How to manage money in your early twenties

Ok if you are reading this, it means you are young! Not sure how young, but let me assume that you are really young. It means you are still wondering who will pay for your higher education.

You have just graduated and are wondering whether your parents can / should pay for your higher education. If you think it is their duty, you are wrong. If you think they are doing you a favor, you are right.

Here are some tips to handle money:

1. Paying for college education: College education really helps, and you should go. In fact it makes sense to do a good MBA (I mean in the top 10 MBA schools of India – or even Ivy League if you can afford it). However expect your parents to pay only for a portion of the costs. It is amazingly good to pay for your education, books, etc. In life you will NEVER ever regret this piece of advice. Sure, if your parents cannot afford it, you will be FORCED to find ways to fund it. Even if your parents can afford, it will give you a great feeling of paying partly for your own education.

2. Become financially independent: The aim to try to earn an income to meet your own expenses is a brilliant move. The earlier you can do it the better. Remember Warren Buffet was 11 when he started looking for business opportunities? So no age is too early to start, and no age too late to start. Living within your own income (not depending on parents) is also a great feeling. The younger you are the better.

3. Start saving and investing: Savings make your money go, investments make your money go faster. So earn, save and invest. Once you see your money making money you will enjoy the process of investing. When your money makes money you also do not like to blow it away on things that you do not need.

4. Do not buy junk: If you have already been earning and buying unnecessary things, you surely understand what I mean. Just look around if you have things that you have not used for 3 months (6 months if you insist) ask yourself ‘do you really need it?’. If the answer is NO, gift it away, throw it away, get rid of the junk. However, remember the lesson ‘Do not buy junk’. Warren Buffet said: ” If you buy things you do not need soon you will have to sell the things that you need”.

5. Talk money while you are dating: Know the other person’s attitude towards earning, saving, spending and investing. Just too many young people get hitched without knowing the other person’s attitude towards money. Being on the same page as far as budgeting, saving, investing helps. Needless to say I am seeing vicious fights among dating and married couples. Sadly India does not have enough financial behavior data – so we have no clue about how many marriages end in divorce because of money matters alone. Be warned.

6. Avoid credit card debt: If you cannot afford something, hey you cannot afford it that is all. If you are spending everything on the cc and are unable to pay off in FULL at the end of the period, simple, you are in a debt trap and you will need a GIFT to pull you out of the shit. Unless you are Obama, you cannot print money.

7. Make a budget and stick to it: This is really a tough job and it requires a lot of discipline to do it. However if you want to improve at anything – running, fitness or money management, budgeting, recording and comparing the actual with the budgeted is ABSOLUTELY essential. You must do it. Worth the effort. Honestly.

8. Do not rush into a relationship like marriage if you have problems having a conversation regarding money.

9. Do not quit your job without a job on your hand: It is not easy to find a job when you do not have a job. However unhappy you are at your current job, and however frustrated, do not leave your current job. Many people are unhappy or sad with their jobs. However if you have a house to run, an EMI to pay, a promise to keep, find a job first. The quitting can wait.