Jay Shetty & Nischa Shah ON Financial Mistakes in Your 20s & 30s

Would you still be happy if you were living the same life five or ten years from today?

In this On Purpose episode, Jay Shetty sat down with Nischa Shah, a former investment banker, now a leading voice in the financial happiness movement, teaching people how to build wealth that serves their personal freedom and to overcome money anxiety. After climbing the corporate ladder for 9 years, Shah pivoted to content creation and now dedicates her efforts to educating people about finance.

Write Your Own Story

Nischa Shah had a high-paying job at a prestigious firm, enjoying business trips and the status that came with a banking career. However, what seemed to others the pinnacle of success left her unsatisfied. She told Jay Shetty that she felt a disconnect between her actions and her desires that she could not ignore. Shah went through a challenging phase, asking herself whether she was living for herself or only trying to meet others' expectations.

She wondered if she would be happy in five years if she continued on the same path. Although her job provided stability and recognition, the fear of remaining stuck in an unfulfilling career pushed her to take a leap into the unknown. Shah told Jay Shetty that while you may have invested time and energy in something, it doesn't mean it has to last forever. While leaving is not easy, she believes that, if you don't have the courage to write your own story, someone else will do it for you.

Financial Cushion Before Pivoting

Nischa Shah told Jay Shetty that people often believe that changing careers is an "all ot nothing" leap of faith. But, in reality, bravery is often a byproduct of having a financial safety net to catch you if something happens. Therefore, Shah recommends having a "financial cushion" before making major life changes; she explained that knowing you won't lose everything gives you the peace of mind to be creative.

Jay Shetty agrees; he, too, worked a day job while editing his own videos in the evenings and on weekends. While your bills are getting paid by your main job, you have the time and the tranquility to pursue your dream in safety.

Nischa Shah recommends saving three to six months of basic living expenses as your financial cushion, but the more you can save, the better. These savings will prevent you from living in survival mode, so you can still enjoy your passion projects without worrying about tomorrow.

What Drives You?

Nischa Shah admitted to Jay Shetty that one of the most difficult parts of leaving a high-status career was the loss of identity. For nine years, her self-worth was tied entirely to her work, and when she eventually left, she had to find fulfillment within herself. All the years she fed on the external validation that came with her successful career, she forgot who she was, deep down.

A job doesn't have to define who you are. Jay Shetty and Nischa Shah agree that, when people choose alignment over traditional success, they sacrifice their identity. So, you must understand who you are on the inside and find a life purpose that goes beyond your job title. Shah chose to leave behind a prestigious career and find her purpose, yearning for a life more aligned with her core values.

Young People Avoid Checking Their Balance

The number one mistake young people make around money is avoiding finances. She told Jay Shetty that, just as the ostrich buries its head in the sand to avoid danger, some people refuse to learn uncomfortable information, hoping that, if they ignore it long enough, it will disappear. It's not uncommon for people to avoid checking their bank accounts after a weekend of spending or to ignore their credit card statements.

Nischa Shah explained to Jay Shetty that habits formed in your 20s can either compound for you or against you. If you keep avoiding your bank account, that is often a sign that your spending isn't aligned with your values. Shah recommends confronting the dreaded balance head-on, to learn your spending habits and identify impulse purchases. Taking back the reins of your finances is the first step in creating a better life for your future self.

Create Friction

As bills and coins were replaced by cards, purchases seemed to have a different weight. Now, with one-click digital transactions, spending money has become frictionless, and we don't even have time to properly process the amount we are paying. Shah told Jay Shetty that you can now buy a car from your phone at 2:00 AM without talking to a single person.

The current economy is designed to make spending easy; it takes willpower to create friction again by becoming more aware of your spending. Nischa Shah recommends waiting 48 hours before making a purchase and giving yourself time to decide whether you actually want or need the item, or if it was only an impulse in the moment.

Nischah Shah told Jay Shetty that one should spend 20 minutes at the end of every month reviewing their purchases. During this time, you must ask yourself if they made you genuinely happy or improved your life. She explained that, by creating this dedicated space, you can break the cycle of mindless consumption.

Tips for Budgeting

If you find budgeting daunting, Shah recommends looking at your pay, subtracting a set savings amount, and automating the transfer to your savings account, so you don't need to think about this money every month.

