Background

I began working as a Software Engineer in June 2015, which means I've been earning for nearly 10 years. But if you ask me when I seriously started investing, the answer is "about three years ago." In this blog post, I'll share what happened around that time and how my views on money and expenses have changed over the years. This article might draw some ideas from the book — The Psychology of Money, but I won't be acting as another financial influencer suggesting which stocks to buy 😃.

Three mistakes

My first salary was for about 16 days of work as I joined the company on 15th of June. About Rs. 20000 was credited to my account and my aim (before reaching home) was to take out some money to give to my parents. I was not a kind of person who would reach home with some gifts for everyone (as shown in movies 🤣). The only struggle for me was to find the ATM of the same bank so that I can set the PIN of debit card and then do the first withdrawal. While my new schedule was tiring (including travel, ramping up at work, etc.), being employed and having a steady income was definitely motivating. With this steady income, I did the following things (that sound like mistakes today):

1. I wanted a new phone for myself but my sister also needed one. So I got one for her first (around August 2015) because the one I wanted was not yet launched. As both of us now had latest phones, I thought I should get one for my parents too. By September 2015, all four of us were having new phones. With a salary of ~ 40K/month, I got phones worth 55K within first four months to make everyone happy.

2. As my father thought that I should start investing, I met someone who did LIC policies. I got two policies done by them before end of financial year without doing any market research. In the next financial year, I took another one. Today, I have three running LIC policies that are mix of money back and long term policies. After that I also started putting some amount in PPF.

3. In 2019, I drove from Delhi to Amritsar (and back) on our Hyundai Santro. After coming back, I thought of purchasing an automatic car without any strong reasons (okay, there was one reason — a good salary increment). I purchased a brand new Honda Amaze CVT. In last 6 years, I’ve driven it < 27000 Kms.

I think many of you might be having very similar stories of such expenses, so I hope you can relate with these. Although my parents always recommended me to save money and avoid useless expenses, they never gave any serious financial advice. And I think the core problem is that the system we are raised in expects “every good and sensible thing to come from elders”. Ideally, if it’s your money, then you should take care of investing it (not your parents). I’ll share my current perspective to the above expenses:

1. The amount I spent on phones was < 1.5month of my salary and half of it was on Credit card (because of No Cost EMI). To many of you, this might sound okay because even I have seen people earning a similar amount today, and still getting a iPhone Pro Max from their first cheque. While today I’m calling this as a mistake, it was not a very expensive mistake. And I think it was important for me to commit these mistakes so that I can learn from them and avoid making even bigger mistakes in future.

2. My father’s friend who did my LIC policies is a very good family friend and also a very good gentlemen. He did not hide any details of the policies from me or my father. Being a senior citizen (~70 yrs at that time), he recommended me to invest in safer options rather than in private companies or stock market. Because I was influenced by my father and his friend, I decided to go for safer options (like FDs, PPF and LIC). For first 3-4 years these were the only instruments that I was investing in. I even had a C.A. (who was of my age) but he never recommended me any good options and was happy filing my tax at the end of financial year. Investing a good amount in LIC policies seems like a mistake because the XIRR is very low. Although these policies have terminal benefits too, but that’s insignificant unless you die young.

3. I got a very good increment in Feb 2019 that made me think that I should upgrade our car. As my father also likes cars, he didn’t stop me 😆. Both of us started seeing some pre-owned cars and finally landed to the top model, automatic Honda Amaze that costed 9.5L at that time. My father was retiring in the same year so I thought I’ll use it to go to office later. With COVID kicking in and my remote role (since first COVID), we’ve not driven it much. Today, I think that purchasing a new car is the fastest way to burn hard earned post-tax salary (okay - not the fastest, having an AWS account is still the fastest).

From 2019 - 2022

I met another CA through a common friend who started advising me to invest in slightly riskier options, given my young age and risk taking ability. The best thing about this person was that he didn’t act like policy agents or middlemen who recommended you specific funds or schemes to invest in. He focused on basic investing knowledge — the concept of asset classes, returns that beat inflation and possible investment options in the market (like stocks, mutual funds). These things were pretty new for me at that time. He convinced me to invest in Mutual funds but due to some issue with my Identity card (Aadhar) to mobile linking, this didn’t happen. I still got introduced to financial literacy, that I could learn more about.

