By the age of 30, an average American should have a net worth of $7000. In the Indian equation, by the age of 30, you should have a total saving equal to your annual salary. By the age of 35, it should be double your annual salary.
In my 20s, it seemed pretty doable. I never took into account the fact I won’t be living with my parents. Though I might be better off than the average, spending and saving are the two super difficult tasks – even more difficult than earning!
Eventually, I realized, it’s just not me who is struggling – the majority of the millennials are clueless about their finances. To educate yourself, click here. I am not here to give any financial advice but I just want to discuss some practices that have helped me maintain a decent portfolio.
Stop Saving Actively
It might sound vague but trust me, it’s not.
You can’t save money by going out to a club and NOT spending there. We don’t have to be Uncle Scrooge to save big! Savings should be automated.
Your paycheck needs to make certain pit stops before reaching you. I like the American system of banking – savings and checking accounts. Automate a part of your paycheck to go to your saving account. In India, I had two additional accounts, other than my salary account. One for my savings and the other for my travel savings. And I would keep a major chunk of my salary in my salary account for daily expenses like groceries and gas.
This might sound a li’l tight in the beginning but it allowed me to have the lavish lifestyle I had!
If you have loans to pay (thankfully I didn’t because being a good student paid off well), you know how to segregate your paycheck.
The basic idea here is to make sure that your liquid fund is minimal so that your mind is trained to spend less.
Invest, Invest, Invest
Financial education is very important.
Mutual funds, stocks or even deposits – invest anywhere but invest.
Keep an account for only buying shares. Don’t sell – just buy and your money will earn for you in the long run. This requires very less market understanding.
Switch to a high-interest yield Savings Account
Your money should do something for you even while it’s sitting in the bank. While Chase gives you an APY of 0.01 %, there are online banks that can give APY of as high as 1.7%. Though that might not be a fortune, it’s something to think over.
Stop Mindless Spendings
Stop going to the grocery store – order online! Believe me, it works! Every time you go to the store, you tend to buy more. Online shopping is a lot more focused.
I watch only Netflix but I used to have Hulu, Apple TV, Disney + and HBO Max subscriptions. Why? I don’t know – maybe such a waste of money and productive time. for days when I “might” want to watch something!
Mindless spending is very different from active savings! These are just passive spends that are there and won’t harm you if not done! But depriving yourself of simple things in life makes you discontent and we don’t want that!