Whether you are a young graduate, a small business owner or a professional in your 20s, the desire for a good lifestyle is common. However, that lifestyle you aspire cannot be sustained by many unless there is a steady fire hose of regular cash flows. This is why you need sound financial habits that can catalyse your meticulous and consistent hard work into wealth. 

Myths about becoming rich within months followed by the shiny, glittering social media images abound us. Becoming rich is not a matter of luck, but about setting goals, ignoring distractions and most importantly- ignoring naysayers. While you may not be amassed with a fortune, there are ways to create one for yourself with time. In this blog, we share the 5 financial habits that you can adopt in your 20s and become rich by your 30s. 

  1. Track your Spendings

Take a long hard look at your spending patterns. If you are an impulsive shopper, then you should know that the idea of becoming rich in your 30s is a real stretch. Start with record keeping of every expense you make such as grocery, leisure, fees levied on your credit card (unlike on the EarlySalary Salary Card), subscriptions, etc. While setting personal budgets, first set aside the money you’ll need to fulfil your financial goals and then spend the remaining amount. 

2. Buck the Short-Term Market Noises

With the financial markets sending mixed signals with rising crypto fever, fiscal stimulus, inflation risk or fluctuations owing to economic and political instability, you need to ensure that your financial decisions are based on fundamentals and not market rumours. Leveraging volatility is an art, we suggest you sit tight and ride the market when you are well-armed with information and a money corpus that can act as an insurance.

3. Invest 

If you think that socking all of your money away can make you rich in your 30s, then you are mistaken. You need to diversify your money through a well-rounded investment portfolio that provides passive income. Explore and invest in instruments that you understand well. Allocate resources as per your risk appetite and never be greedy. After all, getting rich is easier than staying rich. Leverage the power of compounding and rotate your money to earn higher returns that beat inflation. It’s the snowballing effect with multiple income streams.

4. Avoid Debt for Debt

Live within your means or else debt will trap you. Learn to fight your impulses as you would be left with nothing but the regret of wasting money and the opportunity to earn more. If you have bad debt, know that you are paying higher monthly interest rates. Avoiding bad debts in your 20s is like a heuristic. Develop the habit of evaluating debt decisions by determining whether they are conducive to your overall financial goals. 

5. Earn and Create Wealth

Your income is not equal to the wealth you have. Accumulate wealth in your 20s and earn returns. Indian tax laws incentivise long-term investments, so invest in real estate, bonds or ETFs to accumulate wealth. They can reduce your overall tax liability with concessions and deductions. Prioritise financial stability and allocate any raises you have in a fixed ratio, say 80:20, wherein 80% is into wealth creation and the rest to spend now. Apportion some portion to high-growth instruments like large-cap equities. 

Who wouldn’t want to make astronomical returns? But let’s agree that expecting king-sized returns without these habits is a recipe for disaster. While there is no exclusive path to becoming rich, financial habits instill financial discipline and help you become more objective in money matters. 

With all of the 5 habits above as the backdrop, there are instances when one may need external support to fight the cash crunch. We, at EarlySalary can help you with financial wellness ideas, credit, or personal loans to fulfill instant cash needs, download the EarlySalary app now. To know more, you can reach out to us on:

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