The 10 Money Rules i Wish Every 25-Year-Old Knew

You’ve probably heard a hundred tips on saving, investing, and budgeting. But here’s the real truth: money starts in your head—not in your bank account. Sitting in my armchair, struggling to ensure I have enough for old age, I wish my younger self had known these money rules:

RULE 1: Pay Yourself First

Your first payment each month should be to yourself. Save at least 10% of earnings before spending. Track income and expenses through budgeting. Build an emergency fund covering 3-6 months of expenses. If young and single, save up to 50% of earnings. Understand your needs and wants. Limit your spending on Luxury. As your income increases, don’t increase your expenses. We feel Income minus expenses is equal to savings, but it should be Income -Income/10=Expenses. We should not spend more than 7/10th of our earnings. Next time you’re tempted to splurge do this 3W Check: Want – Wait – Why? Use it before you tap “Pay Now.”

RULE 2: Explore Multiple Income Streams

Increase earnings through side hustles, freelancing, and passive income. Develop skills for career growth. Invest savings wisely to generate passive income. Focus on net worth, not just working income. Understand financial elements to create your net worth:

• Assets: Generate money (e.g., rental property, dividend stocks).
• Liabilities: Take money away (e.g., loans, credit cards).
• Wealth: Mathematically it is Assets minus liabilities. But in reality, wealth means how much money you have that will make money for you.

Wealth is about how in-control and intentional you are with what you’ve got. Own your story. Build good habits. Stay consistent. The rest will follow.

RULE 3: Insurance is Protection, Not Investment

Insurance safeguards your family, it is not an investment tool. Get coverage worth ten times annual expenses. Choose term assurance, the most cost-effective option. Select an insurer with a strong claim-settlement history. When your bike is insured, the premium is lost if nothing happens to the bike. In short, it is treated as an expense. You should take the same stand with life and your assets.

RULE 4: Diversify Investments

Don’t put all eggs in one basket. Invest in stocks, bonds, real estate, and mutual funds. Start early to benefit from compound interest. Follow the 12/7/4 rule: expect 12% returns from equities, 7% from bonds, and 4% from liquid cash. Understand the power of compounding. To estimate how long it takes for your money to double, divide 72 by your investment’s interest rate. Example: At 8%, money doubles in 9 years (72/8). If you want it to double in 7 years, earn at least 10.2%. It is called the Rule of 72, know and practice it. Maintain separate bank accounts for your income, expenses, and investments, don’t mix them.

RULE 5: Manage Debt Wisely

Keep total EMIs below 36% of monthly income. Prioritize repaying high-interest debts like credit cards. Use the Snowball Method (smallest debts first) or Avalanche Method (highest interest rate first). Be grateful for loans that help fulfil dreams and be responsible when repaying them. Debit cards use your money, credit cards use borrowed money. Ideally, have one credit card for convenience, a second for backup. Avoid multiple credit cards to prevent overspending.

RULE 6: Plan for Retirement

Aim for 120% of pre-retirement expenses. To retire safely, accumulate 20 times annual expenses as corpus. Example: If annual costs are Rs 600,000, you need Rs 1.44 crore invested at 5% to generate Rs 720,000 per year. Limit retirement withdrawals to 5% which should be the return on your investment. By drawing only part, you are keeping your principal corpus intact. Be mindful of inflation and longevity.

RULE 7: Know Your Taxes

Understand tax implications on income, investments, and savings. Use tax-saving instruments like retirement plans, deductions, and credits. Tax evasion is illegal, but tax avoidance is smart financial planning. We pay direct tax on our income or profits that is progressive in nature. Indirect tax is levied by the government on goods and services which is regressive in nature. Custom Duty, Goods and Service Tax are Indirect taxes. We also need to pay Property Tax, Registration fees, Toll Tax, Education Cess, Professional Tax. As a good citizen of India, we need to pay them on time.

RULE 8: Estate Planning

Life is uncertain. Everything in life comes with an expiry date, including you and me. Ensure loved ones are protected by preparing a will, trust, and power of attorney. Assign beneficiaries and plan wealth transfer efficiently. Discuss your finances with your family members. Let them not struggle when you are not around.

RULE 9: Be Flexible

Act when the time is right. Great opportunities are rare, and not to be missed out. For it, cut out the expenditure. Know about changing investment avenues. Wealth is not a matter of income. Take care of expenses and investments. Understand the changing market and global scenarios. It is said that in few years from now, paper money will become redundant. Be prepared.

RULE 10: Consult

Guard your treasures from loss: avoid investments that sound too good to be true. Take advice from experts. “It costs nothing to ask wise advice from a good friend. “ Go to people who are experts in a particular subject if you want expert advice. Be mindful from whom you take it. When you wish to lend or if you desire to help you friend do not do so in a way that will bring their burden onto you. There are many ways to help people. You don’t have to choose the ways that would restrict your time, money, energy, or ability to care for yourself.

Mastering these rules leads to financial independence and long-term security. Do what you are passionate about that pays you and find pleasure in it. Staying consistent and smart even small, beats waiting for the perfect time. Money needn’t be mystery or mess. Be smarter than I was. The best financial flex is not having to flex at all.