However, if you want to approach budgeting more consciously, she shared with Jay Shetty a framework involving three buckets:

• Fundamentals (65%): Must-haves like rent, groceries, and car payments.
• Fun (25%): Leisure, travel, and self-care like massages or manicures.
• Future You (10%): Savings, investments, and extra debt payments.

Jay Shetty quoted Warren Buffett, who recommended saving first and spending what is left, not the other way around. Moreover, before you buy anything, ask yourself the following questions:

• Do I need it?
• Can I live with less of it?
• Can I get it cheaper?

Taking Action Is Crucial

Taking action is the micro-habit that sets successful people apart, Shah told Jay Shetty. She shared the story of a follower she met in the hotel lobby who, despite having the knowledge, the tools, and the desire to invest, couldn't do it. Shah encouraged her to invest right then and there in the hotel lobby, using the apps she had already prepared.

Another habit toward becoming good with money is setting clear goals. You must set a fixed amount you want to save and make concrete plans for how to do it, rather than getting lost in vague formulations such as "I want to save money."

Nischa Shah told Jay Shetty that many people often learn for the sake of learning, but never put their knowledge into practice. However, it's not the goal or the information that is flawed; it's not following through that sabotages even the most masterful plan. She explained that you don't have to cut out everything you love from your life to save money, but you must ensure that your spending is intentional and aligned.

Financial Success vs. Financial Happiness

Nischa Shah and Jay Shetty discuss the difference between financial success and financial happiness: the former corresponds to society's definition of wealth, while the latter is your intrinsic definition of a good life.

According to Shah, the top 1% of financially happy people are those who are crystal clear about what a good life means to them. Unless you are clear about what you want and need, you may find yourself carelessly spending money without realizing whether your purchases bring you closer to or further from your goal.

Social media plays another role in how we see money, wealth, and happiness; it often focuses on the billionaire lists, but Jay Shetty noted that living an aligned life is far more attainable and rewarding than becoming one of the wealthiest people on the planet.

Invest Your Money Wisely

There is no such thing as passive income, Shah told Jay Shetty. Everything requires some degree of involvement, whether initially or on a regular basis. Instead of making this your goal, she recommends investing in the stock market, which is a simpler way to get rich long-term.

However, Nischa Shah warns against buying individual stocks because it's like putting all your eggs in one basket; if something goes wrong, you lose all your money. Instead, she recommends index funds (like the S&P 500), which let you buy a small slice of hundreds of companies at once. However, the money invested here should be money you won't need for at least five years, so you aren't forced to sell during a market dip.

Moreover, Nischa Shah told Jay Shetty that she challenges the popular belief that a home is always the best investment. She explained that while a home provides psychological comfort, it often comes with hidden costs such as maintenance, taxes, and legal fees. Shah believes that in today's economy, renting can offer freedom and that you can invest the rest of your money in the stock market.

The Roadmap to Financial Transformation

If you want to transform your finances in six months, Shah shared with Jay Shetty a short roadmap:

1. Save an initial $2,000 – This alone can increase your financial well-being by 21%.
2. Pay off high-interest debt – Anything with interest rates above 8% (like credit cards) should be prioritized, since the market's average return is 8-10%.
3. Establish a 3-6-month cushion – This provides an additional 13% boost to well-being.
4. Invest for the long term – Once high-interest debt is gone and you have a cushion, start your wealth-building journey.

Moreover, you need to stay away from these three types of purchases, Shah explained:

1. Items bought only to boast and look cool in front of others.
2. Marginal upgrades, such as the newest phone, when yours is still working perfectly fine.
3. Brand names over utility items.

Nischa Shah told Jay Shetty that while savings have a limit, earning potential is infinite. Therefore, she encourages the audience to increase their value by becoming indispensable at work or by solving others' problems outside their daily job. Last but not least, she believes that the best investment is always the one you make in yourself. Never stop learning, and use money to live a life true to yourself and aligned with your values, not with what others expect of you.

More From Jay Shetty

Listen to the entire On Purpose with Jay Shetty podcast episode “Nischa Shah: #1 Financial Mistake People Make in Their 20s & 30s (Fix It With This Simple System)” now in the iTunes store or on Spotify. For more inspirational stories and messages like this, check out Jay’s website at jayshetty.me.

Disclaimer: This episode reflects Nischa Shah’s personal experiences and perspectives. It is not medical, psychological, or therapeutic advice. Any references to health, diet, or lifestyle practices are her individual choices and may not be suitable for everyone. Results and experiences vary. Always consult a qualified professional before making changes to your health, wellness, or personal care routines.