6 pillars of financial life

Everything in life has basic ground rules, which we should never forget. You can consider these ground rules as the pillars of your decision making activity. Even our financial lives have some ground rules to follow in order to have a great and enriching life. You should focus on avoiding bad decisions. I have seen so many people who have been careful, not messed up things and their financial life quality is really awesome. They have not lost wealth due to foolish mistakes and live a clean financial life overall and while they feel lag behind others, I can say they are ahead of others in many ways. Yes – They have not taken awesome decisions, but the best part is they have not made terrible mistakes either. Lets explore more on this today6 pillars of great financial life

Now I am going to talk about 6 areas of financial life which are like pillars  If you are clear about these ground rules and start some serious work on all of them, your overall quality of financial life should go up. But having said that, its a long term activity !


1. Rule of Earning

“Do not depend on a single income. Invest and create a second/ third source of income”

So many people just never focus on this. A person in a job has just taken it as his fate, that his only source of income will be his Salary. For him alternate source of income other than his salary is like a distant dream which he can only see, but could not achieve. The same happens with a businessman at times. He depends solely on his business income. Why? Why not also have some other passive income from other non-core business area.

At least start thinking in that direction ? Lets Explore some extra income source. I don't say, it need to be some grand income, but lets make some start, if not in action taking, at least in thinking about it. Other than our business income, I had some source of income from other stream. That's important ! . It can be a small income, not a grand one . That's okay ! . Whatever is your specialization, you must be god gifted into some or the other thing in life, start sharing about it with world by writing about it, you never know when you start making fans for yourself and it might bring some opportunity to you in life. 

Forget all that, at minimum, If you are a person who comes home early, why not take some tut-ions to make few extra bucks. Its not about earning a little more, its about the habit of creating an extra income. You never know when, in the future when you might have to look at it seriously! . So the point is, go ahead and put a small seed in your head about “Creating Alternate income” .

2. Rule of Spending

“If you buy things that you do not need, you may soon have to sell things you need”

People are over spending. There is no doubt about this. Just look at your own expenses & write them down. Question each of your expenses, do you really need them? Is it out of necessity or just a desire which you can avoided altogether or at least minimize it? The answer will be in front of you. 

I have seen many of my friends who buy a car on the first day of getting the job! and mostly they don't need it. Its either to show off, or just that short term desire of own it, without thinking about long term aspects of it. Its just unplanned!. Then there are people buying 25 shirts, when they only need only 12. There are people, who don’t have the `haisiyat` of driving an Alto Car, but they have bought a Honda City just to show off !

It just violates the rule of spending!.

Slowly but surely, this will take them towards disaster. It will come as surprise (to them) one day. Spending is a core activity of your life. You earn so that you can spend it, nothing wrong with it, but there is a difference between spending and over-spending. Understand it today to make your future more robust.

3. Rule of Savings

“Do not invest what is left after spending, instead spend after you save/invest”

This is directly related to rule 2 above. If you do not control your spending, you can never be able to save much and then you will never be able to give your best for your wealth creation. Fix this clearly & prominently in your head. For most people the formula is

Saving = Income – Expenses

If you rely on the natural flow of life, you can never save. Life will give you all the reasons why you can only save amount X . At times Nandini tells me – “ you know what, if you do not define the purpose for your money, money will find its own purpose” . This is very strong point , for a moment, just slow down and think about it. you will realize what it means. You need to control the flow of money and you have to create that flow yourself.

 “Imagine your employer says that from next month, you will get a salary cut of 10% and all you will get is just 90% in your income. For most of the people, will they not be able to live the same life as they lived till now ? If the answer is YES , then why are they waiting for ? Why not give that small salary cut to yourself as your gift to your financial life. You will enjoy this salary cut in coming years. trust me.

So your next task today is tell your family, yourself and your relatives that from now on you will be living on just 90% of your salary – PERIOD! . Start doing it and slowly you will see that magically – you will be able to manage things – Try it! It works! .Your assets , your net worth , and every bit of wealth comes from those tiny savings you consistently do for years. That’s the most important ingredient part of your wealth creation. If you do not focus on optimizing it, nothing else will work out!

