Neeraj Arora On Building Wealth At 25: Skills, Insurance, SIPs And EMI Traps

Neeraj Arora's Financial Roadmap For Young Earners: Skills First, Insurance Next, Then Boring Index Funds

"You can get a loan to buy a car. You can get a loan to travel. But you can't get a loan to retire."

On the Accompany Akki podcast, chartered accountant and educator Neeraj Arora spoke with host Akash Kumar about how young Indians should approach money: from building skills and automating savings, to insurance, emergency funds, EMIs, credit cards and financial education.

Stop obsessing over Rs 1 crore

Asked how a 25-year-old earning Rs 50,000 a month can build a Rs 1 crore corpus, Neeraj pushed back on the question itself.

"A 25-year-old shouldn't even be thinking about Rs 1 crore right now," he said. Every podcast asks the same question, and he's tired of answering it.

His focus instead:

• How much skill do you have?
• How much knowledge and education?
• Can you monetise them?

"Invest in yourself before the stock market," he said. Know every valuable skill in your field. When people start finding you because of your name, Rs 1 crore, Rs 10 crore and Rs 50 crore all become possible.

The easiest time in history to build financial discipline

Neeraj believes building discipline has never been easier, thanks to SIPs and automation.

For someone earning Rs 30,000 to Rs 40,000 a month:

1. Cover essential, non-negotiable expenses like rent and food.
2. Then focus on your SIP.
3. Track your income and expenses for six months.

Use AI to understand your money

His practical tip: create a project in ChatGPT or Claude and add six months of income and expense records. Then answer four questions:

1. What is your income?
2. What are your expenses?
3. How much do you owe (loans, cards and so on)?
4. What do you own (your assets)?

These four answers give you your net worth and a clear starting point: where you are now, and where you want to go.

Don't fix a savings percentage

"Don't make a rule that you'll save 10, 20 or 30 percent," he said. "Whatever percentage you can save is still less."

Flip the savings equation

Most people think:

Income minus essential expenses minus discretionary expenses equals savings.

Neeraj says it should be:

Income minus essential expenses minus savings equals discretionary expenses.

Save first, then spend what's left, guilt-free.

The two-to-three bank account system

• One account for essential expenses
• One for investments
• One separate account for discretionary spending

When the "fun" account runs out, the fun stops until next month.

He also advised moving investment money out within two to three days of getting paid. "If the money stays in your account, it will get spent. That's human nature."

For investments, choose a good mutual fund, or an index fund if you're unsure, and set an automatic SIP the day after your salary arrives. Continue for 10 to 12 years.

"Nobody will do this for you," he said. "Get up, check your expenses and automate it."

Insurance before investing

When asked what instrument to use for a first Rs 1 lakh corpus, Neeraj said the milestone itself was wrong.

"First, take medical insurance and term insurance. Then talk to me about Rs 1 lakh."

His reason: a single medical emergency can bring a Rs 5 lakh hospital bill and wipe out years of investing.

His order of priorities:

1. Medical insurance
2. Term insurance
3. Emergency fund
4. Investments

You can build your emergency fund alongside your investments, but insurance comes first.

His simple investing plan

"Medical insurance, term insurance, emergency fund, and index funds. You're sorted for your life."

For investments, he suggests spending a few hours researching index funds tracking the Nifty 50 and Nifty Next 50, then starting an SIP. After two to three years, you can optionally add some gold or US ETFs.

The problem, he said, is that it's boring. People look for small caps and mid caps so they can boast at parties. "If you invest to show off, you'll never create wealth. If you invest for your goals, you'll achieve them without noticing."

His view: "My main job as a teacher is to fix my students' behaviour. If your behaviour isn't right, any investment will fail."

When do you need term insurance?

• If no one depends on you financially, and no one will, you don't need term insurance.
• If someone does or may depend on you, take it as early as possible, when premiums are lowest.
• Aim for cover of at least 20 times your annual income.
• Once your wealth is large enough to support your dependents, you may no longer need it.

Neeraj took term insurance at around 24 or 25, starting with Rs 60 lakh cover and later adding a top-up of around Rs 1 to 1.5 crore. He learned about it while teaching income tax sections 80C and 80D.

His analogy: you respect the security guard at your building, but you don't expect him to fight at the border. That's the Army's job. Similarly, term insurance is for covering risk, not for giving returns.

