No time? Listen to it instead
I recently turned 24. If you know anything about my story or even if you’ve read the introduction on this website, you’d know that I designed some stickers for Counter-Strike: Global Offensive, that gave me enough money.
However, I was 19 in 2015. Give a 19-year-old some money and watch him go. I was much younger, and if I had the understanding about finances that I have today, I would’ve managed to save and invest much more than I did. Those are the mistakes I’ll talk about in this post.
Disclaimer: Since these are the subjective experiences of just one person who’s still a juvenile when it comes to finances, I would not take them word-for-word.
The idea is to get a general sense of what the most common mistakes are and customise them to your context. I hope we can work together on that. I’ll share the mistakes; you make the application.
Also, I don’t doubt I won’t make mistakes going forward. Perhaps, we can do a 30s post down the line. Let’s hope the list is shorter then.
Mistake #1: I Didn’t Pay Myself First
What does that mean? That means you’re the first person who gets paid out of that money. Once that is done, you’re free to spend/use the rest as you please.
Paying yourself is not getting the newest console for yourself. Paying yourself means that before you pay any other person or business, you cut some amount and you either save it or invest it.
In college (naturally), I wasn’t as wise. I would rather have a cushion of an amount that I was too specific on, and I’d make sure there was that amount in my account at all times. That meant continually refilling my transactional account which as you can guess meant lots of invisible spending.
Mistake #2: I Didn’t Track My Finances Well
This is less of a mistake. I did diligently track my finances. However, there are gaps in between which I feel I would be better able to cover now, especially with the kind of automation tools that we have today, we can in a lot of ways make our lives a lot easier when it comes to tracking finances.
You have smart SMS apps who pick your accounts and balances off texts to show you summaries. You have finance manager apps like Money Lover that I especially recommend. There’s too much help around for us to spend and not know where the money went.
Mistake #3: I Used Reddit Wrong
Reddit is a great community, and I’ve been on there for over a decade now. While I was present on Reddit, I didn’t realise there were dedicated subreddits that talk about finance, financial independence, investing et al.
For example, specific to the Indian context, r/IndiaInvestments is a brilliant subreddit. If you’re into the concept of FIRE which is Financial Independence Retire Early, you can find the r/fire or r/FIREIndia.
Case in point: use Reddit (or any app that you use to interact with strangers) better. You can always find people talking about finance.
Mistake #4: I Didn’t Engage My Immediate Circle
This is something I realised a couple of days ago in a café. Recently, my friends and I have started talking very freely about finances, our stock portfolios, we even have a separate Whatsapp group to discuss money. It’s a very healthy environment, and I thought why didn’t I find something like this during college.
One of those reasons is that, of course, not everyone is earning in college. That makes sense, too. However, I could’ve still made an effort to find those people who were willing and perhaps, made new friends. I could’ve even engaged my current friends into the conversation. However, I was too confused with the entire ordeal.
Mistake #5: I Had the Wrong Financial Philosophy
“Money doesn’t matter” is the wrong philosophy to live by. “Money is not the most important thing” hits a better place. It is essential, accept it or not; the world around you won’t bend to your opinion.
There is a way to make ethical wealth. Some people make ethical wealth. You need to stop looking at the bad apples and look to better people who live more balanced lives.
You can’t sit in a café, pay for a cup of coffee (expensively so), wear clothes that are made an ocean away from where you live, use a phone that’s made of metal from all over the world, and then talk about how money is wrong and the current systems are evil.
They’re flawed, and they’re improving; they’re not evil. Nothing is inherently evil. Not even money.
Mistake #6: I Started Investing Too Late
No matter what age you are, if you start investing now, you’ll always feel you were too late. So, your best bet is to start today, when it comes to stocks and funds. The ideas feel overwhelming at first, and you’ll almost always need a mentor.
For me, I had my elder brother and my father. So, I was fortunate in that sense. It’s just that I took their advice about three years later. That’s also a tiny mistake I made. The financial conversation should not be taboo (even in your own head.)
Ask questions wherever you can. You can always find someone to learn from. If you can’t, go to Growth/Money Twitter. You can also find communities on Reddit that I talked about earlier.
Start now. You’ll thank yourself later.
Mistake #7: I Didn’t Learn to Cook
Cooking your own food isn’t cheap; eating outside is expensive. There’s a nuance in that vocabulary that I only learned of later. Cooking isn’t even hard, even if you have no one to teach you. You have Youtube, you have stores, go buy the ingredients, and fail for some attempts. That’s okay. To be able to cook your own food is a superpower in the times of expensive, substandard pasta from Dominos.
It shouldn’t have taken a pandemic for me to have started cooking, and I feel that was a great mistake and an even bigger financial mistake.
Mistake #8: I Splurged On Coffee Outside
This is in-line with the previous one. If you’re like me, and if you splurge on coffee, you’ll realise you’re way better off by investing in a French Press or a Drip Filter Machine. You can even get your beans from the same café. They don’t mind selling them. Then you’ll realise you get coffee for a month in a couple of cups’ worth. That’s a huge lesson.
P.S. you can still have coffee outside, but your finances won’t take that substantial hidden hit monthly.
Mistake #9: I Had Terrible Purchasing Habits
I’m glad I found The Minimalists podcast when I did. Before that, I was all over the place with the way I bought things. The podcast helped me find ways to change my decision-making process when I wanted to buy something. I did spoil myself on some occasions, but I went from a things-approach to an experiences-approach.
Minimalism also helped me redefine how I thought of and bought clothes. If you pay yourself first, avoid random spends (getting that awesome mug on that random website), only buy what you need, wait for 24-hours before purchasing something, spend on the right things (quality food, education), cut down your wardrobe, you’ve already overcome most of the common financial blunders.
Minimalism isn’t only a movement, or about throwing things, it’s a shift in mindset. You have to find your balance.
While my financial journey has been a little unconventional, I feel I made a lot of mistakes when I started earning. These mistakes aren’t blunders but a list of “the sooner you fix it, the better you fare”. Ideas such as paying yourself first and minimalism save you money without you realising. Lifestyle changes like cooking your own food and brewing your own coffee are conscious steps to save more money. In fact, a complete rewiring of what money is and what you think it means is a significant step to get towards better finances.
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