4. Rule of taking Risk

“Never test the depth of the river with both your feet”

There is a very thin line between risk and calculated-risk. Calculated risk is the risk which is taken after due thought, and by accepting the future consequences and a thought full evaluation of how the odds are stacked.

If you invest a big sum of money in stocks, just because markets are going up and you do not want to miss the train, and just because that guy on TV said you should , then you are taking a risk. You will not be able to sleep at night for sure.

However if you look at the current market and tell yourself that – “Markets have not moved up from last 5 years, and this kind of situation in past have been proven to give great returns in next 5 years and you are economically ready to loose up to 30% of your money, and that's why you choose to invest in stocks, then its a calculated risk! . You have put some reasoning , thoughts and accepted the downside of that decision and hence you are taking that risk !

Taking risk is not a bad thing at all. It’s the only thing which can help you grow at exponential rate. Those who don’t take risks, just die a simple life most of the times. The best things in the life are on the other end of the Risk , its on the opposite side of it. So take risks, but always make sure they are calculated one ! . Over the long term, one an average, you will do great. Its proven already, I am just reminding you!.

5. Rule of Investing

“Do not put all your eggs in one basket”

Warren Buffet is not a very big fan of diversifying. All the money he has today, comes from stocks, but there is one simple rule he has followed – “Put all your eggs in one basket, if you know you are an expert of that basket and closely keep an eye on it”.

Most of us are not like Warren Buffet! . So lets not copy him. What if you have put most of your money in one single asset class or a property or a particular branch of a bank? or just a single stock. Things can go wrong, and when it goes wrong, you will cry out loud, but no will will be able to help. You will be helpless and will regret like anything.

As a best practice make sure that your wealth is not in a single place. Remember that portfolio diversification is mainly a tool of minimizing risk, not for maximizing returns, so don’t ask a stupid question like – “Will diversifying my money to different places increase my returns?” – The answer is “It might… or it might not!/. But properly done, it will surely minimize the risk of losing your wealth in future.” .

6. Rule of Expectation

“Control your expectations, and control your happiness – they are same thing”

One very dedicated reader of this blog, told me once that he does not expect equity to give him more than 8% of returns in long term and he always invests his money in equity, assuming that he will get 8% or better in long run. Anything more than that would be a bonus for him. I am sure that he must be happy all his life and will never be disappointed with equity returns.

In financial life, we expect agents to work in our favor, we expect financial products to give us amazing returns, we expect financial planners to charge less, but give an awesome experience , we expect life insurance companies to pay our family, even if we make some mistake while disclosing some important information, we expect our credit card to  forget the penalty for in-case we don’t pay on time, we expect government to decrease the tax rates.

If you look, we are an “expecting” machine in our life. I can say from my tiny experience of life till date, happiness and expectations are just the two different words for the same thing. If you want to get in control of your happiness level, just control your expectations in life. Stop the expectations from others, better control yourself and your expectations, because that's all you can control. not others.


Practice these 6 rules in your financial life

If you can master these 6 rules in your financial life, your quality of life will improve. Each decision of yours should originate out of these 6 pillar rules.

Budgeting Vacation Plans

This is something that we all hate. When in vacation who wants to calculate instead of enjoying. Vacations are well-deserved treats and money shouldn't be a cloud over these precious times away. On the other hand, the “anything goes” spirit that is so intoxicating during a trip can turn a little…toxic afterward, when you’re home facing staggering credit card bills.
As Christmas is nearing, this  season is perfect for a vacation plan.Well, yes when it's time to plan a new vacation all would love to, here I present to you some useful tips that could help you plan your vacation budget.

Plan it early :- Planning early would give you more options to select and choose the best price. When trip planning, balance your total costs based on 1) where you’re going; 2) how you plan to get there; and 3) what you’ll do once there.

Plan your daily expenditure :- After an initial expenditure on travel and hotel, keep aside money that you would require each day on food, shopping & activities.

