गरीब दिखना आपको वास्तव में धनवान बना सकता है

2025 में, अमीर दिखना पहले से कहीं अधिक आसान है—क्रेडिट उपलब्ध है, डिज़ाइनर कपड़े आसानी से मिल जाते हैं, और इंस्टाग्राम फ़िल्टर हर किसी की ज़िंदगी को चमकदार दिखाते हैं असल में जितनी है नहीं उतना । लेकिन अगर असली मजा धन को दिखाना नहीं, बल्कि उसे छिपाना हो तो? 

ऐसे समाज में जहाँ संपत्ति को दिखाना सामान्य है, एक साधारण जीवनशैली को अपनाना—जिसे अक्सर "गरीब दिखना" कहा जाता है—एक रणनीतिक विकल्प हो सकता है जो अधिक खुशी, स्वतंत्रता, और वित्तीय सुरक्षा की ओर ले जाता है। इस पोस्ट में मैंने यह बताया है कि यह दृष्टिकोण भविष्य के लिए सबसे बुद्धिमानी भरा निर्णय क्यों हो सकता है।

 

1. सादगी: अमीर दिखने की छिपी हुई लागत

लक्ज़री वस्तुओं के स्वामी होने से अनपेक्षित खर्च बढ़ सकते हैं। उदाहरण के लिए, एक उपहार में मिली लैम्बोर्गिनी भव्य लग सकती है, लेकिन इसके चलते सतत खर्च (रखरखाव, बीमा आदि) बहुत ज्यादा हो सकते हैं। डिडेरोट प्रभाव यह दर्शाता है कि एक लक्ज़री वस्तु कैसे अपग्रेड के चक्र में ले जा सकती है, जो अंततः वित्तीय तनाव का कारण बनता है। एक साधारण जीवनशैली अपनाकर, आप इस मानसिक और वित्तीय बोझ से बच सकते हैं।

 

2. यह जीवनशैली मुद्रास्फीति के जाल से बचाता है

कई लोग वेतन पर वेतन जीते हैं, अक्सर जीवनशैली मुद्रास्फीति द्वारा संचालित होते हैं न कि सिर्फ अपनी आय से। उदाहरण के लिए, अगर आप माह में ₹5000 की बचत कर अपने पैसे को समझदारी से निवेश करते हैं, तो यह समय के साथ काफी बढ़ सकता है—अंदाजन 25 वर्षों में ₹94 लाख से अधिक, केवल 12% के साधारण रिटर्न के साथ। संतोषी होना एक रणनीतिक कदम है जो भविष्य में बड़े निवेश की अनुमति देता है।

 

3. यह सही लोगों को आकर्षित करता है

खुद को अमीर दर्शाना ऐसे व्यक्तियों को आकर्षित कर सकता है जो आपकी संपत्तियों को अधिक और आपको कम मानते हैं। इसके विपरीत, साधारण जीवन व्यतीत करने से ऐसे वास्तविक रिश्ते बनते हैं जो समान मूल्यों पर आधारित होते हैं, न कि भौतिक धन पर—जो एक अधिक संतोषजनक सामाजिक दायरा होता है।

 

4. यह आभार और दीर्घकालिक खुशी का निर्माण करता है 

यह विश्वास कि अधिक संपत्ति का मतलब अधिक खुशी है, एक मिथक है। शोध से पता चलता है कि अचानक मिली दौलत, जैसे लॉटरी, जीत आदि स्थायी खुशी नहीं लाती। साधारण जीवन जीने से सरल आनंद—जैसे अच्छे खाने और सार्थक बातचीत—के प्रति आभार की भावना को प्रोत्साहन मिलता है, इस प्रकार भौतिक धन से परे संतोष की भावना का निर्माण होता है।

 

5. इससे आप कम में जल्दी रिटायर हो सकते हैं

आपकी रिटायरमेंट बचत आपके खर्च की ज़रूरतों पर निर्भर करती है। कम खर्च करने से आराम से रिटायर होने के लिए कम धन की आवश्यकता होती है। जब आप कम की आवश्यकता की कला में निपुण हो जाते हैं, तो वित्तीय स्वतंत्रता जल्दी प्राप्त की जा सकती है, जिससे जीवन का आनंद लेने के लिए अधिक समय मिलता है, बजाय अंतहीन वित्तीय लक्ष्यों की ओर काम करने के।

 

6. गरीब दिखना आपको लक्षित बनाने में कम करता है

धन को दिखाना आपको चोरी और धोखाधड़ी के प्रति असुरक्षित बना सकता है। एक साधारण जीवनशैली सुरक्षा और गोपनीयता प्रदान करती है, एक ऐसी संस्कृति में एक सुरक्षा कवच के रूप में काम करती है जो अक्सर दिखावे को सामग्री से अधिक महत्व देती है।

