All over the world the mistakes by young people seem to be the same. Hang on, we are all guilty of the same mistakes. Since we made the mistakes, we are requesting, pleading, with you guys not to make the same mistakes. I am calling those born post 1984 as Gen Y and these are the mistakes that I see (believe me some of them are very focused and may be doing well – well not as well as Mark zuckerberg but yes on the way to good finances). If you have seen the Bloomberg figures, it takes about 300 years income to buy a luxury flat in Mumbai. So damn it, let us ignore that !! Here are my observations:

1. Ignoring compounding: Time value of money is the most important thing in saving and investing. Every blog, speaker, writer has screamed about this. The best way to tap into this is to start saving / investing early. As early as possible. Make a start today. Do a SIP in an ELSS fund and do it from today to the rest of your life. Do not interrupt the process of compounding. If the fund in which you are investing is not doing well, start a SIP in a second fund, but do a sip in an ELSS FUND, now. http://www.subramoney.com/2008/07/start-investing-today/

2. Ignoring the power of youth: It is in your young age that you can travel the seas and look for a job in Dubai, Singapore, USA. Remember the power of earning more and therefore saving / investing more. Resistance to change means people do not want to travel for work. It is so bad that boys and girls look for a job near their house even at an young age of 30. This is so sad. On the other hand I do see some young girls willing to travel 30km everyday because they get a better paying / better learning job. There is a huge difference between getting a Rs. 18L job in Vashi (because you are staying in Kharghar) and getting a Rs. 25 lakh rupee job in Andheri. Yes you have to travel, unless you are willing to ask your family to shift house. For heavens sake, do not be geographically handicapped.

3. Most of you understand that Income MINUS Expenses = Savings. You need to change this a bit. Income MINUS Money allotted for all your goals = is available for current spending. This means you pay yourself first. You pay for your retirement, your home buying, your children’s education, your life insurance, medical insurance, etc. and then the money that is left is used for current expenditure. This forces you to learn a little about patience. Also delays the gratification. Some of you do it very well and some of you do not. Pushing all of you to do it. That is all. http://www.subramoney.com/2013/12/pay-yourself-first-means-what/

4. Listening to parents about investing: This is one of the worst crimes that some of you do. Especially true if your parents are the PPF, LIC, bank FD types of savers. The generation born in the 1950s and 60s ‘saved’ for their retirement. You cannot afford that luxury. You need to ‘invest’. So you will have to be in equities for your long term goals. So if you are investing Rs. 150,000 per annum for your 80C requirements, my suggestion is Rs. 10,000 towards term insurance, Rs. 10,000 towards PPF and Rs. 130,000 towards ELSS. In case you have a contributory provident fund, say Rs. 40,000 per year, then 10k term insurance, Rs. 1k ppf, and Rs. 79,ooo in ELSS. Maximize your exposure to equity, and do it fast. http://www.subramoney.com/2015/05/when-saving-is-better-than-investing/

also read this http://www.subramoney.com/2012/04/papa-ko-bolo/

Many of these kids do live frugally, and cutting costs is really great – savings are faster and investing that money is great. However what will really create wealth for you is geographical mobility to earn more, frugal living and investing in equity. This triumvirate is what is going to create wealth for you. All 3 are equally important. 

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