Which age is the most important to make money or earn money in any manner? Actually, every age is right to make money, as I always say. However, the way we earn makes all the difference.
There are very important money lessons, too, that everyone should learn at different stages of life. That’s because each stage of life demands a newer mindset, a different level of skills and an entirely different way to work to earn money.
While all stages of life are equally important to earn money, there’s one specific age group where you need to be particularly careful.
And that is when you’re in your 20s. That means right from the date you finish your 19th birthday till the time that you celebrate your 30th birthday.
This period between your 19th birthday and your 30th birthday is one full 10 years or 3,560 days if you calculate.
And during these 10 years, there’re several landmarks of life that you would most likely cross. That’s why I consider that you should learn at least five money lessons in your 20s.
I will start by describing some of the landmarks that Indian people usually cross between their 19th birthday and 30th birthday.
This might make it easier for you to understand why I say that there’re five important lessons about money that you need to learn during your 20s.
Landmarks We Cross in the 20s
In fact, the 20s are the period of 3,650 days when we cross the most important landmarks of our life. Hence, this period is very crucial for all, regardless of whether you’re a woman or a man.
These landmarks occur just once in a lifetime.
Graduation from College and University
Unless you drop out of high school after your Higher Secondary Certificate, you would most likely join any of the professional courses such as medicine, engineering, law or mass media, information technology or something else. This is common in India.
Let us consider that an average Indian woman or man graduates between the age of 21 years and 23 years, depending on the course they study after HSC. Also, let us consider that till graduation, you were fully dependent upon your parents for your money.
This means that anything between one year to three years of your 20s is already gone in studying. More, if you opt for higher studies. In some cases, people achieve a postgraduate doctorate or some other qualification at the age of 25 years. This means they have relatively fewer years till they reach the age of 30.
Generally, in India, women and men get married before the age of 30 years. The most common age for the majority of women and men to get married is between 26 years and 29 years, depending on various factors. Surely, some get married even earlier.
A lot of factors related to our Indian marriages depend upon the educational qualifications you hold, the community that you belong to and the income that you earn. Other considerations, such as social factors, also matter in Indian marriages.
This means that other than merely getting your education degree you’re assuming the responsibilities that come with marriage. This means you’re being responsible for another person in your life, a wife or a husband.
Modern-day psychology proves that marriage is one of the most traumatic experiences of life. Of course, there’s nothing sad or wrong with the marriage.
However, it brings trauma because people have to go through several rituals and are often uncertain about what married life would bring. Some are even blissfully unaware of what married life means.
You could have worked part-time or taken small side gigs, or even done some full-time work during vacations or college days. But those were done for earning some money during spare time and without much experience or even a college degree.
I won’t call them serious jobs or real jobs. That’s because, most likely, you didn’t take these jobs to make a career in that company or with that employer.
Instead, these jobs were internships or some sort of source of income or even to get insights into the profession where you wish to make a career.
Usually, in India, most people in their 20s change the maximum number of jobs. While some leave only one job and take another if they find a good employer, others switch at least three jobs before the age of 30.
The only exception to these job changes are persons that get a Central or state government job with top banks or practice their own professions such as medicine, law or even, to some extent, engineering and architecture or Chartered Accountancy.
Often, newlyweds in their 20s get their first baby within a year or two of their marriage. This is a common in India because society lays emphasis on becoming a parent while you’re still young.
That’s because a growing child has growing needs. Hence, the younger your age, the better you can bring up a child. For example, you wouldn’t be too old or retire when your daughter or son is in their 20s.
Couples that have their first child in their 20s are actually able to give more time for the kid because their energy levels are relatively higher.
However, having a child also brings in a load of responsibilities. It means that the wife would not be able to work for some time or may have to give up her job altogether. This puts an additional strain on just one income from the husband.
Unless the man has a large enough salary, marriage and childbirth can actually drive you into poverty and even put you on loans unless you’re careful with the money you earn.
Buying New Stuff
Normally, people in their 20s are very fond of buying new stuff with the money they earn. Their financial independence gives them some flexibility to buy a vehicle such as a scooter or a motorcycle or even a good car. They also buy lots of other stuff such as new mobile phones, laptops and other gadgets.
Often, such people don’t buy on cash. Instead, they prefer buying in instalments. That allows them to pay only a part of the money every month, though installments come loaded with interest and other charges.
Other than these, people in their 20s also spend heavily on new garments and other stuff, that helps them improve their lifestyle. This, however, depends on the salary you earn.
If you’re earning in the mid-income bracket, you can afford such stuff in instalments. But if you’re earning a small salary, you might be unable to afford that bike of your dreams. And if your income is high, you might prefer buying it cash down instead of in instalments.
However, these expenses are expenses. In the sense that you have spent the money, you earn in your 20s. These aren’t investments of any sort.
What Does This mean?
Through these examples, I am only pointing out that most Indians cross the most important landmarks of their life, such as graduation, settling at a job, marriage and childbirth, as well as getting new stuff for themselves while they’re in their 20s.
If we look at the later stages of life, there wouldn’t be so many landmarks really. This means the 20s are an age that can define your career and lifestyle as well as social status and financial standing. And this directly implies that the 20s are perhaps the most important age of your life to earn money.
The 20s are actually a short span of time. Though it looks like 10 full years or 3,650 days, it could be much smaller, depending on when you graduate and take a job or enter the business.
This again directly means that you have to learn five important money lessons in your 20s. What are these money lessons? I will explain now.
5 Important Money Lessons in the 20s
So, what are these important money lessons that you should learn in your 20s? And why do I say these lessons are important? They are because these are the master key to living the rest of your life happily.
Here are these five important money lessons. I choose to call them the master keys of your success in life.