Don't over spend on Gifts :- It’s tempting to pick up souvenirs for friends and family every time you pass a store. But while we’re all for gift giving, there’s no need to return  with four leather bags for your mom, or a candle & a bracelet  & a bar of soap for your best friend. Before leaving, make a list of people to buy gifts for and how much you want to spend on each person. When you hit a nice shop where you can knock several gifts off your list, buy in bulk and negotiate a discount. Shop with your budget in mind—don’t pick up cheap gift items whenever you see them. Have a research done on the place you are planning to visit, the items that are fairly priced and unique to that place.

How many do you really need :- When going on vacation, you want to make your memories last. But before buying that miniature Taj Mahal, think about whether the “souvenir” in question fits into your lifestyle or home décor. Snag items that work seamlessly with your lifestyle, like a pearl ornament from Hyderabad or a sandalwood bar from Karnataka—that way, vacation memories become a part of your everyday life instead of relegated to a dusty mantle display. Plan your year’s budget with your vacation in mind—if you know you can get an inexpensive silk block print scarf from Jaipur when you head there later this year, don’t buy one at your place, where it will be more expensive. Also, consider buying less stuff but taking a lot of photos you can later frame or keep on your phone or computer screen.

Live like a local :- Hotel restaurants can often be much pricier than restaurants in the surrounding area.Street food is another inexpensive option and is a great way to try authentic local cuisine. You can also save on breakfast, lunch and snacks—and experience local color—by buying fresh produce at local markets.

Leave Room for more :- Leave room in your suitcase for items you may want to bring back so you don’t have to buy another luggage piece on your trip or get slapped with additional baggage fees. If you’re allowed to carry on or check another bag, consider bringing a fold-up tote bag and packing it in your suitcase to accommodate extra items.

10 financial mistakes you must avoid

Hi Readers,

I am going to high light some of the common errors that are generally committed by youth while planning their financial requirement.

1-Unclear Goals :- Most of the youth generally set no goals with respect to finance. Everyone needs to set a financial goal and accordingly should work to achieve that. Goals could be marriage, purchase of house, child's education etc.

2- Keeping money idle in Saving Bank :- This is very common practice of youth. With hectic work environment and laziness, people tend to accumulate a lot of money in their saving bank account. Suddenly, they realize there is too much money lying idle in their bank account. This leads to impulse buying and affects their financial goals

3- No Clear Investment Objective :- There is no proper method that youth generally adapt and stick to when its about financial goals to achieve. They do it by themselves and mostly not structured well. They do not follow any comprehensive plan and stick to it. You need to map the mutual funds, life insurance and bank deposits when you plan for the future.

4-Getting into unplanned loans and debts :-  Most of the loans can be avoided by postponing purchase. Youth get attracted to EMI and other installment schemes that are provided by the retailer and tend to spend their future income. Whenever the interest rate goes up, the worries associated also goes up. Retaining same EMI and increasing loan tenure aggregates to this process.

5- Improper Risk Management :- Everyone needs to evaluate their risk taking ability. You need align your risk with your financial goals. It is advisable to take more risk when you are young and gradually reduce it with your age as your risk taking ability reduces. However, the general mistake people do is, when young they least bother about financial goals and when they wake up and plan for their goals it is already late. In order to meet their financial goal they take more risk at a later stage in life. This should be avoided strictly. It is essential to judiciously take risk, so that you never have to regret for it in life.

6- Ignoring insurance :- Most of the people in India are not adequately insured. Most people take up insurance policy to save tax and they search for options where return would be more. However, at this time they forget the fundamental of insurance. Insurance is taken for your family, not for you. Insurance is meant to fulfill your family need in absence of you. There is a lot of tools available in market that can provide you with good returns and you need not have to think of the returns when taking up insurance. Instead look for insurance which could meet up the needs of your family and also check the claim settlement ratio while you take up a policy. It is advisable to do some research before taking up any policy and not be influenced by what the agent say. There could be many clauses that agents would not disclose at the time of selling, and which leads to poor claim settlement.

7- Back-up plan :- Everyone should have a backup plan to meet your needs in case of any reduction in pay or retrenchment or business loss.

8- No proper communication with family members regarding money matter :- Traditionally, the male members or the bread earning member never used to discuss the financial difficulties and achievements with their spouse and children. However, in this modern age, your family should know where and how you are planning the finance. This is also upsetting the financial plan since the cash flow will be affected in case of any emergency.

