Best financial advice for young people | by Saurabh Adhane | Jul 2022

because you have time to build wealth.

picture by Austin Distel on Unsplash

In personal finances, everyone will tell you to spend less than you earn.

Even that suggestion sometimes works, but it’s not just about saving money.

What is personal finance?

  • The basic definition of personal finance is managing your financial needs and planning your finances for the future.
  • This includes taking out specific health insurance, creating emergency funds and paying installments.

Many people start their personal finances late. They think they are quite young and when they reach their 40s they will start planning their personal finances.

Investing is the key.

Say you start investing in the S&P 500 at age 20. You invest $500 per month, then stop investing after 40 years.

Another example is if you invest in the 40s. You started investing $500 for the next 40 years.

In the first investment, you will earn more money.

This is the power of equity investing.

When if you start investing early in the market and start building wealth that accumulates year after year.

This is a personal finance rule of thumb.

Warren Buffett could create a lot of wealth because he started at 14.

In this digital world, many platforms are available. You can start with $10 and then increase your amount further.

Taking the first step in personal finance is necessary for building wealth.

Reduce your borrowing and pay your credit card bills regularly

I object to using a credit card, buy now and pay later apps. These apps make you spend more money than necessary.

Before you buy anything, ask yourself one question.

Do I need to buy it?

If the answer is yes, buy it.

When I was in college, buying an iPhone was a status symbol. I bought an iPhone, celebrated weekend parties, used expensive clothes, and then went financially and mentally bankrupt.

I had no money to pay my student loan. From then on, I planned my finances to live a better and financially stable life.

I blocked my credit card, started cooking at home, and built up an energy fund for six months.

After finding a job, I paid off my student loan. I don’t make millions, but now I’m more financially stable than ever.

Invest in assets, not liabilities

Buying a house is a good thing.

What if, living on rent was more peaceful and financially cheap, than taking a large sum of the loan and paying it back.

Instead of taking the big car, take a smaller one. You will go from point A to point B, by both cars so why bother to get a cheap one and then invest that money.

You need to educate yourself if you want to manage your finances well. No one understands your financial needs better.

Good management of personal finances leads to a satisfying life. Ultimately, you can use this money to create free time and mental peace.

If you are young and growing, start investing and let yourself find freedom.

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