Is it really important to start saving early? Not really

Why College Students Should Think Twice Before Trying to Save Aggressively.

This write-up aims to explain why it is not a good idea for youngsters still in college to attempt to save money, given that the money comes at an opportunity cost.

India’s Conservative Nature with Money

The Indian population by its very nature tends to be quite conservative in their expenses. While stripping off expenses and saving your hard-earned income is indeed the only way for wealth creation, the same is not true for all age groups.

Wealth gurus on YouTube and Instagram often advocate the notion of starting small and being consistent with savings to youngsters (most still in college). Even ₹500 a month in SIPs is a big step in long-term wealth creation – they say…

The Market Illusion

The high participation of the public in capital markets and the resultant boom post-COVID has led the young population to believe that markets can create a level of wealth unmatched by many other routes. But markets demand wealth to create more wealth, and that ₹500 or ₹1000 a month SIP simply doesn’t do much in the 3–4 years you spend in college. Given you get the pocket-money of an average Indian teenager, uyour investment will most probably be close to the salry you will make in just one month of employement.

A simple mathematical calculation can tell you that this small money scraped from your pocket money will not suffice in the future — even if you outperform the NIFTY50 index by 2×. Can check the same by using the SIP calculator at the bottom of this post.

Understanding Opportunity Cost

Before that, let us understand the cost behind this money. Yes, money, because it is limited, has a cost attached to it. When you use it for something, the other thing you gave up, or what was second on your priority list, becomes the cost.

Economists call this Opportunity Cost or, as my Economics professor in CA Foundation would jokingly put it… ‘the Opportunity Lost’. The value derived from money is a function of the purpose it is put to use for.

Not an Excuse for Reckless Spending

Mind you, this post does not intend to justify irrational spending or increased dependency on parents for any reason whatsoever. Instead, it is for those who try to become a bit too responsible at a critical juncture in life — one where money spent is not necessarily money wasted; many times, it is money invested.

It is highly recommended to look for active intership opportunities that not only add value to your expertise & personality, but also gives you some cash to invest (indulge) in activities you otherwise couldn’t have. That investment can take the form of plans, outings, relationships, and experiences which shape a better all-round human being.

When looking for a job, theoretical knowledge of the subject matter is non-negotiable. But so is a rational and practical thought process. Some people call it ‘Street Smartness’, and rightfully so.

Invest in Yourself First

This is the time to invest in oneself because these are the kinds of investments that make you fall in love with compounding — not that ₹500 SIP that some finance guru recommended so hard.

SIP Calculator

The rate of return has been taken as average returns from NIfty50 over the past 3 years as on the publication of this post.

-Naman Shah (14.08.2025)

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