9- Liquidity :- Most of the people tend to keep too much of cash. You should periodically check into this and evaluate your budget and plan accordingly and invest your money.

10- Inflation bites :- Most of the people tend to save and not invest. With less investment, inflation goes high.This affects the people who tend to save more compared to investment.

10 Money management lessons College won't teach

College teach us many things, but rarely do they teach us how to handle money. However, it is essential to have a good understanding of finance, as most of the students have debt or loans even before they start working. You need to understand some basic rules, so that you can take better judgement of your money.

1- Student Loans vs Expected Salary :- It is tough to graduate in any professional course without taking educational loans. However, you need to calculate how much of loan would be too much. Lets take a example, suppose you have loan of 7 Lakh at 12% interest and you have time period of 5 yrs to pay back. The EMI that you incur after 6 months from college would amount to Rs 15600/- approx. So, you need to get through a salary that would give you Rs 25,000/- at least to pay back this loan. Assuming you need only Rs 10,000/- to maintain your life style. So, this would mean you get into something that pays you more in just 2 yrs of your first job.

2- Books and Other fees :- Books taught in any professional course are quite costly. You also have other fees for hostel facility, computers etc. So, when you opt for books look for library options or lending options that could serve your need in cheaper cost. However, do your research before getting into such facilities as they sometimes might be more costlier.Most of the college's collect huge sum for hostel facility. Instead look for something cheaper, rent a flat with some friends. While renting check for additional bills.

3- Having proper Career Plan :- It is better to have a career plan in place , post your graduation. Students, mostly do not know what subjects they would like to pursue and that makes them take up courses that do not help them in future. So, while choosing a professional courses do some research and find out where you would like to plan your future. This could save a lot of your money by not taking up subjects that would be of little help later in your life.

4- Credit Card fees add up :- Do not be lured by the cheap offers. Many banks give credit cards with no processing fee and they lure you by saying it is for free. However, a credit card is like any other personal loan. You need to understand the terms and conditions on these cards before swiping it. It is advisable not to use a credit card when you are in college.

5- Credit vs Debit :- These are two terms that you should know, and understanding the difference is important. A debit card draws from money in your bank account and a credit card is that for which you pay at a later date. A debit card is a better option to keep a check on your spending habits. However, credit cards are beneficial to prove that you can borrow in responsibly that is you are responsible to pay back in correct time. This helps when you apply for any other loan.

6- Budgeting :- Start budgeting all by yourself. This is the time that you stay apart from your family and you do not have your parents to budget for you. Learn to budget well. Keep a check on all the bills that needs to be paid. Remember to pay before due date, and there by stop extra loss on late payment.

7- Nothing comes for free :- When you enter college, the loans may pay extra funds for your books and additional expenditure. But, remember this is loan and you need to pay back. So, use the fund wisely in the stuff that you need.

8- Understanding Bank fees :- In the world of ever-changing bank fees and new regulations, it’s hard to keep up with what banks are starting to charge us to use our own money. Check out what bank fees you will be subject to before opening a new account, and to closely monitor your statements.

Look closely at your statement and read the requirements for your type of account. Keep a check on the fees bank take on using other bank ATM's, on demand drafts, on over drafts etc to name a few.

9- Live Below your Means :-If you take up part time job, then remember just because you start making more money doesn't mean you should run out and buy that new couch you've been eyeing. Live frugally, pay yourself first.People in their 20s tend to think of retirement in abstract terms and as something to deal with far in the future, but although young people are getting better about it, their planning is not always done smartly. Start planning now and choose the right retirement plan for you.

10- Make a habit of saving :- Make a habit to save, be as little as is possible but this would help you in budgeting for your household, planning a emergency fund and investing later in your life.

Start early and achieve maximum benefit.

Most of the young people believe they do not have adequate knowledge about the market to jump in and start investing. However, fear of unknown and misguided belief that retirement planning can wait can cost you big in long run. There are numerous benefits to getting into investing when you are young. The single biggest benefit is time.

