I still remember what the last day of my very first month of working looked like. I’d just gotten my first paycheck and all I wanted to do was celebrate. In the weeks that followed, my closet saw a whole new set of clothes and my brain, too many hangovers.
Of course, celebrating my success was super important. I still make it a point to give myself that space where I pat myself on the back. But what I wasn’t aware of was how my spending capacity increased out of nowhere. In my first month of college, my dad transferred ₹5000 into my account. With this money I was supposed to handle my monthly groceries, electricity, maid, and cook bills. Of course, my leisure and study material was also supposed to be covered in this budget.
Not once did I think that I was short of money. I would, in fact, end up saving ₹1.5-2k a month. Each time I think about how easily I pulled a month through in ₹5k, I’m astonished at when and how I began spending double or triple to get through similar things once I began working. Of course, student town life and metro city life are starkly different, but if I could save and budget then, what happened now? To add to it, this wasn’t a problem I alone dealt with. Fellow newbie workers fall into the same cycles, and in all honesty, it takes us that one realisation to know where we’re going wrong. I’ve listed three broad spending traps you might be getting into. And if even one hits home, you know where you might be messing up:
This one is the most common and I’m sure that it happens to all of us in some capacity. While it’s normal to increase the quality of your life as you start earning, we often look at coworkers and other professionals as a benchmark. I live with two very successful women in their thirties, considering we’re all working from home, they’re the ones I see every day. There are things which they can afford (both in terms of time and money), and I simply can’t. While a few things like buying a vehicle or a house are beyond my capacity, I did jump into the other things like constantly booking cabs instead of taking the metro closeby, or trying out the house cook when I had the time and energy to make my own meals. We often forget that the people around us come with different paychecks and a different outlook on money. It’s no surprise that tonnes of freshers want to look as rich as their coworkers but this just ends up burning a huge hole in their pockets. A close friend of mine works in an agency in Mumbai and blows up more than half of their salary renting an apartment in Juhu, only because it looks good. If you’re in that space where you’ve jumped to buy a new phone, car, or rent a place that is clearly not suiting your savings, all I want to tell you is that your time will come. It takes years to have a budget similar to your senior colleagues, so wait it out. Grow your savings and decide on where you actually want to spend.
Instagram (or any social media out there) shows you the best of people’s lives, on a day to day basis. Everyone you know is either going on fun trips, or fancy restaurants, or is buying something new, or is achieving all their life goals. Who wouldn’t feel shitty looking at all of this? Another friend of mine is particular that the outfits she wears on social media don’t get repeated. She’s super active on Instagram, and this means wearing new clothes every time she posts a story or makes a reel. She spends a huge chunk of her salary on buying clothes she doesn’t really use more than once. The world gets really small on social media and you have an in on everyone’s lives. Comparing ourselves and trying to outdo others isn’t healthy. If you’ve ever spent on something to only document it on Instagram, it’s time to reevaluate.
Or simply, YOLO-ing too close to the sun. When you’re in your twenties with money that isn’t given to you as an allowance, life's all colourful. So many new earners go a year or two into their jobs without financial planning for the future, building emergency funds or investing. A part of this obviously comes from the fact that financial literacy is rare and there’s too much to learn too quickly. The other part though comes from the fact that you suddenly have so much spending potential and there’s absolutely no one to guide you or keep an eye on you. It’s easy to get sucked into the “living-in-the-moment” mentality and carry it to your thirties and even after that. Yes, savings are important, but building wealth through them and growing your retirement, emergency and life goal funds are also super important. Another mistake many young earners make is settling. Too many of us don’t negotiate for better paychecks and wait for our time at appraisals. Too many of us stick to the same job for years without strong financial growth just because we’re comfortable at our current jobs.
The problem is, the longer you avoid planning out your financial future, the more it will set you back in terms of getting financially independent.
Guilty? What now? If you’ve spotted yourself in there here are some things you might want to consider -
Saving is simpler than you think it is. You don’t have to jump into a complete DIY mode in life, small changes in your day to day life can make your end results so much better. To start with, create a budget. Break this down into a budget for rent and bills, another for groceries and hygiene, and another for leisure like eating out, taking trips etc. All you have to do now is to ensure that you stick to it. Yes, it’s possible that some months you won’t but all you need to do is look into why you went overboard and if it was really needed. The basic rule is, if it doesn’t feed you, make your life easier, or add to your value in some way, it’s not a necessity. A basic needs and wants check will help you spend smarter, and save better.
Managing personal finances can be overwhelming, but a well-executed financial plan can help you take control of your money and achieve your goals. Here's what a personal financial plan should include and ways to create one:
What Must Personal Financial Planning Include:
Ways to Create Personal Financial Planning:
There will always be a bunch of things we want or want to do. And as fun as it is to be impulsive and get these things, it’s also stressful on your pocket. Before you make any budget or decide to purchase an expensive item, make sure you have a priority list. My current phone is a few years old and doesn’t get updates anymore. Getting a new phone is on the top of my priority list this year simply because my current one will soon be incompatible with many apps. I’ve also wanted to get a cat for a few years now and luckily, pets are allowed in my new residential area. Despite that, getting a cat is at the bottom of my priority list for the year. Only because I don’t have a strong need for one, and I know I can wait it out a bit more. Look into every purchase you want to make, and see if it’s something you really need and want, or if it’s something you could wait out for a bit. Not only will this streamline your thoughts and give you goals to work towards, but it will keep you away from unnecessary expenditure.
Remember, it’s normal to land into any trap and take time to figure money out. You’re not doing bad in life if you haven’t had finances figured out but you could be doing a lot better if you did. Unlike school, learning about money is a lifelong thing so take some time out of your life and begin before you spend too much time in the loops.
Financial planning for a salaried employee involves assessing financial goals, creating a budget, investing for the future, and monitoring and adjusting regularly. This can include setting priorities, reducing expenses, building an emergency fund, investing in retirement accounts, and managing debt. Seeking professional advice may also be helpful in developing a comprehensive financial plan.
Check out the top books for financial planning here: https://www.youtube.com/shorts/SE_gr9vAgHk
The 4 basics of financial planning are budgeting, saving, investing, and debt management. Budgeting involves creating and sticking to a budget to manage expenses effectively. Saving includes building an emergency fund and saving for future goals. Investing refers to investing in different assets to build wealth and provide financial security. Debt management involves managing debt to avoid high-interest payments and maintain good credit.