"The biggest sin is mixing insurance and investment," he said. Mis-selling happens partly because buyers are greedy for returns too.

How much emergency fund do you need?

It depends on your situation.

• Single, no dependents, parents financially secure: two months may be enough.
• Add dependent parents, medical costs, EMIs, a non-working spouse or children's school fees, and the requirement rises, potentially to 12 to 18 months.

His method:

1. Calculate essential, non-negotiable expenses.
2. Inflate them by 10 to 15 percent to be conservative.
3. Decide how many months you'd need to comfortably find new work or income.

"Only the person wearing the shoe knows where it pinches," he said.

The one mistake that ruins financial plans

Not getting financial education.

Understand the difference between assets and liabilities. If your asset column keeps growing, you're on the right track. If your liability column grows, you'll get trapped.

He also challenged the excuse that schools don't teach finance. "School didn't teach you everything about Bhagat Singh either. Read it yourself." He already teaches his 13-year-old daughter about assets, liabilities, mutual funds and behavioural biases.

Watching reels isn't education

"People follow five finance influencers on Instagram and think they've learned something," he said. Ten minutes later, they've scrolled to a drama reel and forgotten it. "You're living in an illusion of education."

Real learning means watching carefully, making notes, reflecting and, most importantly, changing your behaviour.

The EMI trap

Neeraj is completely debt-free. He has taken loans only for his first car, when he needed mobility, and for a home, which he considers a wise decision. Every car since has been bought without EMIs.

On "zero-cost EMI", he was blunt. "The cost is your mental health, your financial health, your future and your retirement."

How to stop impulse buying

• Wait two to three days before buying. This alone can cut 50 to 90 percent of impulse purchases, he said.
• Reduce UPI use and use more cash. Paying in cash creates a sense of pain that digital payments don't.
• Review your spending on Blinkit, Zomato and Swiggy.
• Add items to your cart and wait.

He quoted a line he heard from Sachin Bansal, co-founder of Flipkart: you can only manage what you can measure. "Awareness precedes change," he added.

He was clear this isn't about living like a miser. If something genuinely adds value and you've planned for it, buy it. Just don't buy because of FOMO or an influencer.

Credit cards: amazing tool, dangerous trap

"There's no tool more amazing than a credit card," Neeraj said, when used well. But if you treat it as extra income and overspend, "cut it in half today and throw it away."

He uses several premium cards and says he earns so many rewards that he sometimes feels guilty. He described redeeming points for stays at five-star hotels.

Note: Card reward rates and benefits change often. Always check the latest terms with your bank.

Why social media glamorises finance

Boring advice doesn't sell. Neeraj said one of his reels about buying a car with a credit card got around 10 crore views, while simple, valuable videos get few views.

He also warned against collecting a new "best mutual fund for this year" every year. After a few years, you own 40 to 50 overlapping funds.

His own costly lesson

Neeraj openly admitted he once bought Yes Bank shares after watching a video, and lost money.

"Wisdom doesn't come from eating almonds. It comes from stumbling," he said. The key is to stumble early, with small amounts.

Greed and fear, he said, have always made people lose money, from the tulip mania to bubbles in stocks, gold and silver.

Books he recommends

• Seeking Wisdom: he has read its first chapter around 25 to 30 times
• Monika Halan's books, including Let's Talk Money and Let's Talk Mutual Funds
• Morgan Housel, whom he calls "the Monika Halan of the US"

Lessons from teaching

Neeraj teaches auditing, the next level after accounting. His core message to students: "Your effort shouldn't be mediocre. Results will follow."

Even after teaching the same subject for years, he wakes up early to review his notes before an 8 am class. "A good teacher never skips homework."

He compared teachers to the sun: they give everyone equal light. Some use it to grow, some waste it.

He also credits his mentors, including Ajay Jain sir and Munish Malhotra sir, and still seeks mentorship himself. He hires coaches for new skills, from badminton to guitar.

His signature line: "Keep learning, because when learning starts, winning starts."

Key takeaways

• Invest in skills before investing in markets.
• Save first, then spend.
• Automate SIPs right after payday.
• Get medical and term insurance before investing.
• Build an emergency fund based on your real situation.
• Index funds are enough for most people.
• Avoid EMIs and impulse purchases.
• Financial education means changing behaviour, not watching reels.

Watch the full episode:

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Which of Neeraj's money rules will you start this month?