Guest column by our summer intern, Vishal Aditya Potluri.

Your twenties, more than any other decade, are a time of self-discovery. It is the first time that many of us are living independently. We are working hard to build fulfilling careers. We are forging friendships that we hope will last a lifetime.

In all of this, saving and financial management can come as a rude interruption. Young people often ask us whether they should even be worrying about saving as a 20-something. After all, won’t their investments in their education and careers pay off? Can’t the future millionaire that we’re all sure to be, make up for the time lost? Yes, we all hope for a much brighter future. But doing some basic financial planning early on, can go a long way.

Here are some simple steps you can take in your 20s to be financially smart.

1. Plan for your goals

How much you need to save depends on your goals. In modern India, people’s goals and circumstances can vary a lot. Some people want to buy a home. Others are comfortable renting. Some of us want to start a family. Others are planning for further studies. Identifying your goals can help you plan in advance for them. List out the specific goals that you want to achieve and estimate how much they cost. Divide this number by the number of months you want to achieve them in. This will give you an amount that you need to save each month. Sum these up across your goals. Now make sure you save this amount regularly (use EasyPlan to simplify the process). If your goals or your income change, you can redo this exercise to calibrate this amount.

2. An absolute requirement: Save for Emergencies

Phone damage. Job loss. Health issues. Emergencies can crop up unexpectedly, and it is important you save for them. Personal finance experts recommend keeping 3-6 months of living expenses aside. Keep this easily accessible, like in a savings account. You will thank yourself for your foresight should things go badly. If all goes well, it will be still be a welcome gift for your future self.

3. Start small, but start early for long-term goals

When it comes to financial decisions, most people are serial procrastinators. And when you’re young, it is easy to tell yourself “I’m only 20 something, I can start thinking about saving in a few years”. But those few years make a significant difference. Especially for large goals. Buying a house or a car can be onerous if you don’t plan in advance.

Let’s take an example (represented in the above graph). Suppose you started saving Rs. 1000 each month in a simple savings account (at 6% interest). If you started at 25, by 45 you would have Rs. 4.7 lakhs! If you started at 30, you would have only Rs. 2.9 lakhs. If you started at 35, you would have just Rs.1.7 lakhs.

This is because the interest is compounded. The interest or return you earn, earns more return in the next period. You don’t need to remember the mathematical formula. What you need to remember is start small, but start early.

4. Don’t be afraid to invest in yourself and your career

Of course, many people aren’t able to save as much in their 20s because they are studying or investing in other ways in their career. That’s totally fine. Think of this as a different sort of investment, that will increase your earning potential for years to come.

So in conclusion, in your 20s we suggest that you save for emergencies, and for your upcoming goals. Remember to start early, even if small, for long-term goals. And don’t beat yourself up if you’re investing in your career growth in other ways.