15 things I wish I had known about
money when I was 22
1. Kill your loans first. Car loan, Education loan, home loan, personal loan, credit cards, insurance, cashbacks, reward points - these are traps. Money is a myth and money is a trap.
Avoid loans at all costs. Money is created in thin air, the moment you sign a loan document. Bank loans you the money they don't have, they make it up and you end up paying that money through slavery. The only way to pay off a loan is slavery.
Example - You took $50,000 as a loan to get a degree from some university thinking that it will help you in terms of career. That's great but then you are assuming that it will help. It may not help. Things can go in any direction and you may end up working for years, trying to pay off the loan you took.
The Banking system is by far one of the biggest scams introduced in the history of Mankind. Banks are the corporations who greatly influence inflation, power and loots you of the resources you deserve, without you even realizing it.
Whenever someone from the Bank approaches me, I just say
- Move out, I am not buying anything you have to sell. I don't trust you and I will never trust you. I will rather burn my money but I will not give it to you.
2. Avoid financial investments and make investments with regard to skills. Develop skills. Be more agile. You can always play with mutual funds, stocks at a later point of time. This is the age to develop skills, not accumulate wealth. Skills goes far. Very far. Wealth is just a lubricant.
3. Earnings - Expenses = Savings (Wrong)
Earnings - Savings = Expenses (Right).
4. Every month, pay yourself first. Reward yourself first. You are the first person who should get the reward for working hard. Make yourself happy first, make peace with yourself first.
5. Open a PPF account, keep dumping money whenever you have time. Trust me, you will thank me 10 years later. Money grows exponentially in the last few years.
6. Avoid LIC. Avoid Chit funds. Avoid get rich quick schemes. Avoid Network marketing business, avoid anything which does not add value to the society. If someone tells you to invest in X, ask yourself - is this X adding value to the society? Is this X dealing with people? If the answer is No, chuck it. These are traps they have built to loot your money, they will mould your brain so that you yourself submit your money to them.
7. Simplicity is the ultimate sophistication. Be simple, stay grounded and never take shortcuts when it comes to money. Showing off, lavish lifestyle and buying unnecessary crap will recoil back in time. What goes around, comes around.
8. Differentiate between needs and wants. Whenever you buy something, ask yourself - is this my need or is this my want? I generally follow a 3:1 ratio. I will buy 3 things I need and one thing I want. This ensures some kind of balance. No matter how much money I have, I will try not to break that balance.
9. Listen to your parents. They know how to deal with money better than you and they have been doing it for decades.
10. Divide your income in 4 parts
1/4th = needs
1/4th = savings
1/4th = Contribution/Entertainment
1/4th = Risks, ventures, investments.
11. Do not give money to your friend as a loan. Never. Trust me, money kills relationships. Some relationships are broken the moment you earn or lose enough money. Try not to give loan to friends or relatives. If they are in trouble and need your help, donate the money to them but never expect them to return. Do not loan money to people expecting a return. Better, do not loan it in the first place.
12. Prepare some sort of buffer cash. If my survival is X per month, I have a buffer cash of 12X in my bank account as fixed deposits. This ensures I can do whatever the heck I want to in this one year, so money cannot kill the choices I want to make. Buffer cash will save you opportunity costs and time.
13. Do not work for free. Ever. Say no to free internships, say no to extra hours after work. If you are good in something, never do it for free.
14. There are some avenues which will always remain profitable no matter what happens. Example - land, medicines, alchohol, education. If you want to start a business, pick a secured industry, gain ground and then jump into a risky venture.
15. In the end, money is just a lubricant, it makes your life smoother. Remember, money is for the life, life is not for the money. Realize that it is never going to be enough. Never. Its a beast - you keep feeding it and it will still want more.
Bonus tip: Never depend on a single income source. Always have an escape plan. Freelance, start a side venture, do whatever it takes to have a secondary earning source.