 

सादगी का शांत क्रांति 

"गरीब दिखने" का निर्णय लोकप्रिय सामाजिक प्रवृत्तियों के खिलाफ है लेकिन यह शक्ति, शांति और उद्देश्य प्रदान करता है। यह एक ऐसे जीवन को प्रोत्साहित करता है जो भावनात्मक, सामाजिक, और आध्यात्मिक धन को चमकदार भौतिकवाद के बजाय ज्यादा महत्व देता है। इसलिए अगली बार जब आपके साधारण जीवन पर प्रश्न उठे, तो याद रखें: आप एक ऐसा जीवन जी रहे हैं जो वास्तविक रूप से आपकी पहचान दर्शाता है, केवल यह नहीं कि आपके पास क्या है।

Looking Poor Can make you Real Rich

In 2025, looking rich is easier than ever—credit is accessible, designer clothes are easily available, and Instagram filters make everyone’s life look glossier than it really is. But what if the real flex isn’t flaunting wealth, but hiding it?

In a society where flaunting wealth is the norm, embracing a modest lifestyle—often referred to as "looking poor"—can be a strategic choice that leads to greater happiness, freedom, and financial security. Here’s a breakdown of why this approach might be the smartest decision for the future.

 

1. It helps you to avoid the hidden cost of Looking Rich

Owning luxury items can create unforeseen expenses. For instance, a gifted Lamborghini may seem glamorous, but the ongoing costs (maintenance, insurance, etc.) can become burdensome. The Diderot Effect illustrates how one luxury can lead to a cycle of upgrading, ultimately resulting in financial strain. By keeping a lean lifestyle, you avoid this mental and financial burden.

 

2. It saves you from the Lifestyle Inflation Trap

Many people live paycheck to paycheck, often driven by lifestyle inflation rather than just their income. For example, saving ₹ 5000 a month and investing it wisely can grow significantly over time—over ₹ 94 lakhs in 25 years with a modest 12% return. Choosing frugality is a strategic move that allows for larger investments in the future.

 

3. It Attracts the Right People

Presenting yourself as wealthy can attract individuals who care more about your possessions than you as a person. Conversely, living modestly tends to attract genuine relationships based on shared values, rather than material wealth—a more fulfilling social circle.

 

4. It builds long-term Happiness and Gratitude

The belief that more possessions equal more happiness is a myth. Research indicates that even sudden wealth, like lottery winnings, doesn’t bring lasting happiness. Living modestly encourages gratitude for simple joys—like good food and meaningful conversations—thereby fostering a sense of fulfilment beyond material wealth.

 

5. It helps you to retire early with fewer needs

Your retirement savings depend on your spending needs. Spending less means needing less to retire comfortably. By mastering the art of needing less, financial independence can be achieved sooner, allowing for more time to enjoy life instead of working towards endless financial goals.

 

6. It helps you to avoid being a target

Flaunting wealth can make you vulnerable to theft and scams. A modest lifestyle offers protection and privacy, serving as a safeguard in a culture that often values appearances over substance.

 

Modesty changes the way we live

Choosing to "look poor" runs counter to popular societal trends but offers power, peace, and purpose. It encourages a life that values emotional, social, and spiritual wealth over flashy materialism. So next time you're questioned about your modest choices, remember: you're nurturing a life that genuinely reflects who you are, not just what you own.

वेतनभोगी वर्ग के लोग वित्तीय स्वतंत्रता कैसे प्राप्त करें

वेतन पाने वालों के लिए, जीवन की शुरुआत में वित्तीय स्वतंत्रता का एक हल्का रूप भी प्राप्त करना अब से एक या दो दशक पहले की तुलना में अधिक महत्वपूर्ण है। यदि कोई व्यक्ति 40 तक कुछ हद तक वित्तीय स्वतंत्रता प्राप्त कर लेता है, तो यह एक बड़ी उपलब्धि है। आइए इस पोस्ट में वित्तीय स्वतंत्रता प्राप्त करने के लिए कुछ मूल बातें जानें।

1. एक महीने में अपने वेतन का 60% से अधिक खर्च न करें।

2. 40% बचाएं और कम से कम 3 अलग-अलग जगहों पर निवेश करें। अपने जोखिम प्रोफाइल और समय-सीमा के अनुसार म्यूचुअल फंड, पीपीएफ, स्टॉक, गोल्ड, एनपीएस आदि में निवेश करें।

