“Eventually, what are you going to do with all that money in the world?”
Well, a lot!
While some may argue money doesn’t buy happiness, we fail to understand that most of our life is chronicled around either earning or spending money. Happiness comes in different forms – Buying a dream home, providing the best education to your child, going on a holiday (like the one in ZNMD movie), and then transiting into your retirement phase where you can be financially independent. The thought itself brings you happiness but it does not come free of cost if you’re looking to convert it into a reality. While it may seem easier for a few, some of us are still juggling at the lower levels in a Maslow’s triangle. And fighting our way up requires planning, strategizing, and dedication towards achieving one’s financial goal.
Honestly, tricks to attaining lifelong financial fitness cannot be summed up in a single article. However, based on the suggestions and guidance of few of the top financial experts in town, we have come up with an important checklist that will quickly help you know all that you need to do to attain it.
Checklist For Attaining Lifelong Financial Fitness
Early on investment
How early in your life you begin investing has a more significant impact on the wealth creation than you can possibly imagine. To understand how an early on investment is more profitable, let us take an example.
Example – Rahul (30 years old) and Priyanka (25 years old) join an IT company as Software Engineers. Both of them decided to invest Rs 8,000 per month till their retirement age (58 years). Priyanka is 5 years younger to Rahul. What is the additional amount that Priyanka can accumulate, assuming returns of 10% (CAGR)?
Rahul can accumulate a corpus of around Rs 1.46 cr in 28 years (58-30) and Priyanka can accumulate a corpus of around Rs 2.47 cr in 33 years (58-25).
Now that’s a big difference. The bottom line here is the best time to start investing is NOW.
Curtail expenses by making smart purchases
If you’re looking to buy a newly launched smart phone or any other product, then wait for a while (mostly until a new product from the same brand is launched). Once a considerable duration passes by, the price of that product is bound to reduce and there you go! You’ll be saving quite an amount on the same product. Besides, make it a habit to always check for coupons/discount before making an online purchase. Try to control ‘instant gratification’ & avoid acquiring high cost Loans.
Get adequate insurance cover
Financial emergencies like hospitalization, job loss due to an accident, and emergency home repair can be difficult to deal with. If you do not have adequate insurance cover or an emergency fund, you’re most likely to break into your savings. Avoid this financial mistake by getting yourself a few necessary insurance policies. Unexpected hospitalization expenses can be dealt with a health cover; a critical illness insurance plan will provide you a lump sum amount to pay for your medical expenses when diagnosed with a life-threatening disease; an adequate home insurance will cover loss and expenses incurred due to theft or a natural calamity.
Likewise, a Term plan will provide a life cover to your family in the event of an untimely demise. Besides acting as a financial back up, insurance policies also help you save on your tax under Indian Income Tax Act.
(Related Article : ‘If Life is unpredictable, INSURANCE can’t be optional‘)
Have effective conversation with your family
“Sabka saath, sabka vikaas”. Fulfilling a financial goal requires support and involvement of each member involved. Rather than enforcing a budget, it is best that one sits with the family and discusses a mutual financial goal. Instead of straight away denying kids something they wish to buy, you may suggest them to put that on their wish list and start saving for that. One could also put up on a bulletin board the family’s financial goals and areas where the expenses can be curtailed; it will act as a reminder for everyone and help them improve their spending & saving habits.
Sticking to the plan
“Someone is sitting in the shade today because someone planted a tree a long time ago”. – Warren Buffett
Plant a seed and forget to water it regularly, it will die soon. Sticking to your set plans is a requisite if you wish to see it bearing sweet fruits. To be able to stick to your plans, it is also necessary that you set realistic goals.
A Financial goal that is neither too easy, nor too difficult to achieve. A realistic, reasonable goal will not disturb your routine expenses and will keep you determined to achieve your investment objective. As suggested earlier, put up your goals on a bulletin board, so you know how far you are in realizing them. You may as well install a spending /investment tracker on your mobile phone and keep a watch on all your expenses & investments.
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To conclude, a strong commitment to save/invest consistently and an adequate emergency fund or insurance policies to take care of your financial crisis and support of your family is all that you require to attain a lifelong financial fitness.
This is a guest post by Maria of OneInsure.com.
OneInsure, the online brand of Robinhood Insurance Broker Pvt. Ltd. claims to have India’s first ‘all in one’ Insurance Management App. The app proposes the users to move beyond the celebrated concept of compare & buy. The app promises its users to provide almost all types of service and support related to insurance, without any biasness. Which means whether or not you have bought any product from OneInsure, you can update your policy details on the app and avail 60+ services (including claim assistance) and support.
About the Author
Maria Panwala is a content writer and copy writer at OneInsure who specializes in blogging and writing about diverse finance subjects like insurance and investments. Her passion for accountancy, taxation and the English language pushed her to pursue B.Com from Maharaja Sayajirao University of Baroda and later MA from SNDT Women’s University. When she’s not writing or reading, you can find her binge watching television shows, movies and documentaries and exploring the streets of Mumbai.
Kindly note that ReLakhs.com is not associated with OneInsure. This is a guest post and NOT a sponsored one. We have not received any monetary benefit for publishing this article. The content of this post is intended for general information / educational purposes only.
(Image courtesy of Sira Anamwong at FreeDigitalPhotos.net) (Post published on : 19-March-2018)
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This is a lovely post, like all posts by Ms. Maria Panwala. Very informative. Clearing all my doubts one post at a time Maria ji. Respect.
This article was brief as well as explanatory. It helped me check my list for a life-long financial fitness. Thank you.
Dear Rajan,
The portfolio allocation of Kotak select focus is skewed towards large cap as of now. You have one more large cap fund ie SBI bluechip.
If we check the overlap % between these funds, it is around 45%. So, may be it is prudent to have either of the two in your portfolio.
Kindly read : MF Portfolio overlap analysis tools
HI
DARSHAN SHAH
WOO IS IT U MARIA SINCE U ARE MOST QUALIFIED PERON IN SCHOOL , I M HAPPY THAT I GOT GOOD FRIEND LIKE U IN MY SCHOOL , I SALUTE U MY FRIEND I HAVE READ IT AND I GOT UR POINT WHICH IS IMPORTANT BY AND AND PRAY FOR THAT U GOT MORE GIFT OF SUCCESS
As usual, another informative and excellent article on relakhs.com.
In my view the checklist could also include – “Regular investment in oneself and his/her family”. This investment will outperform the rest of the financial investments.
For example, knowledge earned from a book worth Rs 500 can get you an additional increment worth 200,000 in your salary.
Hi Kunal,
You have made a very important point there. Thanks.
-Maria