That same year, my sister got engaged and married, and then COVID hit in early 2020, leading to salary cuts and a big drop in the market. Later in 2020, I got engaged too, and then married in 2021. After the wedding, my expenses went up for a few months (as you'd expect), and I started thinking seriously about investing. April 2022 was when I started my first set of SIPs.

In the past decade, financial literacy among salaried individuals has improved significantly. Back in 2015, most people I spoke with relied on traditional savings methods like FDs, RDs, PPF, and EPF. Now, even college graduates are trying their hand at trading (though that has a dark side too). A major reason for this change is mobile-first platforms like Zerodha and Groww, which have made investing more accessible and user-friendly. As a result, terms like expense ratio, asset allocation, LTCG, and STCG are no longer alien. Additionally, financial influencers, or "finfluencers," have played a key role in educating the public, offering insights and tips on smart investing, and promoting a more informed approach to personal finance. I personally know folks who started earning in the past few years and are actively investing in stocks as well as IPOs. But again, this post is not to talk about which asset class is better so let’s talk about some fundamentals.

Understanding the basics

Managing money isn’t just about numbers, or creating plans on spreadsheets — it’s about behaviour, mindset, and self-awareness. You don’t need a finance degree to build wealth. What you really need is a good grip on a few timeless principles that most people overlook in the race for returns or status.
(Few of these draw ideas from Psychology of money that I read somewhere in 2023):

1. Spend less than what you earn - This is one of the most basic rules of personal finance, yet also the hardest to follow: don’t let your spending grow just because your income does. Real wealth begins when you resist that urge and continue living within your means. That doesn’t mean you need to give up all pleasures or avoid nice things—but if you don’t draw a line somewhere, you’ll always feel like it’s not enough, no matter how much you earn. Lifestyle upgrades can easily turn into a trap. The more you try to impress others, the more you link your happiness to appearances—and that’s a cycle that’s hard to break. When your self-worth depends on showing success, it can start to feel like you're constantly falling behind. True financial peace comes when you no longer feel the need to prove anything to anyone—not even yourself.

2. Wealth is what you don’t see - Just because someone drives a fancy car doesn’t mean they’re rich. In fact, it might mean the opposite. Wealth is invisible — it’s not the money spent, but the money sitting quietly in savings or investments.

3. Money is more about psychology than just numbers - The best financial plan isn’t the one with the highest returns. It’s the one you can stick to through good times and bad. Your ability to control impulses, stay patient, and avoid comparison matters more than technical knowledge.

4. Save beyond goals -It’s great to have a recurring deposit or SIP in place for planned goals like your child’s education, a bigger home, or a new car. But life doesn’t always follow a plan. Many important or difficult expenses come without warning and that’s why you don’t need a specific reason to save. Saving gives you options, freedom and most importantly peace of mind when life takes an unexpected turn. Take layoffs, for example — they’ve become increasingly common and can affect anyone, regardless of their role or the size of the company. It’s never easy to navigate a layoff, especially in a tough job market. But the first thing you need during such a time is a financial cushion that helps you cover your expenses for the next few months. That safety net gives you breathing room to make thoughtful decisions, rather than desperate ones. Without it, people often experience serious mental stress and end up taking whatever job comes first (even if it pays less or doesn’t align with their goals).

5. Don’t act like you’re in a race - Money related matters are personal. Our goals, life circumstances, and risk appetite are unique, and so are your financial decisions. For instance, I bought my first car at 26. Around the same time, a few people I know bought their first homes (something I still haven’t done). On paper, they invested in an appreciating asset, while I spent on something that loses value over time. But both choices had their own place and purpose in our lives. That’s why comparing financial decisions doesn’t really help. What matters more is being clear about your priorities and staying consistent with your plan. It’s easy to get influenced by what others are doing, but real financial progress comes when you stop reacting to others and focus on what makes sense for you.

The above is a gist of what I learned from the books and blogs, but there are a few more personal lessons I want to share about saving and managing money:

1. We usually learn by making mistakes. It’s great if you can learn from other people’s mistakes, but when it comes to personal finance, most of us end up learning the hard way—after making a few of our own. It’s generally less costly to make money mistakes when you're younger and earning less, so don’t stress too much if you slip up early on.