3. आय के दूसरे स्रोत के लिए लगातार कोशिश करते रहें। जीवनसाथी की आय को दूसरे स्रोत के रूप में न मानें, बल्कि इसे एक आपातकालीन निधि के रूप में मानें।

4. आपके पास अपने परिवार के लिए स्वास्थ्य बीमा और टर्म बीमा होना चाहिए जब तक कि आपके पास आश्रितों पर भरोसा करने के लिए पर्याप्त धन न हो।

5. अपनी जीवनशैली को दूसरों के साथ तुलना करने की कोशिश न करें। इसके बजाय, उनकी मेहनत से मेल खाने की कोशिश करें।

6. अगर आप कर्ज ले रहे हैं तो उससे संपत्ति खरीदें, देनदारी नहीं।

संपत्ति:- शिक्षा ऋण, नियमित नकदी प्रवाह के साथ कम जोखिम वाले व्यवसाय के लिए ऋण, गृह ऋण केवल तभी जब ईएमआई आपके द्वारा भुगतान किए जा रहे किराए के बराबर या थोड़ा अधिक हो।

देनदारियां:- महंगे फ्लैट के लिए लोन, महंगी कार खरीदना, हाई-एंड वेकेशन, मोबाइल और अन्य इलेक्ट्रॉनिक गैजेट्स आदि।

7. कभी भी अपने माता-पिता के पैसे पर भरोसा न करें क्योंकि वे आप पर निर्भर नहीं हैं।

8. खर्च कम करने के उपाय:-

-फूड डिलीवरी ऐप्स पर अपनी उंगलियों को नियंत्रित करें।

-मॉल में या ऑनलाइन ऐप्स के जरिए अनावश्यक खरीदारी से बचें।

-जब भी संभव हो कैब के बजाय मेट्रो, या ऑटो लें।

ऑनलाइन भुगतान ऐप्स और क्रेडिट कार्ड आपको ऐसे निर्णय लेने के लिए मजबूर करने के लिए बनाए गए हैं जिनकी आपको अधिकांश समय आवश्यकता नहीं होती है।

9. जिंदगी एक मिली है, खुल के जियो और उड़ाओ। - इस प्रकार के जाल में न पड़ें ।

क्योंकि उनमें से अधिकांश गतिविधियाँ क्षणिक सुख हो सकती हैं लेकिन जीवन को पूरा करने वाले अनुभव नहीं।  

और अंत में, याद रखें कि मौज-मस्ती और परिवार धन के साथ आता है और इसके लिए एक अच्छे वित्तीय सलाहकार का होना जरूरी है।

Financial Freedom for Salaried People

For salary-earners, getting even a mild form of financial freedom early in life is more important now than it was a decade or two ago. If a person achieves some degree of financial independence by 40, then it is a great thing to achieve. In this post let’s learn a few basics to achieve financial freedom.

1. Do not spend more than 60% of your salary in a month.

2. Save 40% and invest in at least 3 different places. Be it Mutual funds, PPF, Stocks, Gold, NPS etc as per your risk profile and time horizon.

3. Constantly thrive for 2nd source of income. Don't count on spouse income as 2nd source, rather consider that as an emergency fund.

4. Must have health insurance for your family and term insurance until you have enough for dependents to rely upon.

5. Do not try to match up your lifestyle with others. Instead, try to match up with their hard work.

6. If you are taking a loan, buy assets with it, not liabilities.

Assets:- Education loan, Loan for low-risk business with regular cash flow, House loan only if the EMI is equal to or slightly more than the rent you were paying.

Liabilities:- Loan for expensive flat, Buying an expensive car, High-end vacations, Mobile and other electronic gadgets etc.

7. Never rely on your Parent's money coz they are not relying on yours.

8. Ways to decrease expenses :-

-Control your fingers on food delivery apps.

-Avoid unnecessary shopping in malls or via online apps.

-Take the metro, or auto instead of a Cab whenever possible.

Online payment apps and credit cards are built to force you to make decisions that you don't require most of the time.

9. Don't fall into the trap- Zindagi ek mili hai, khul ke jio aur udao

Coz most of those activities can be momentary pleasures but not life fulfilling experiences.

And finally, remember fun and family comes with finance and for that a good financial advisor is a must to have it.

Are you In Debt Trap: How to come out of it !

While discussing the investments and financial planning with a young couple I found that despite having good salary he was not comfortable to put aside a decent amount for his retirement planning. When we discussed more I found that he has got lot of EMIs running for CAR, TV, and IPhone etc. which were eating a substaintial part of his monthly cash flow.

