finance, investment, life, Marriage life, money, social media, Uncategorized

5 Money Habits You Need to Follow

It’s been a while since I wrote a post on investments. I did a bit of a research from various sources including my dad’s word of mouth and have mentioned the following points. You may read on:

  • Start Early :

Many billionaires follow this strategy. Starting with your very first paycheck, you may put in a small amount of money as a part of your investment. Even if it is as small as a thousand bucks, it is money that is saved after all.

Always remember the 60-40 rule, where you spend 60% of what you earn and save or invest the rest of the 40%.

This is just for a reference. Even if you are not able to save up 40% during the initial stages of your career, it is just alright. You may start with something small. There is no hard and fast rule.

  • Choose Your People Wisely:

Friends and Family are an integral part of our lives. But what if he or she turns out to be your biggest weakness?? I am mentioning this here as a bullet point because you will be able to avoid anyone who is piling on you despite being employed. If you and your other friend is employed, you can take turns to pay your restaurant bills or split your bills whenever you guys are catching up. Once in a while a treat is fine, but this is not supposed to go on forever.

It is a fair warning, if it’s your date and he/she makes you pay your bill more than three dates, despite being employed, you must watch out.

Be around people who value money as much as you do. 

  • Automate your money:

Do a little research and find out more about mutual funds or SIP’s or whatever you would like to invest in, make sure a certain amount of money goes onto these automatically. It is advisable to set it on a date which is right after your salary date. You may have a buffer of 2 or 3 days. This way, you would not spend everything you earn.

  • Lifestyle jumps:

Whenever we get an appraisal or a raise, we would start making plans to spend that extra amount of money that would be adding to our existing salary.  During my first job, I was having a lot of thoughts of buying a shoe that costed 2k rupees, but during my second job, when I was earning more I easily spent 1.5k rupees on a mere lipstick. This is not a good habit to inculcate in our lifestyles.

Yes, you need to stick onto your life like before  if you had everything you needed and instead of making plans of spending, make plans to invest. 

  • Simpler life:

Always, buy only what you really need, not what you want. I am a hoarder when it comes to home décor and stationery, I am learning to control. Try to adapt to minimalism style of living. It’s absolutely fine to binge on something luxurious once in a while, but you need to keep a check on it. Think before you go clubbing or eating out. It all feels great for a few hours but it doesn’t help in a long run.

When you are investing on some luxurious brand, think twice about why you are doing it. If it were your bucket list it’s fine, but if you are gonna buy it to impress the people around, you must reconsider your decision.

On the contrary, when you spend on electronics, compare the life of it and then invest. Always choose something that lasts longer even if it is to spend a few hundred bucks more. The next things one would spend is the clothes. Get pieces that might last longer and of course a versatile piece that can be styled differently for different occasions.

And Remember, You need people to value you for you, not the brands you carry or the things you own. No, you do not have to prove people about how much money you have.  

Have a great week ahead folks!!

Written by,

Divya Shankar

 

Sources:

  • Outlook money

 

 

finance, life

How to save in your 20’s?!!

“An investment in knowledge pays the best interest.”

                                                                             – Benjamin Franklin

Earning money is probably one of the most wonderful experiences ever. And indulging yourself with all that you have earned is even better. It is really hard to keep those temptations at bay whenever you step out and start saving up. YES!! All your friends must be partying and buying new clothes and you may be in the fear of missing out (FOMO). So, you end up doing things when you are not okay with it.

Maybe the first two or three months, you can spend your money as you like, of course it is your first salary and you need to taste the fruit of all that hard work you have put in it ( *wink wink*). Maybe, after that start limiting yourself. I started realizing when my dad asked me excluding all my expenses after the first three months, where did the rest of the 60 k go.  I really could not answer nor did I actually know what happened.

So keep a ratio of saving up at least 60% of what you earn if you live with your parents and at least 10% of your income in case you live on your own. 

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When you start saving up or investing, always remember the power of compounding, it was called the eight wonder  of the world by the great Albert Einstein.

So, here are few tips on how to save when you just started earning. 

  • Make separate bank accounts:

Keep two accounts, wherein one of them will be your savings account which would have all the money that you saved up and the other would be your salary account. The money in the savings account should not be touched unless it is an emergency. When you feel you have a lot of money in your salary account, you can transfer it to the other one.

  • Make a budget:

When you know how much you are gonna spend, plan your budget accordingly. Keep a certain amount of money in your wallet and chart it out. Spend only the amount you have originally planned to. This way you will keep a track on it.

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  • Shop only when you really need something

The staple supplies to survive should not be compromised. But are you one of those who goes to the super market to buy two things and end up buying twenty five things?? Think again. Buy only what you actually need. I am addicted to stationery, lipsticks and shoes. The moment I stopped buying them , I actually had a lot of money left in my account.

  • Always wait for a SALE and Happy hours:

When you are gonna go shopping, always check out a sale around you and websites like myntra, flipkart, nykaa etc has a sale too. Keep a track after you create your wishlist and then binge yourself without any guilt.

  • Write down all the expenses: 

Write down everything you spend on a separate notebook and sort it out. Take the help of the internet to organize it. It would appear tedious at the first but you would be used to it soon ( I am trying my best to do it religiously).

  • Pieces that can be used multiple things:

Always take inspiration from various fashion blogs on instagram and wordpress in order to understand how to use a single piece of clothing or accessory can be used a multiple times to put together an ensemble.

