Chances are you will make mistakes or get confused as a young person when you start financial planning as a fresh professional. You will splurge on things as simple as clothes and avoid saving.
However, it can have an adverse financial effect in the long run. There is a need to overcome financial mistakes among freshers. You can follow some simple finance tips to help young working professionals like you overcome monetary mistakes.
Initial mistakes
Gunjali Kothari and Manoj Kumar, the co-founders of Flashaid, think getting your first salary can be incredibly empowering and a moment of pride and independence, especially for those who have studied their way through student loans, etc. “It often comes with the thrill of finally being able to buy what they want. In urban India, where the average starting salary ranges between Rs. three–six LPA, this can be a grave oversight.”
They feel that one oversight is 'not accounting for past educational loans or ongoing academic costs, which are rising sharply’. “For instance, if medical education at private colleges is around Rs. 25 lakhs, you can safely assume you have to build a one crore corpus in 15 years. The consequences? High debt, low credit scores, and financial anxiety.”
Mukesh Pandey, Director of Rupyaa Paisa, agrees that the first paycheck feels like a celebration with many youngsters going into spending more. "I’ve seen people spend without thinking of savings or insurance. The most common mistake? Living paycheck to paycheck. This happens because financial literacy isn’t taught early. There’s also peer pressure and the excitement of newfound independence. The problem is, that without a safety net, one medical emergency or unexpected job change can throw everything off. These early missteps can also build bad habits that are hard to break later.”
Prof. Himanshu Joshi, Professor – Finance and Accounting, FORE School of Management, considers overspending on non-essential items a major mistake followed by budgeting neglecting and not prioritising savings. "Other pitfalls include accumulating high-interest debt through credit cards or personal loans without fully understanding the implications. These mistakes can lead to financial stress, negatively impacting mental health and overall well-being.”
Things to understand
According to Pandey, the first and most important difference to understand is between ‘wants’ and ‘needs’. “I always tell freshers: track where your money is going. Also, get clarity on your income, fixed expenses, and goals. Many dives into investments just because their friends are doing it or a trending app recommends it, without understanding the risks. You should know about compounding, debt traps, taxes, and how inflation impacts savings.”
He wants everyone to get a grasp of basic budgeting and planning before getting that fancy credit card or high-risk crypto scheme.
“Before making financial decisions, young earners need to understand the cost of delay, especially in savings and investing,” suggests Gunjali and Manoj. “It’s equally vital to understand debt management, especially educational loans or instalment plans tied to tuition or skill-based certifications, which are increasingly used to ease financial burdens.”
They want the young ones to know how to secure health insurance and taxation to avoid last-minute issues. An informed person makes more confident choices in an economy which sees youth employment and underemployment.
Financial tips
Joshi wants the young professional to start setting a budget, tracking income and prioritising needs over wants. "Allocate funds for savings, investments, and debt repayment. Develop the practice of delayed gratification and assess needs versus wants. Build an emergency fund. Save three to six months’ worth of living expenses to handle unexpected situations. Concentrate on repaying high-interest debts to avoid accruing interest. Consider taking out loans for productive assets—such as property—and for personal advancement, such as education or skill development. Avoid lifestyle inflation. As your income grows, resist the urge to increase unnecessary expenses.”
Gunjali and Manoj want young professionals to begin with the basics – setting monthly budgets, splitting income into needs, savings, and discretionary expenses using the 50/30/20 rule and spending tracking. They want young professionals to focus on insurance since they feel any accident or illness without savings drains your savings. They feel empowerment comes through clarity in money matters and not complexity.
Pandey wants everyone to keep it simple. “Automate savings. Open a recurring deposit or SIP to build the habit. Most importantly, talk to a financial advisor before making major decisions. Learning about money management early is more valuable than chasing the highest returns.”
Lasting impact
Early financial decisions do impact one’s future. Pandey does think they mould an amorphous mind toward any discipline. “It’s like a muscle memory practice: the sooner you build good money habits, the stronger the future for your money life. Early investments can unlock the magic of compounding. Even small contributions now can become big assets later. In contrast, negative habits like unchecked debt and no savings might hold on to you for years. So yes, those first few years of work are more crucial than they seem, plan them wisely.”
Now that you have the right knowledge, your financial start as a young professional will be easy.
