save money in ua time Money management skills are not taught in the school. Your parents way of managing money will be different from how you will manage your money. To have a risk free financial life, you need to learn to manage your personal finance.  Today, lets talk about savings and investment.

You need to start saving money and start investing. For those with student loans, pay off the loan, at the same time start saving a small percentage for emergency fund. Here is new grads guide to personal finance.

  • From your very first pay check start saving 5 to 10% for your emergency.
  • Use the rest of the money to pay off the debt.

Next – What do you do with the money you are saving for Emergency Fund?

Simple : Learn to grow your money by Investing.

Types of Investments

  • Level 0 : No Savings (paying debt)
  • Level 1: Savings Account
  • Level 2: Fixed Deposits ( CD’s),
  • Level 3: Stock Market – Stock, Bons, Options, Buying gold.
  • Level 4: Invest in Properties (in USA or your home country)
  • Level 5+: Big Time Trader, Capitalist, etc.

Most students in initial years will be in Level 0 and as you earn more money pay off your debt, you tend to move up in the levels listed above.

But, there is this mindset that students in the college are obsessed with Higher Salary.

In reality higher salary is not equal to more savings. Spending less equals more savings.

Spending less is different being a miser. You have to spend for the essentials and maximize your savings.

Every other personal finance books will suggest you to save few dollars here and there, avoiding daily morning $5 coffee and haggling with utilities providers to lower the bills.

Even a penny saved is penny gained. To get a different perspective about personal finance, read the following 2 books (my favorites) to get basic personal finance education and skills

But, as we discussed in Essential Money Management Skills all these savings will not make you rich. It merely increases your savings by few dollars.

If you are looking at financial independence, then you need to think about increasing your income (even a small percentage will result in good savings).

Don’t spend 1 hour to save $1. Spend the same 1 hour to find ways to make $100.

How can you do that?

Here is a clue : Don’t think like an employee, think like an entrepreneur.

Reality : Savings

Lets talk about how much can you really save money while in USA.

$50,000 in salary in first year with $20,000 in student loans.

You are looking at about 3 to 5 years to pay off the education loan.

In 5 years in Time your Salary should be around $65,000 to $85,000.

In 10 years you are looking around $100,00 to $125,000.

But, your expenses will increase when  get married and have kids. Increase in salary will be compensated by increase in expenses.

For example, we are spending about $1000 per month for our 3 years old son’s pre-school. That’s $10,000 per year.

The amount of money you can save depends on your money management skills.

If your spouse works, then you can you save lot more.

Lot of people run their family with single income. But, when you have single income, chance of saving money will be like $0 to $1000 per month.

When your spouse works and she makes $80,000 per year, then entire money after taxes will be savings. That’s about $50,000 per year.

If you and your spouse work for say 10 years, then you are looking at about over half million dollars in savings.

Real challenge for you is how you can grow that money. Savings account will give you 1% in interest. Stock will give you like 5% to 10% ( if you take risk).

Money Management Skills

Good money management skills comes from learning and willing to take advise from external experts.

Once you have 100,000 plus in cash, talk to a Financial Planner. Investing in CD’s is not gonna help you grow your money faster.


I started talking about Savings, Investment and gave an insight into real life situations you could face few years from now.

In the end, I want you know that

  • Savings is MUST
  • Learn to Invest
  • Invest in getting personal finance education
  • Take risks to Grow the Money
  • Think like an entrepreneur (not like an employee)

Other article in this series


  1. Rajendra on October 17, 2013 at 12:46 PM

    I have reading your blog since i was back in india and its been three years since i am here.Thank you for all your valuable posts in different areas.
    I just want let you know there is something inappropriate which is not major when you said $100 per month for you kid how can it be 10000 per year, i didnt get that?

    • Raghuram Sukumar on October 17, 2013 at 1:44 PM

      I said 1000 per month for 3 year old kinder garden which is about $10,000 per year. That’s shows the expenses increases with family and kids.

      • Rajendra on October 17, 2013 at 3:15 PM

        For example, we are spending about $100 per month for our 3 years old son’s pre-school. That’s $10,000 per year.

        its still $100 per month 😉 may be a typo mistake

        • Raghuram Sukumar on October 17, 2013 at 3:30 PM

          Gotcha. Updated.

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