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Written by Divya Shankar

image source : https://medium.com/@PiggybankNG/saving-with-a-purpose-understanding-the-why-behind-your-savings-d418c20eab79

 

finance

Credit cards…

Your goal should be to pay off your credit card bills in full at the end of each month and set aside money toward your emergency savings. 

A credit card is a very convenient financial tool, but it comes with the risk of hurting you if you don’t respect when it comes to spending. When zeroing in on a credit card, ask yourself what you will be using the card for?? If you are going to use it for most of your financial transactions, evaluate if you will have the repaying capacity when the payment is due each month.

Next, look for a card with the lowest charges – these could be by way of annual fee, late fee and interest charges when applicable.

If you frequently use your card to refuel or buy airline tickets, look for a co-branded card to derive additional benefits. Most importantly, check the credit limits you are entitled to and make sure at no time this limit is so high that you get into a situation where you are unable to repay. As most cards come with incentives by way of reward points, do check what is on offer and how you can benefit from it before zeroing in on a credit card.

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How does the credit card EMI offer work??

First things first, credit card companies make money by earning interest on late payments that you make. If you are paying off your credit card bills within the due dates then, essentially, you are not contributing to their profits. By enticing shoppers to make easy repayments on their credit card through EMIs, card companies have devised a system to make money. Yes, it does offer the cardholder respite with payment but, in reality, EMI on credit cards works like a loan – you pay the principal and interest each month and clear off your debt over a period of time.

 

Source: Outlook money, 17th anniversary issue.  

 

finance, life

The basic finance I learnt from my dad!!

“In investing, what is comfortable is rarely profitable.”

                                                                                          – Robert Arnott

How did it all start???

It all started when I started earning a stipend of Rs 5 k per month in my fourth year of architecture, where I am supposed to work as an intern in a firm. I was in my own city, so I never had to worry about food or shelter. So, spending on little luxuries was my thing for the first two months, then I started keeping some money in my account, which I would call saving up.

After a period of eight months, I opened a demat account as my dad was bugging me constantly. (Yeah!! when you are in the phase of growing up, your dad looks like your biggest enemy in this whole world, ironically, you realize everything later when you face the world.)

So, I would really state the difference between saving and investing. Read it carefully.

Savings refers to that part of disposable income, which is not used in consumption, i.e. whatever is remained in the hands of a person, after paying all the expenses. On the other end, Investment is the act of investing the saved money into financial products, with a view of earning profits. It alludes to the increase in capital stock.

I started with a mere amount of Rs 10 k in June 2015 and invested in some stocks. I was seeking my dad’s help shamelessly for the market study because I never had this finance or economics study background in my life. It did take a lot of effort to learn but it was all worth it.

Where did all the money come from when I went back for my final year?? Yeah!! It was all the money which my relatives, grandparents and my parents gave me with a lot of love. The same disposable income we spend on eating out and getting other luxuries. I kept investing all of it.

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Compounding was the key. 

Now, how to diversify your investments?? 

  • Fixed deposit- Fixed deposits are a high-interest -yielding Term deposit and offered by banks in India. The most popular form of Term deposits are Fixed Deposits, while other forms of term Deposits are recurring deposit and flexi- fixed deposits (the latter is actually a combination of Demand deposit and Fixed deposit).
  • Mutual funds – an investment programme funded by shareholders that trades in diversified holdings and is professionally managed. I invest 3 k every month and it has given a good returns. It is a period of seven years that I opted for. I have chosen DSP Black rock mutual fund.
  • Share Market – a market in which securities are bought and sold; a stock exchange to be put in a single word. This requires a little more effort and needs a proper study or guidance. You need to watch the market carefully. Websites like Moneycontrol.com, Capitalmarket.com can be used to track your portfolio. You need to take every move carefully. Even a mere sum of 100 bucks would come in handy at times.

“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffett
Be prepared to invest in a down market and to “get out” in a soaring market.

These are some of the strategies I follow. I am a proud owner of a portfolio of Rs 2.5 Lakhs.

Whenever I have an urge to spend on shoes or lipsticks, I follow the principle of DELAYED GRATIFICATION. ( I love to splurge.. )   What is it??? It is to control your urge or your temptation for an immediate reward and wait for a later reward. As a 90’s kid, I was taught to be content and be happy with whatever I have. I have always seen my parents as examples, who never faced any financial crisis during the month end or while building a house or buying the first car. Back then, my mom was not working and  with one man’s salary, my mom has planned it so well that we enjoy now.

I would also say that I was lucky enough to experiment with various options as I don’t have responsibilities to take care of my family. I would suggest you to start as early as possible to exit the rat race. Think before spending on those shoes. Do you really wanna buy that when you already have 15 pairs of shoes?? Or you wanna invest the same money in share market or mutual funds??

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Once you invest a significant amount of money, you will get a good returns from the interests, dividends and what not!! Money would work for you. Yeah!!you heard it right. 

I am no pro and you need to do your study right away and check what is good for you and start building up your empire.

Happy investing folks… !!!!!!

And watch this space for more!!!

 

References:

https://www.investopedia.com/financial-edge/0511/the-top-17-investing-quotes-of-all-time.aspx

https://en.wikipedia.org/wiki/Fixed_deposit

https://www.google.co.in/search?rlz=1C1CHBD_enIN775IN775&q=Dictionary

Illustrations:

Mine!!