Notes to my younger self 2
Building a Bio rhythm - Good habits to last a life time
Having secured the fundamentals it is time to ensure that the hard work you put in to earn your money does not go wasted and you make your money work as hard as well.
Early working years you do not have the money for many goals but as your salary increases your habits should also change. I ended up saving money but had not identified a need for the saving and used to accumulate in one pot. This was some 6 years after working and a friend came for a loan and I was also planning a down payment for my car. I dipped into my savings and gave the loan to the friend. Around the same time a colleague eloped and needed some money for his wedding. All of these were mutually exclusive events and had I kept my car saving pot separate it would’nt have got impacted.
It’s often said that all of us get to experience one of the two things - The pain of discipline or the pain of regret or disappointment. Motivation is what keeps you going but discipline is what keeps you growing. So, it is essential that you build a practice of creating a budget or living within one’s means, paying of bills in time, planning and sticking to the plan. A way to paying yourself first is automating your savings via SIP - systematic investment plans. #asipforeverygoal. The other discipline to build in early days is to tag a goal to each of your buckets or investments. This concept of mental accounting in behavioral finance keeps you disciplined and focused on the goal.
Luckily for me however tempted I was, I never leveraged myself to buy something big and get into a debt trap. The impact of compounding works both ways – to create wealth or get you into a debt trap. Fortunately, the middle-class upbringing or the company I kept did not test me on this many a times. In fact, with a good credit history and managing spends one can leverage the loyalty programs of credit cards to create something meaningful.
Avoid Debt trap
Lately the availability of easy money is promoting the culture of borrowing to spend. This is the worst debt trap you could get into. This can wreck the foundation hence essential that all bills are paid in time and no spending is done beyond means. Buying stuff on impulse for 100 bucks 10 times is Rs 1000/- which can be put to good use. Use the 72-hour rule atleast for online purchase. Put your stuff in the cart and wait for 72 hours, if you still feel very strongly about it, it will make you realise whether you really need it or just want it ( do not really need it at all ) . Practise delayed gratification as this will help one in the long term. That is why we started a campaign #weekendinvestmentplan
Invest in Reading
I was a voracious reader and must be reading a book a week in my sales stint and all of it was fiction. Now not that it did not help me push my everyday boundaries however even if I had read a couple of financial books it would have been a different outcome. There will never be a time when one will have perfect knowledge however a good way to build confidence is to read wisdom shared in books. As Benjamin Franklin once said “An investment in knowledge pays the best interest. Read a blog or a at least one financial book every month.
Here are some references for you to decide
The thought behind this is very simple. Even if you pick up or or two ideas from each of these books see how far you would have traversed by the end of the year
Rich people have small TVs and big libraries, and poor people have small libraries and big TVs.” – Zig Ziglar
Focus on Fitness
Having grown up in the armed forces environment one was very physically active. One also had a middle-class mindset where in studies were always more important than play. This played up somewhere in the early years where in I put on 15 kgs of weight in the first 10 years of working. This wiring has to be set right, and a balance sought early in life for self-care as well. Happiness in life really is an outcome of good health and freedom in all just pursuits. Keep some time for exercise and play
For about 10 years I just let my salary come and sit in the bank. Coming from a B school I read about investments but never practiced anything. The quest for getting it right or fear of losing because of imperfect knowledge always prevented one from taking the plunge. It was always watching from the sidelines. Its only when I started this journey by signing up for an index fund SIP that I began to get curious and started reading or finding out more about investments.
Transfer inertia from your side to category
There is never a perfect moment when you will have all information about investments or market. Well begun is half done. The trick is to shift the inertia from your side to the category. Start the journey of investments with little sums. Being in the category like mutual funds would make you curious after some time to know more as you discover the magic of compounding and growth. While the plethora of choices confuse you, start with something as simple as an index fund ( index fund invests in the largest of the companies in the country and has very low cost of operation ) and manage you liquid investments by putting them in liquid or overnight funds ( this provides you access and also puts the money to work)
Chose a Financial Advisor
If we are not in financial services then we are busy with our day jobs and hardly have time to track, understand, research about investments. I did precisely that – Nothing for the first 10 years of my career and still regret that till date. So, one can take the help of a financial advisor. Now this is one of the most difficult choices to make. It can give you incalculable gains if you make this decision right.
Disclaimer: The views and opinions expressed in this blog- article are those of the author and do not necessarily reflect the official policy or position of any other agency, organization, employer or company.