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Money Lessons I Should Have Known When I Was 22

20's are an exciting time, to take risks and to find your calling. But you must be mindful of how you manage your money whilst taking the risks. This personal experience of a 30-something professional will help you avoid some common money mistakes.

I started working when I was 22. Today, I oversee product development at Scripbox and have the opportunity to see how mutual funds are helping people build wealth on a day-to-day basis.

As I turn 30, I realize I could have done so much more with my money if only I knew the importance of saving money. Here are the top four money saving tips I wish I knew in my early 20's.

#1. I wish I knew the importance of savings - no matter how small they were

It seemed like a boring word back then 'savings'. Today I know different. Every time I spend Rs. 1,000 on a restaurant meal, I lose out on a chance to make it Rs 3,700 over 10 years (assuming 14% annual returns that equity funds can offer).

Imagine if I had started investing Rs. 1,000 per month for 8 years in equity funds, I would have had a corpus of Rs 1.8 lakh today which would still be growing every year and would be TAX-FREE.

#2. I wish I knew how to save taxes the right way

I realized too late that my “Tax Saving” investment in an insurance policy wasn’t yielding any benefit. I actually didn’t even need to start putting money into anything that “saves tax” till I was 25 because my rent receipts would get me the tax break I needed.

Now I’m stuck with this insurance policy for another 12 years till it matures and I will continue to pay Rs. 60,000 per annum for it. I wish someone had told me about ELSS.

#3. I wish I had invested time in learning about finance including investing in Equity

Having turned 30, I now realize that saving money and making it grow is a lot about knowledge and turning to the right people for advice. I’ve been investing regularly in equity for the last 2 years and I realize that there isn’t a better way to grow your savings in a way that doesn’t burden you.

I can put a small amount away into equity funds every month and as the investment completes a year, the investment grows whilst becoming tax-free.

#4. You don’t have to listen to everyone

I wish I realized that the traditional investment instruments advised by most of my elders were more about saving money and less about growing it. Insurance policies or Fixed Deposits may help you save money but rarely give you the inflation-beating returns that equities do.

If you are looking to fund that big Europe holiday when you are 35, equities will beat the traditional money instruments hands down.

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