Something Personal...

Don't worry I am not going to share anything personal about me, but personal financial planning tips which I learned from my own experiences and over the Internet... 😀

1. Saving = Earning

Yes, if you are saving money it's as good as earning . 

For example I have 50k salary per month and I spend 10K for on my needs, 15k on my loans, 5k on my policies, 10K on luxury, I still end up saving 10K per month

Where as if I have 100k salary per month but I have 25k home expense, 35k home loan, 15k car loan, 5k for policies & 20k on luxury then I have nothing left for saving

So, your financial equation should be - 

Income - Savings = Expenses ✅

AND NOT

Income - Expenses = Savings ❌

You must save atleast 20% of your salary right from the day you got money... even since you got your pocket money ☺️

P.S. - please be a smart saver, don't sound like  cheap, kanjoos makkhichoos 😋

Many times I pay chai /snacks bills at tapari for all, still I am left with 50% food cash amount in my account at the end of the month because I never order junk food for lunch or dinner when I am at home... Home made food is always heaven. Mom n Wife are happy that I am eating at home, friends are happy as I pay for them. It's win-win situation! 😉

2. Emergency Fund

Keep emergency fund if you are earning.

It should be equal to 6 times of your monthly expenses.

3. Get yourself educated financially

So many things are given priorities but finance. How many of us pay our own ITR?, Do we discuss on finance with spouse/family? Do we teach simple economics to kids? Do we follow annual budget or just keen to know tax limit value for the year? Yes, we are so traditional / Orthodox in terms of finance. 

We must gain knowledge about finance, we must file our own ITR, We should take risk and put money into various options and not just in FD. Inflation rate is more than FD, so we are actually putting our money into negative if we invest only in FD

If IT company ask you to work for their client called NSDL then you will any way gain domain knowledge of securities and depositories...If the IT client is supposed to be Money Control or Morningstar you have to read about equity , debt and other various terms...If your IT project is on insurance, you collect entire business knowledge of it to write the logic, but when it comes to our own financial planning we say 'Arey Itna kaun padega'. If we spend just 15 mins a day for finance, its more than enough. In bus, train, doctor's waiting room, before your order comes in hotel, before your Barbour calls you for hair cut you can read about finance instead of facebook n whatsapp

4. LIFE INSURANCE - Get pure term plan always. Start earliest.

Don't look at life insurance as an investment so always go for pure term plan.

Sooner the better, as lesser is the premium if you opt one earlier.

If you are smoking then select yes else no. But even if you are not drinking still mention YES. At the age of 28 while taking policy you can't predict if you will start drinking in your 50s or not. But if you are very confident that you will never drink in your life, mention NO!

And share the details with spouse

5. Health Insurance - go for individual with super top up for entire family

Get health insurance for individual family member upto 5 lacs and super top up for family of 20 lacs. It's cheaper than 25 lacs family insurance! 🙂

And share the details with family

6. Diversify your investment and keep it simple

Do invest in gold, equity, bond, debt fund, fd, rd, real estate equally.

Don't buy say 35 mutual funds or 500 different companies' shares in your portfolio. Keep it simple and track them.

Good shares are nothing but shares of good company. Learn fundamental analysis of shares and buy based on your own analysis

Even though the company fundamentals are best, don't invest lumpsum in shares, buy them at every fall.

Do not panic if the value of share goes down due to any external factors/news, check their fundamentals and decide. Consider fall is an opportunity to average out provided fundamentals of company are solid!

Keep monthly track of all your investments and revise if needed.

7. Power of compounding

If you invest 1 lac for 20 years with interest rate of 10% but did not reinvest the interest earned, then you will get 4lacs after 20 years.

But if you invest 1 lac for same 20 years with interest rate of 10% and reinvesting the interest earned as well, then after 20 years you will get 17 lacs rupees!!! 

So understand the power of compounding and don't eatup that interest earned every year.

8. Choose your money eater wisely

 - You need to search for good ethical doctors, who are not money minded. It will save your lot of money. Same is for your choices of foods, clothing, home decorating, wedding or other show-off functions. For your kids schools etc.

- Gym is not  the only place which keeps you healthy, but 2 rounds to your society can achieve the same. Come out of the fad of six pack abs or  zero figure. Functional strength is more important than physique. It will save many more bucks

- Car is need, but luxury car is always to show off. Give priority to safety than looks when buying vehicles. Same for other electronic gadgets.

- Always stay with your family, every family member is needed to each other at some point in life. It gives you not just lot of money but love and support as well.

- Don't earn for your kids, let them earn by themselves

9. To be rich is good but to be richer is bad!

When your monthly interest/return from all your investments is more than your monthly expenses, then you are rich.

Just be concerned about your needs and your money, the moment you start comparing it with others you are trapped!

Instead of becoming richer, give it to society and neglected ones.

9 people in india has asset equivalent to what bottom 50% Indians collectively has! That's inequality and imbalance. 

10. Get peace of mind

Don't run behind the piece of paper (money), but get peace of mind. 

Be healthy , be happy.

~ Arun Bhaud