Money Matters: Mistakes, Lessons, and Growth In My Personal Finance Journey

Second only to health, the most important journey you undertake is for your personal finance. And while it’s good to make mistakes and learn from them, it’s even better to learn from others’ mistakes and learnings. Here’s a list of mine. I hope they help you on your journey towards financial stability and, hopefully, independence. 

1. Plan for the Future

One of the first investments I made was towards term insurance. It was scary to think of what would happen to my loved ones should anything happen to me, so it was reassuring. I did need to take a health test, which was a little scary at first. I’m happy to say that it went well, and the reassurance of having the policy is worth the effort and amount involved. 

2. Save Save Save

As many young people, it feels like time is on your side and the money will always turn up by the end of the month. I didn’t spend frivolously, but I also didn’t have the habit of saving. I learned the hard way when unforeseen circumstances had me reconsider this approach to my finances. I realized that I never contributed to a 401(k), Roth IRA, or their Indian equivalents like the Provident Fund. This was a painful lesson to learn, but also marked the first major steps towards more responsibly managing my money. 

3. The Power of Compounding

Many have talked about the power of compounding when it comes to growing wealth. However, compounding also has a significant impact when it comes to debt. I missed a few monthly loan repayments, both in the US and in India, due to carelessness. The loans took over five years of responsible and diligent repaying to close, but I did get there. I am now even more cautious and disciplined about repayments. 

4. Cash is King

I have made it a habit to ensure I have cash on hand. Whether it is for unplanned expenses or investing, it is always reassuring to have cash. It keeps your options open and prevents any anxieties associated with less funds. 

5. Index Funds: S&P 500 & NIFTY 50

A major milestone during my journey in productive investments was discovering Vanguard and its legendary founder, John Bogle. That’s when I learned about index funds. Today, most of my investments are now in the S&P 500 in the US and the NIFTY 50 in India. These investments have ensured my money compounds, while also leaving me enough room to experiment with individual stocks. 

A Game-Changing Read: The Only Investment Guide You’ll Ever Need

This book came to me at the right time in my financial journey. I have a lot of gratitude for Andrew Tobias, someone I have never met, but owe a lot to. Thanks to his book, I had a timely shift in perspective when it came to personal finance and how I approached it. Thank you, Andrew. You have made a big difference to my life. 

What are some of the lessons you have learned in your personal finance journey? Feel free to leave a reply, I would love to hear your stories. 

Thank you for reading. 

Karthik Chidambaram.