When you start investing in your 20's, you get more returns for your money by the power of compounding. Moreover, the more time you have to invest before your retirement, the more time you have to recover from any market losses.

Start now no matter how much money you have :-  When you are not confident of investing in equity, do not just wait, you have large choices of Mutual funds. Investing in mutual funds is much more easier. And when you are planning to invest in for a larger period of time, choose a good large cap fund to invest. Though the return on mutual funds may not exceed the returns in equity, these are better than any debt funds. However, distribute your money in all the possible forms of investment options.

Keep your eye on long term horizon:- When you are investing in  equity, choose companies that you would like to own. You can not let the everyday ups and downs in market scare you. When you try timing the market you can end up loosing money. However, when you have a good long term perspective, the equity market can outperform any other form of investment. So, look for good stocks that pays good dividend. When there is any dip in these stocks buy them. 

Don't forget debt or savings:-  Never forget to keep some money handy for emergency purpose. Keep money in debt funds or Saving bank accounts, that could cover up for your expenses minimum for next 6 to 12 months, in case of any emergency. 

Invest in Precious metal :- Precious metal like gold has given a good return in past 8 years and gold prices never soar. However, choose a right medium to invest in gold. The traditional method to invest in ornaments, may not give you proper returns. Moreover, we have tendencies to develop emotional attachment with ornaments, so now the market has come up with Gold funds and GOLD ETF's. The Gold ETF is most preferred as they give much liquidity and it is easy to purchase and sell them like any other stock.

The noisy Growth vs Inflation debate :- Max looser Indian Saver's

The RBI's stance on rates has provoked the noisy debate of Growth vs Inflation, however, what about the interest of most fixed income savers in India.

Trading, investing in equity is still seen by most as a form of gambling. Hardly 5% of the general mass engage their hard earned funds in equity market. Most people are vivid savers in debt funds such as bank fixed deposit.

In the Inflation vs Growth debate that surrounds RBI's action last week, the interest of Saver's is hardly being talked about. Last week, when RBI did not approve the rate cut, the industry and finance minister himself did not took much time to express their displeasure. The RBI thinks as long as inflation is high, interest rates cannot be lowered and the opposition thinks cut in interest rates will induce growth.

Let us now focus on the rates themselves, lower the rate of interest in deposits, lower the rate of interest on borrowers. Who is the largest borrower? The government itself. Who is the depositor? Its the general mass of India, who put their hard earned money in bank safe deposits. Especially, the ordinary people who use no other financial schemes.

A huge amount of money is borrowed by the government directly by post office schemes to banks. So, if the rates are reduced, certainly the borrower(government) will pay its depositor(general mass) less for its borrowings. This is the direct effect. Whether this will be able to bring down inflation is secondary and might not happen.

If inflation does not react to rate cuts, it is going to be poisonous. The Savers will then be left with fatal combination of high inflation and low interest rates. His real, inflation adjusted deposit will give zero or negative returns.

This issue is deeply tied with retirement benefits in India. Most senior citizen depend upon the returns from their fixed income for their cost of living. Moreover, inflation in health care is comparatively more, which could paralyze these senior citizens in case of emergency. In addition the inflation in fuel and electricity has induced inflation in almost all sectors. Based on this, ensuring a decent return on fixed income is important. Putting this in other word, the poor and the rich have voice, but not the senior citizens of middle class.

Lowering rates when inflation is high is like taking money from these people and putting it into government.

Thank you.

What Finance Minister should do to cut the inflation rate?

In my Opinion, the government should focus on generating more employment which would there by decrease the need of subsidized goods to meet the needs.

