Running away from Financial planning like I do?
Here’s how that changed in tough COVID times.
I am very bad at Maths. That also translated for me into ‘I don’t understand anything much about Finance, planning, saving blah blah’.
I started earning a very low salary. So low that I was not eligible for tax cuts. However as years went by, I forgot to notice that hefty taxes were being cut from my now decent salary. Ah, it’s okay. Who cares!
As I switched jobs and my salary rose exponentially, I found freedom with money. I am single, so all this family, marriage liability did not apply to me. I was an independent person who had right over every penny in her account.
I traveled many places, purchased comforts for my ageing parents, I treated friends like never before. Thankfully I had a conservative mom who sat on my head to start saving at least some proportion of my salary in a conservative instrument so that I am not devoid of money.
That basic saving is the only thing I did and blew up the rest of my money. On good things, but I did. Even the saved money got blown up in-home repairs, trips, and sister’s marriage.
Net-net, I was living on the edge.
Enter lock-down. That is when I had to stay put at home. I couldn’t order food, nor go out, nor travel. And all of a sudden my bank account had the money I had never seen before. I was thrilled.
The great Indian lock-down of almost 8–9 months swelled my savings. I started getting a thrill out of saving money. And I realized, you are only as rich as what you save.
As an ambition, I never wanted to work for a fashion brand or a financial brand because both were out of my brain’s domain. I never understood nor had the affinity for these fields. However, as it happened, I was and still am working in a fintech firm.
As luck would have it, I started taking interest in various apps that made investments easier and more fun. I consulted my boss and hired a financial planner who was investing my money in better avenues. I relegated more than 40% of my salary to savings.
Thus began my obsession with Financial Planning. I took a few minutes before I clicked the ‘buy now, button on that shopping cart. The scenario earlier was that I would make instant purchases at the drop of the hat.
I started calculating travel expenses, started moderating food. I set goals for myself, one of which was to buy a home till March 2021. And guess what, I saved enough to buy a home! Read this article on how I managed that one.
Earlier I would always believe that one has to live life for the moment. I have seen people be stingy to save and that’s why my association with saving money was a very poor one. It meant not living for today.
However, I realized that with optimal savings, one can plan a dream tomorrow. Money gives you the power to pounce on opportunities — as says the ‘Psychology of Money’ book by Morgan Housel. And that is one book you SHOULD read if you are a finance-averse person like me.
Also, save but ensure you don’t stop having fun. I still shop, I still indulge. But now I monitor and set limits. It is no more mindless spending. It doesn’t mean I have stopped living life. I am living it and creating opportunities for the future.
Here are few tips from personal experience:
- Depending on what liability you have, allocate at least 30% or more of your salary in saving instruments.
- Apart from this, keep aside some play money. The money you can dabble in stocks/crypto and not regret if it is lost
- Decide what money you wish to spend on daily expenses and transfer the rest of the money to another account to avoid touching it. You may still end up withdrawing from it once in a while, but largely that money is untouched
- If you know your goals, plan for them. Buying a home, planning a vacay, anything at all
- Use apps for investing. Some excellent ones simplify this for you
- Last but not the least, enroll a financial planner to give direction and sense to your wealth.
Saving is not rocket science. Financial planning is not rocket science. It is just a matter of allocation + consistency.
