Research says personal finance is rarely on priority of people in their early 20s. Facts also state that this is the age when people make grave mistakes related to their personal finance, which can be detrimental in a few years. Till the time they realize, it gets too late to undo the mistakes. Hence, I thought to share some basic personal finance hygiene people in their early 20s must maintain. Originally answered on Quora as an answer to this question, here are my 5 tips.

1. Don’t earn to pay credit card bill - Credit card enables you to purchase things which are not even in your budget. If your monthly income is Rs. 30,000/-, purchasing a phone for Rs. 60,000/- using a credit card is not good for your financial health. You’ll end up spending most of your income for next few months to pay the credit card bill.
2. (Savings = Income - Expenses) Vs (Expenses = Income - Savings) - Practice the second equation instead of first. Save first and spend the rest instead of spending first and saving whatever is left. How much to save and what to do with it? Next point
3. Set financial goals and invest your savings accordingly - You might want to go for a vacation with your friends next year, you might want to buy a car in next 2 years, you might want to get married in 5 years or you might want to own a house in next 10 years. All these financial goals need systematic investments, as you can not fulfill them with your monthly income. Based on your goals, how much to invest and where to invest can be decided. The earlier you start, the better returns you make on your investments.
4. Have adequate insurance - Have a medical insurance for sure if your company does not provide that to you. If you get hospitalized, you’ll be taken care of. Otherwise, it will also affect your financial health adversely.
5. KYA (Know Your Agent) - You’ll be approached by different kinds of people trying to sell you some or the other scheme. Understand their motive behind that. Ask them about their affiliation. An insurance agent will try to sell your insurance scheme, a stock broker will try to sell you stocks, a mutual fund distributor will try to sell you mutual funds. These agents make commission on products they sell. Every product is not suitable for you.

Feel free to raise your questions in the comments section below :)