And what you can learn from them.
As a young person, money isn’t your most valuable asset.
Time, energy, and mindset are your most valuable assets.
The baby steps you take today towards financial freedom can make life so much easier and richer down the line. Read on for some of the most intelligent financial decisions I took in my early 20s and how they have compounded to make my life better today.
If you’ve recently started earning or are in college trying to make ends meet, this post is for you.
0. No Student Loans
This is a privilege I was granted because of my birth and my parents’ hard work.
From pre-university until post-graduation, I studied in colleges subsidized by the Indian government. I also received a scholarship, which took care of most of my expenses, books, etc. My parents took care of anything that the government didn’t cover.
In this regard, I was privileged that I had no student loans.
It helped me start my financial independence journey much quicker than most people my age in developed countries. This headstart paved the way for several intelligent financial decisions, which I discuss in the following sections.
1. Start Travelling in College
My first trip with friends was in my final year of undergrad.
It was to a hill station with a bunch of friends. This was the first time I had explored a new place without the guidance of my parents, and the sense of freedom it gave me was unparalleled.
After that, I went on one trip almost every month during my post-graduation. Traveling young helped me understand a few things, namely:
- I learned to look for cheap flights, trains, and places to stay.
- I milked schools and universities for whatever travel scholarship or internship options they had to get all-expenses-paid trips.
- I constantly searched for new ways to get hotel and flight booking discounts. This made me an expert at always finding the best deal online.
These habits have stuck and helped me plan trips even now. They also got me hit by the travel bug, a wanderlust I haven’t yet been able to get out of my system.
2. Live on a Frugal Budget
Since I hated asking for money from my parents, I always tried to budget for every expense I anticipated at the start of every month.
Budgeting helped me:
- Identify major drains on my money and find ways to reduce them or make them less guilt-inducing.
- Understand which activities or products make me the happiest and cost the least. This way, I could further double down on them and enrich my life.
- Be strict with myself regarding how much money I’ll spend each month. This helped me plan my expenses better, so I didn’t have t constantly go back to my parents in case my bank account emptied itself in the first few weeks.
3. Explore Alternate Sources of Side Income
I’m a millennial from India. I didn’t grow up with the internet.
But the dot com wave took the country by storm and the internet was accessible in the late 2000s. That’s when I started taking part in online writing competitions.
I made my first $ on the internet in my 3rd year of undergrad.
It was a short story competition on “Your Story Club” when my story won the “Story of the Month” and “Editor’s Choice” awards and got INR 1500 ($18).
I was over the moon. This award got me so addicted to writing fiction that I submitted a short story on the platform every month until the competitions on the website finally closed.
But the spark for online writing was lit in my soul. I started writing on Quora in 2014, and today, my entire writing business is built on the internet.
It’s incredible how your first $ on the internet can transform the entire trajectory of your life. It shows you the internet's immense possibility and how side hustles can empower you t make choices that lead you closer to your dreams.
4. Understood the Power of Saving for a Big Goal
My father introduced me to the concept of “recurring deposits.”
Even in college, I leveraged their power to plan for significant expenses, like buying a new phone or finally going on that trip I’d been planning on for so long.
Even if the goal didn’t materialize, I saved some amount at the end of every month. This brought discipline in my spending habits and taught me the power of compounding.
It also helped me gift myself luxuries I otherwise wouldn't have been able to.
Even today, whenever I see a big event looming on the horizon, a recurring deposit is the direction my brain thinks. I’m planning a Europe trip in 2023. You get no points for guessing where the finances for that are coming from! :)
Summing up, here are the five smartest financial decisions I made in my 20s:
- Had zero student loans.
- Started traveling in college.
- Budgeted every small decision.
- Started side hustles and explored ways to make money on the internet.
- Explore recurring deposits to bring discipline in my spending and plan better for big expenses.
Making these financial decisions has allowed me to afford annual vacations and have enjoyable trip experiences without the guilt of overspending. Monthly debt payments do not weigh me down. I can spend my money on luxuries while remaining highly optimistic about my future.
If I hadn’t started making wise financial decisions in my early 20s, none of these perks would have been possible.
What have been your most intelligent financial decisions? Do let me know in the comments.