Financial Planning

I’m in my late 20s and don’t know how to save. Is that normal?

. 4 min read . Written by Vanshika Goenka
I’m in my late 20s and don’t know how to save. Is that normal?

Ah, your 20s – a time everyone expects you to make the most of. This is your time to make mistakes and go crazy, they say.

And just like that, with all the mistakes we rightfully make and learn from, we forget to be responsible. Especially with our money.

How many of us have thought of learning how to be smart with our money in our 20s, only to put it off for another day? Well, I certainly was one of them. That was until I moved out of my home and realised I was now responsible for my own expensive habits (and there are many).

I know I’m not alone. Very few of us are good with money, let alone money smart in our 20s. But that needs to change. And we’re here to help.

We spoke to Pallavi Gandhi, a financial banker and coach with over 9 years of experience.

Pallavi discovered the saving and investing capabilities of women during demonetisation, who had no financial literacy. That inspired her to bridge the gap and relieve people of financial anxiety.

So, if you’ve asked yourself, ‘How can I save money in my late 20s?’ Pallavi has some tips for you.

Who’s afraid of the M-word?

Before we talk about how to save money in your 20s, let’s address the elephant in the room: Why are we afraid of money in the first place?

Pallavi believes this fear has been instilled in us as children.

“It’s been in-built in us – we should not talk about money. We’re taught maths in school, but never saving and investing,” says Pallavi.

“Parents don’t reward their child for achieving something, or how to earn it and to spend it.”

This causes us to grow up ambivalent about money. “You come into your 20s with this mindset. If learning a new language is difficult at this age, finance can definitely be intimidating.”

But the good news is that it’s never too late to learn about how to save in your 20s. Read on!

How to save money in your late 20s

1. Talk about money – a lot

Our cultural sensibilities tell us that talking about money is crass and rude, which has made us fearful of it. But the first rule of the finance club is to always talk about the finance club.

Talking about our investments can help us make financial decisions and understand how to be better with our money.

Says Pallavi, “Manifest it into yourself. We’re living in a world where there is a lot of pressure, so talk about your investments and savings and not just how much you’ve spent.”

2. Know your goals

The first step to start saving in your 20s is to know what you’re saving for. Once you have a goal in mind, you can work towards it.

“Your goals need not be concrete, but you should have some short, medium, and long-term goals,” says Pallavi.

For instance, a short-term goal can be buying a laptop or bike. A medium-term goal can be buying a home. A long-term goal could be saving for retirement. Figure where your priorities lie and plan out your investments. Remember, no goal is silly as long as it encourages you to invest.

3. Start small and build up

First things first, analyse your salary to know how much you’re capable of investing. That will help you choose the right plan. One of the most important saving tips for beginners is identifying where you can save on your taxes.

“80C and NPS cover long-term goals,” says Pallavi. Even PPF is a good instrument to start with.

If you haven’t cleared your debt, start with that before you start saving and investing.

You don’t need to have a huge sum to become money smart in your 20s.

4. Diversify

Don’t put all your eggs in one basket. Your investments should be diverse and should meet the different goals you want to achieve. But there are some important investments you need to make:

  • A retirement fund – to ensure you have enough money when you’re old
  • Health or life insurance – in case of an accident or health emergency
  • An emergency fund – in case you need a large sum of money that isn’t tied up

There are several kinds of investment options for the goals mentioned above. Depending on the time frame and your earning capacity, you can decide how much to invest. Voila, future secure!

You don’t need to be of a certain age to start investing and build your wealth. Your 20s are meant for you to learn, and you are – except now, you do it too!

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