I am no personal finance guru.
I am no millionaire. Far from it.
I am just another person hoping for financial freedom one day.
But since the last few years, I have been enjoying reading about personal finance, researching and then taking action. As mentioned in my previous post, I have no clue where this journey will take me, but it has been an enlightening one so far.
I must have been 10 or 11 when a friend’s father asked a question to a bunch of kids (including me) at a party – “How much of your salary should you save once you start earning?” I remember just staring back at him. I had no clue. To be fair, which 10-11 year old would? Our parents don’t usually ask us such things. He answered “20%” and since then that percentage has stuck in my mind, living rent-free, refusing to leave.
20%. I took this number with me. When I started working, it was the first thing I thought of. Makes me wonder – if only kids were taught personal finance at school. They would grow up to be better at managing money.
I am 36. There are times I wish I had started my journey on learning about personal finance a bit sooner. I try to comfort myself saying I did not have the resources I do now back then. Our resources were our parents, relatives, friends and all those people we regularly interacted with. In short, people who were not financial experts. My 20s and early half of my 30s were mostly spent in a bubble, thinking Fixed Deposits (FDs) are the way to go. When I started researching, all the info I got just blew my mind.
If you are in your 20s, this is the best time to learn about personal finance and invest because there are so many valuable free guides online. Plus, you have age on your side!
It was only recently, in the last couple of years, that I learnt saving your money alone is just not enough. You need to invest as well to create wealth.
Here are a couple of things I have learnt from my personal finance journey so far:
- Read books, watch videos, listen to podcasts, read personal accounts on Quora and Reddit.
- Diversify not just your investments, but your knowledge sources as well. Get your knowledge on personal finance in various formats. Don’t just stick to one.
- Latch on to the things that the different sources keep repeating. I find these repeated pearls of wisdom are of more value and reliability than the things that do not get repeated.
- Use social media to gain knowledge. Follow “Personal Finance”, “Investing” topics on Twitter. Related tweets will pop up on your feed. You will find some of the best personal (and honest) anecdotes and tips this way.
- If you are on Instagram, search for personal finance pages/experts and follow them. Same for Facebook and any other social media platform.
- Start investing in equity as early as you can.
- Be patient with your investments. When I started off investing, the value of my portfolio went down considerably, but then picked up in 3 years. My emotions varied from “Did I make the right choice? Maybe I should exit.” when I first started off to “Why didn’t I start this sooner?” after 3 years.
- Live below your means. I am trying not to increase my standard of living as my income increases. Instead, I am trying to increase my savings/investments.
- 20% – always keep this percentage in mind.
- Do not trust every advice you see on the Internet (including this post!) – do your own research, and customize your own personal finance itinerary depending on your risk profile. Whatever step you take, make sure you take it as soon as you can after doing a proper research.