 Following to be done for employment and judicious use of resources:

1. These rural employment scheme to be directed to agricultural jobs. Lack of man power is one of the reasons for not doing agriculture in many areas.
2. Part of these rural scheme workers to be directed for infra build up jobs .None of these worker want to work for more than an hour in a day. Some place, they fight if more job is given. They want money for resting.
3. Public transport is to be encouraged instead of private vehicles. By using many public transports for short/medium distance like for 5-10 kms, fuel spent per kg per passenger will be much less than that of private vehicle.
4. Usage of by cycles to be encouraged.
5. The saved fuel by above measures to be used for power generation,so that fuel will be freely available for power plants.
6. The input cost of fertilizer/ cement /many other companies will come down if we give same quantity of subsidized fuel for power generation as though we give for private vehicles usage.
7. In due course, fertilizer will be available for cheaper rate,power will be available for cheaper rate govt need not give any power/fertilizer subsidy for farmers.
8. Cheaper power,cheaper fertilizer,easy availability of man power will make farm income profitable rural income will increase.
9. Consumer spending will increase. More consumer goods production,more employment will have more cash flow.
10. Many medical colleges to be opened and sufficient no of medical colleges to be opened to keep the last cut off as 80%. Thus many doctors will spread across the country penetrating rural area too,thus migration of citizens to cities/towns can be best prevented Which is the most influential factor for demand side inflation.
11. Real estate price too will come down..so that true value for plots will emerge thus protecting citizens from paying 2 crore rupee for 2400 sq ft.
12. Govt should survey the annual requirement of technicians/engineers/ other professionals and accordingly regulate the training/employment to avoid undue accumulation of unnecessary man power in single skill.
13. Above all politicians should truly will for country's development,not fighting/revenging the opponent to run the political business.

14. Many more thing to be done. But I leave it here for want of space. Thanks. 

The rule of 72 !!

The Rule of 72 is a well known formula in Investment guides to calculate the number of years required to double your present corpus value at a given interest rate. This is essential for you to determine where you want to park your money so that it gives you a good return and helps you in planning your future accordingly.

Number of years, T = 72/ R , where R is the rate of interest.

For example , you have invested in a bank FD with 8% interest rate, then (72/8 = 9 years), your present value will double in 9 years.

Hope this simple and easy to remember formula helps you.

Smart money management tips for youngsters

It is good to learn the techniques of handling money at a young age. Most of the people start their financial education at a later stage and by then they are already entangled in debt. To stay one step ahead learn managing money at teenage. This is the perfect time as you are given a small amount as your pocket money. If you could plan and learn the techniques, you will soon learn how to save from this scanty amount. Check out the following tips, that would be beneficial to you.

1- Learn the importance of being frugal. Frugal living does not mean that you need to live like a miser. Just make sure you are not extravagant. When buying stationary, check out for options where you could save. Check with different stores and you could find cheaper options readily available at your near by area. If you have habit of reading novels, then check online options, they not only deliver free at your place but also give a good discount. Online stores offer good discount in almost every product and they also give you options to pay when delivered. So, you need not have to worry if you do not have credit cards.

2- Now, a days teens also get their own credit cards. However, if you own one, be careful how you use it. If you have any confusion and you are not sure of the safety, take help of your parent. Do not go for online shopping if you do not trust the site. And while using credit cards at stores and restaurants, check the bill and check the number of your credit card. Dispose the credit card bills properly.

3- You could save by doing good research before buying anything. You can also save by stopping  frequent party with friends. Yes, you need not have to stop all fun activities, but you can reduce the number and still enjoy your life.

4- Follow your parents and learn how they manage everything with a limited income. Talk to your parents, ask them all your doubts and get a clear understanding of how to manage money.

5- When it comes to managing money, then nothing can replace a budget plan. Learn budgeting, with a proper budget plan you could plan your spending.You will also understand how to strike a balance between your savings and spending.

6- You could also save a considerable amount by limiting your cell phone usage.

A teenager often imagines that it is too early to enter the complicated world of financial management. However, every day counts when it comes to making the most of your money. So keep in mind what you have read and remember that it is never too early to begin money management. If you look at the world's richest individual, then you can see they all started very early to understand how money works.

Are you planning to sponsor your own Wedding?

Hi Readers,

Wedding is a high cost budget in Indian culture. We Indian celebrate wedding as a grand celebration with a lot of spending on everything that is part of wedding. Yes, marriage is something that should be celebrated and enjoyed to remember till the end. However, if you do not want to be left  and under debt post marriage then plan it early.

In our tradition, girls settle only post marriage and boys settle before taking the vow. According to tradition its always the parent who sponsor their own child's wedding.  However, if you have got a well paid job, then plan it so that you could help your parent in your own wedding. That would be like a gift and stress reliever for your parent.