2. Have a clear idea of your monthly expenses. At the beginning of the month (when your salary comes), know exactly how much you need for essentials: groceries, bills, rent, small luxuries, vacations, or any planned expenses. Add a small buffer on top, and then invest the rest. If you wait until the end of the month to invest, chances are you’ll spend more than you intended. Money sitting idle in a savings account has a tendency to be consumed. Set up automatic transfers for SIPs, RDs, or any other investments, just like your EMIs to ensure disciplined investing.

3. Build an emergency fund. Aim to set aside at least 4–6 months’ worth of expenses (not your salary). So if your salary is ₹2L per month but monthly expenses are ₹1L, your emergency fund should be at least ₹4–6L. Keep this in an easily accessible & safe place like a fixed deposit or a similar liquid fund, so that you can access it quickly when something unexpected happens.

4. Don’t ignore insurance—especially health insurance. If you're living in a Tier-1 city and your parents are aging or already retired, a medical emergency can shake your finances. Insurance won’t prevent health issues, but it’s a solid safety net when something unexpected happens. It’s not just about your parents; your own health cover also matters. Beyond this, if you can afford - do also get a term insurance.

5. Plan ahead for annual expenses. Large annual expenses can feel like a sudden burden if you don’t prepare for them. For instance, if your parents’ health insurance premium is ₹48K per annum, it’s a lot easier to save ₹4K every month than to part with ₹48K in one go. This works well for school fees, festival travel, or any other similar large planned purchase.

6. Think & invest long-term. Once you’ve built your emergency fund, and have some financial stability, explore options for long-term investing based on your age and risk appetite. Mutual funds, for instance, aren’t great for short-term gains (except maybe debt funds), but over 10–20 years, the power of compounding really kicks in. The idea is to plant now and harvest later.

7. Understand different asset classes and diversify. Inflation slowly eats away at your savings, so your goal should be to beat inflation, not just save. Learn about different investment options: fixed deposits, recurring deposits, ELSS, PPF, mutual funds, stocks, real estate, gold etc. Diversification protects your portfolio during market ups and downs.

8. Look beyond shiny numbers, look at real returns. Few options may sound like a good investment but eat away at your returns. For example:

   • Gold: We’ve been buying gold for generations, but always buying jewellery as an investment isn’t smart. Making charges (10–20% or more) are sunk costs. If you buy something for ₹1.2L (₹1L gold + ₹20K making charges), you’ll only get ₹1L or less if you sell it immediately. If you want to invest in gold, consider gold funds or gold bonds.

   • Mutual Funds: In a bull run, short-term returns might tempt you to sell early. But remember, STCG (Short-Term Capital Gains Tax) at 15% and exit load (varies per fund) can reduce your actual gains.

   • Real Estate: Buying and selling property within 1–2 years can be expensive. Taxes, broker fees, registration charges, and the hassle itself often outweigh any short-term profit.

9. Stay curious and keep learning. Personal finance isn't a one-time thing you learn and forget. As you grow, your income, goals, and responsibilities evolve. Revisit your financial plan every 1–2 years. Read blogs, listen to podcasts, talk to financially savvy friends, or even consult a planner once in a while. The more you learn, the fewer regrets you'll have later.

10. Start now, however small. Many individuals delay saving or investing, waiting for the "right time" or a higher salary. However, the truth is that the earlier you begin, the more advantageous it is for your financial future. Even if you start with small amounts, investing consistently over a long period can significantly increase your wealth. This approach allows your investments to benefit from the power of compounding, where the returns on your investments generate their own returns over time

Conclusion

Money can feel overwhelming, but it really doesn’t have to be. A few intentional habits, some patience, and regular check-ins can go a long way. I’m still learning and making some mistakes. But it’s better to learn with a plan than to keep drifting without one. If you’re reading this, chances are you’ve had your own turning points too — maybe it was the first time you ran out of money before the month ended, or when you impulsively spent your bonus on something that didn’t feel worth it later. Whatever your journey looks like, I’m sure you’ve had moments of confusion, growth, or even regret when it comes to managing money. That’s perfectly normal—we’ve all been there in some way. The important thing is that we’re trying, learning, and doing a little better each year.

I’d love to hear your story too—whether it’s a mistake that taught you something valuable, a trick that helped you save more, or a mindset shift that changed the way you think about money. Drop your thoughts in the comments below.

References

1. Psychology of money

2. One idiot - Short film on importance of Financial Planning