1. Plan for The Future
As we have seen, the 20s was a very hurried 10 years of your life, full of activities such as college life, graduation, marriage, possibly you’re a newborn parent and much more.
Actually, all these were concentrated in a very short period after your graduation, unless you’re among those few persons that marry during your college years.
Also, you wouldn’t have been able to save much during these years since activities such as jumping jobs, marriage and child, buying newer things definitely costs a lot of money.
Often, there would be times when you would have felt the need for extra cash and possibly a higher income. Therefore, the first and foremost of the five money lessons to learn in the 20s is planning for the future.
As I mention earlier, if you have one or even two kids, their needs are going to grow over the next few years till they begin earning. That means you have to provide all their needs to the best of your abilities. That directly translates to higher expenses and more strain on your household income.
If your spouse is also earning, you might be able to help in the household expense if their income isn’t really sufficient to meet the needs of the growing family. But if your spouse isn’t working for any reason, it can be a cause to worry since your lifestyle might start slipping downwards over a period of years.
Therefore, it is best to start planning for the future. You still have several years of service left ahead of you. Therefore, calculate how much money your household would realistically need and plan to earn that money. Again, I repeat, earn that money through your efforts.
The other thing you could easily do is start freelancing. India is home to nearly 23 lakh freelancers, and you can also become one if you can sell your skills properly.
2. Learn to Invest
The second money lesson that I will ask you to learn in your 20s is learning to invest. Most of you would have seen this ad on TV or heard it on the radio or seen it in newspapers, magazines, buses or trains and even rickshaws.
This ad says: “Mutual funds sahih hai.” The ad is from the Association of Mutual Funds of India or AMFI, which is based in Mumbai. And as this ad says, you can start your investment journey with as little as Rs.500 only.
Actually, you don’t even need Rs.500 to start investing. The minimum entry for certain Mutual Funds is Rs.100 only. We all know that in today’s time, Rs.100 is worth very little. Even a person whom we call poor can easily afford Rs.100 or Rs.500 a month.
You can start investing in Mutual Funds through Systematic Investment Plans or SIPs. The minimum entry level for a SIP is Rs.500 per month. You don’t need a broker or any professional help for this.
Just read any good newspaper or online business daily, and you will see which Mutual Funds are doing good. You can buy Mutual Funds directly from a financial institution instead of going through a brokerage.
Mutual Funds are an excellent option for persons like me who don’t know much about shares and commodities or their movements. Also, Mutual Funds are safer because they operate under a fund manager.
Each Mutual Fund has its own Fund Manager who is a specialist in the field. These fund managers ensure that your investments don’t lose money unless there’s a very serious economic downturn, such as what we saw in 2020 and part of 2021 when the overall global economy went into recession due to the Covid-19 pandemic.
Also Read: Best Apps for Mutual Funds
3. Start Budgeting
The third and perhaps most vital lesson is learning how to start budgeting for your family. In the 20s, we live a relatively carefree life, either as single or even as a married couple. Of course, it is your time to enjoy your financial independence and the fruits of your hard work, either alone or with your spouse.
But things change dramatically once you have kids. You have to bear the expenses of your child even before it is born. And the needs of a child will always increase rapidly as it grows.
Therefore, you wouldn’t be able to indulge in carefree spending and would need to apply your brakes on lots of things. Here, let us be clear. Putting brakes doesn’t mean that you stop enjoying life altogether. Instead, it means being prudent about your spending.
This is possible when you start making a clear budget for the month. Nowadays, you can download and use several free apps for budgeting too.
Make a list of your expenses, such as food, clothing, shelter, debt repayment and others. And allocate some money under each of these. You will have to make some adjustments here and there, depending on how realistic you are.
Once you make a budget, stick with it. Remember that it is very easy to violate a budget because all of us have this temptation to spend. You can try money saving challenges for saving money. It’s worth knowing that every extra rupee that you spend today is being stolen from your future.
That means you are denying yourself and your family the pleasure of a happy future if you don’t check your spending habits today.
4. Law of Savings
So, how does one budget? Should I spend all the money or what should I do? You will surely wish to know the answers. Therefore, here’s my fourth lesson. Remember this simple law of savings. Your income minus your savings is equal to your expenses.
That means, as soon as you get your salary, the first thing to do is deduct the amount of money that you wish to save. And make your monthly budget depending on the amount of money that remains.
This will bring us to the next question: how much money should I save or keep aside from my salary? The answer is at least 30 percent. The average savings per household in India is about 30 percent per year though it comes up to 33 percent per month, sometimes.
For individuals, the threshold of savings is 55 percent. That means you can realistically save at least 55 percent of your salary if you decide to live by a good and healthy budget.
5. Maintain Your Fitness
If you’re thinking what fitness has got to do with your money, think again because all your money lessons depend on your fitness. A survey in 2017 by ICICI Prudential Insurance in India showed that the cost of medical treatment in India is rising steadily.
Most Indians do not have a health insurance policy. This means you have to bear the cost of all your sicknesses, such as flu or cough and colds, from your pocket.
The survey also showed that Indians were now more into fitness because they wanted to avoid these expenses on medical treatments.
While you should see a doctor and take treatment if you’re sick, a lot of other diseases that require expensive medicines and specialist therapies can simply be avoided if you maintain your fitness.
All these money lessons that you learn in your 20s will definitely be useful in your 30s and later years too. As the old saying goes, money is a good slave but a bad master. Money is the best friend or worst enemy.
Actually, money doesn’t have a life. Therefore, we can treat money the way we choose. If you treat money properly, you benefit all your life. And if you’re careless, you will pay the price all your life too.
Therefore, implement these tip five money lessons to learn in your 20s from today itself. When you apply these lessons practically, you will find it very easy to handle your money.