For girls, this is a golden chance to help your parent. Post marriage though you could still help your parent with finance, it does not happen regularly like a boy can do. So, girls help your parents by spending the maximum at your wedding. Yes, some parents are humble not to accept girls money at any cost. So, you girls can spend on your own jewelry and bear other personal expenditure.

Even boys you can sponsor your marriage. Mostly, what  have seen is in Indian middle class family, no body plans for a wedding, specially the boys. When marriage is fixed then they go for loans. However, opting personal loans is quite expensive. So, it is good if you plan your wedding budget ahead.

Set some money aside for the marriage expenditure on a regular basis. Plan to purchase jewellery with schemes available at major jewellery showrooms, in this way you could save a good amount of money. Keep aside money for personal expenditure on the D-day. This way you can reduce the burden on your parents.

Planning, saving and investing wisely could help you to stay out of major credits. In general Indian mentality prefers to get settled post marriage. However, major debts at the beginning of your marriage life could spoil the entire charm of it and could lead to awkward balancing. People learn balancing life with their spouse only post marriage. By this time, if you could manage to begin your marriage without any debt then that adds more charm and allows both of you to plan ahead for rest of your life.

Start saving as early as possible

Hi Readers,

If this is the first year of your job and you have not yet started planning your savings then you could end up paying a good amount at your tax. Yes, if your salary falls on to large bracket, you need to pay tax anyway. However, you need to start saving so that you could reduce the tax amount.

1- Firstly,I would suggest to take up insurance policy. However, do not place all your money that you want to invest in insurance in just one policy. Try investing in multiple policies. This way the premium that you need to pay each year would be distributed and in case you could not pay the premium at some point, then you have option to close one policy and run the other.

Some people go for policy that would require to pay a large amount at one time. But, this is not good planning. If you could not manage to pay the premium at that time, then their is risk of becoming defaulter. So, the best way would be to distribute the total premium into different months and take up more than one policy.

2- Secondly, I would suggest you to open up a Recurring deposit with your bank. This way every month the bank will deduct the specified amount from your salary account. Even though the amount saved in RD account is less it would compound and give a good return at the end. The interest on RD is same as the fixed deposit. So, this is best way to save in RD than in your saving account.

3- If you have education loan. Then start repaying the same. Try to complete the same as early as possible.

Most parents in India do not allow their children to handle their own money at the beginning of their job. They would suggest you not to spend from your salary account, instead would give pocket money on the account that they had opened for you. But, I would suggest you to handle your money. The sooner you start managing money the sooner you learn the techniques. 

In my next post I would dedicate it to girls and boys, who are interested in financing their own marriage.

Stay tuned.

Be Money Wise @ 22

Hi Readers,

In India, youngster generally start earning at the age of 22 or 23. So, my first post is dedicated to these youngsters. It is a time to party when you finally get a appointment to your dream job at your dream organization. You would have planned a lot, how you want to spend your earning. Parties, discos, friends and outings are what would have revolved all in your mind. Yes, of-course these are the benefits that you can afford at your own earnings. You do not require your parents pocket money and you are finally independent to decide how you want to enjoy life.

At such a age, it is general tendency to feel free and fly like a bird. However, you have stepped onto your 20's and teenage is over. You need to learn slowly the vast reality how money works. If you learn the technique of using money to reap benefits then you will be master of your money. Your money will work for you and you need not have to depend upon just your job.

In many Indian families, parents do not talk all about their financial condition. They neither let their children know how they manage with finance, be it debt or savings, nor do they share how they have planned their own future. You might belong to affluent family and would have inherited a large amount of wealth. However, still you require to know how to plan for future.Certain families run on continuous debt. If you belong to such family then you need to overcome the debt and manage well to overcome debt in your life.

Yes, for first few months, you would love to buy new clothes and accessories for all occasions. However, you need to save a part of your salary for the future.You also need to invest well to reap the benefits of return.

In this blog I would suggest tips that would help you manage your earnings. The next posts would come up with savings and investment plans.

Thanks