the exact same amount(50% of it, if its too expensive) on a bond, mutual fund, good stock, Crypto or literally anything else. Now that we’ve scratched your itch to spend money, do you still want to buy this shit?

No? Great. Welcome to adulthood. You’re gonna love it. No really. Time to grow up. Invest in your future rather than on those super-duper-magnum-noise-bursting-silverware-platinum-coated headphones that might give you Tinnitus or that e-phone-pro-ultra-max-XL-512TB.

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Don’t splurge on anything

Yes. Anything. Why do you really need to splurge money on anything really? Why? Buy responsibly. You aren’t reading guides like these to listen to people tell you that you can spend as much as you want. So don’t do it. Just don’t.

Live simply. Get only what you need. You don’t need a camera, your phone is fine. You don’t need expensive mice, your budget branded mouse is plenty. You don’t need to upgrade your phone every year. Think long and hard before buying one, don’t change it unless absolutely needed. In fact, how about you stay off your phone for a while?

Don’t buy stuff to impress people. Nobody is impressed with someone spending money. They’re probably thinking ‘Goodness me this guy/girl is dumb’.

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Don’t order food outside all the time

Yep, I know this one sounds hard. But learn to cook. No! you’re not too busy to stay outside the kitchen! Cook simple meals and spend some time understanding what is good for you. You can make it taste exactly the way you want it. But don’t always buy food from restaurants.

Buy fresh vegetables, meat, bread, cereal or whatever it is that you like. Cook your own food. You’ll be surprised how much money you save and how much it improves your health overall.

Budget meals or takeout are fine. But understand that cooking at home is more than just about saving money.

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Now let’s do the ‘do s

Invest, don’t just save

Yes. You need to. If your first reaction to that was ‘But I don’t have cash to invest’, hold it right there. This is the most important part of this piece. Even if you do everything else right and don’t invest, all of it wont matter. So first lets establish that this is like super-critical.

Use the same hack given for shopping. Planning to spend a few dollars on popcorn and nachos? How about you eat before you go to the cinemas? Planning to impulse buy a T-shirt you only ‘moderately’ like? Throw it back into the shelf or into the bin you picked it from. Yes. do it.

Now keep that amount in mind. Go home, open your laptop. Look for a good mutual fund, bond or stock. Buy it. If nothing, throw it into a secondary savings account. This account is only for your investments, no other spending. Invest from it any chance you get.

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Find out where to invest

If your reaction to the previous point was ‘But… but.. but where? Isin’t it easy to just buy this printed top?’ Well yes, its easy to buy the printed top. But it is also not why you’re reading this. And ok, take that damn printed top. It’s ok to buy what you like, just not always.

Spend a full weekend. Get your potential to take risks. Understand how stock markets work. Understand how mutual funds work. Understand the basics of money and investment. Understand compounding. There are loads of youtube videos available for free. They had out this information in a short, efficient manner. If you’re bored, remember — Investment is like earning from the second job without having a second job. So do the hard work now and then you can relax as these investments make you some money in the long run.

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Too hard? Take the easy way — Hire an expert

No seriously. If you hire someone to plan your finances, you have a better chance of saving more than what you pay the financial planner. Suppose you need to dole out $100 or the equivalent. You can easily save multiples of this amount from tax filings, savings, investments.

You don’t have to hire the best planner in the world. You just need to hire someone who can give you at least 3 areas of improvement on your current portfolio. Make sure that you have enough knowledge to put them to work in the first place.

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Too easy? Take the hard way — do even more research from your side

Yes, it is that simple. What else did you expect? Nobody is going to sit down with you for your own sake unless they get paid or unless you put a gun to their head(Not recommended, guns are expensive). They all have important shit to do, man. Besides, a significant portion of them have no clue on how to plan finances anyway. Or do they?

Talk to friends. Read blogs. Read articles specifically for investments. Build your own portfolio. Understand from your friends on where all you save taxes. Is there a category that you might have missed? What could you save on from next year? Analyse stocks. Invest and revaluate Mutual funds and bonds. Take advantage of any new tax exemption that is being added.

Leave nothing to chance. Take this just as seriously as you take your regular job.

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Take no shortcuts in health and wellness

Surprised that we are talking about damn fitness even here? Don’t be. Stay fit. Understand that health is just as important as wealth, if not more. If you are not healthy, you will end up losing more cash than you earned while slogging for it. If you are not feeling well, respect your body and give it the rest it needs. Its ok to slog now and then, just not always.

Don’t pop pills when you feel like it. That is a terrible thing to do. Address the problem with a trained medical expert or physical trainer and make sure you fix it at the root instead of patching it up with pills and hurricane diets.

Bottomline — Staying unhealthy is expensive. Staying healthy is cheap and good for… you know, life and stuff.

Photo by Sven Mieke on Unsplash

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Product manager, builds human-centric products for …humans

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Vijay Balasubramanian

Vijay Balasubramanian

Product manager, builds human-centric products for …humans

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