It is not uncommon to find these kind of young couples, borrowing anything and everything to meet their needs or actually the wants. Now EMI on credit cards makes it further easy to buy the things and paying in future. Many people live in pay cheque to pay cheque and in complete denial of the burden they carry on. Over dues on Credit card are killer, there not only the due amount increase at usurious rates of interest, but the repayment gets tougher as the loan gets bigger. In that situation the person goes to more discreet lenders like family and friends, informal lenders, etc, only to find that they have run out of friends. Informal lenders not only seek higher interest rates but sometimes use questionable means for recovery. So, what can a habitual borrower do to come out of this DEBT TRAP and move forward to the path of saving for long-term goals?

1. Don’t Borrow to Repay the Old Loan

The starting of a debt trap is when new loans are taken to repay older loans. Therefore no further loans should be taken to repay what has already been borrowed. The repayment of a loan should be made out of income not from new borrowing. The person should find new ways to increase his income, for example he can do some part time weekend job to generate extra income or if spouse is not working she can take some job to improve household income etc.  

2. Control the Expenses

Once we realise that we are paying more in EMIs then the normal monthly expenses we should reduce our expenses to fit in the remaining cash flows. To start with we should curb the discretionary expenses, weekend outings and other items which are not necessary till we come out of this trap. We should stop using credit card if dues are not paid as it will carry very high interest charges on the fresh purchases. We need a firm determination and proper budget to come out of this trap as there are several instances of psychological damage like depression and suicidal tendencies which come up due to it.

3. Negotiate and Restructure

We can negotiate and restructure the existing loans which can reduce our burden and fit in to the cash flows. Banks/Credit Card Companies do offer debt restructuring and advice for appropriate payment plan to help chronic borrowers. There are also external professional agencies who can also provide assistance for the debt restructuring. If you are not able to find out the right way it is always better to seek professional help to see what is due, and how it can be reworked. There are some easy way to convert costly loans like Credit card dues into personal loans; penalties can be negotiated for waiver; repayment schedules can be structured in line with capability of the borrower.

3. Sell the Assets to get out of the Mess

Some time we get so much emotionally attached to the things we poses that we don’t want to sell them even though by that we can reduce a significant burden and get a great relief. We should understand the reality and make our existing assets work, like an empty property can be put on rent, we can take mortgage gold/jewellery to raise money or can use our bank/PF balance to reduce the debt burden.  We feel a social stigma about selling assets or mortgaging our ancestral assets but taking some tough decision can be of great help as there may be short term costs but have long-term benefits.

There is a famous Bollywood movie “EMI: LIYA HAI TO CHUKANA PADEGA”, this is the fact and we just cannot escape from it.  We should also understand the fact that loan can be reduced only by repayment not by taking other loan. We will be getting our self in deeper mess if we are borrowing more to pay the older loans. The solutions lies on to figure out how to restructure and reduce the debt by existing cash flows in a disciplined manner. It is always better to take professional guidance before it is too late.

Loans: Is it Good, Bad or Ugly ??

When I was very young my grandfather was planning to buy a house, as loans were not easy to get so the State Govt had come out with a scheme in which a person can buy the home and pay in instalments for next 15-20 years and the final ownership of the house is transferred after making full payment. However my grandfather decided to buy the house with full payment as taking a loan was something he call as “Shaan Ke Khilaf” i.e. bad for the Self Reputation.

Yes that was time when taking a loan by a middle class person was considered as “Daag” a blot in self-respect.

Time has changed a lot since then and now most of the people in 30s may have one or two loans. Yes we are in consumerism. We want to enjoy everything today whether we have money or not, does not matter as we can get loan for everything right from home to cars to electronic gadgets, for holiday’s and even weddings & other petty things also.

So few questions comes to our mind especially among young earners who find it tough to fit their expenses into their incomes:

1. Is it good to be debt free?

If we can control our expenses and don’t get carried away with other’s life style it is possible to live completely debt-free. However it is not necessarily a very smart way of living life. There are certain assets which requires a lot of money to buy like House, Car and college education, and very few people earn enough money to pay full cash for them on upfront basis. So in today’s world it may not be very smart decision to be totally debt free while denying ourselves some basics which can be paid back comfortably later on.

2. Should we borrow as we are getting it easily?

Now the next question comes should we borrow as someone is offering it. Now days most of use to get dozens of calls for personal loans, credit card etc. Does it mean that should we take it just because someone is offering it and use to buy the things which may not be otherwise bought? Nothings comes free and we should always remember it. If we have taken the loan we need to pay back along with the interest.

3. So what is Good Loan?

Good loan is something which is used to buy an asset that will grow in value or generate long-term income. Let’s understand it more.

A home loan to purchase a home for living is usually considered good loan. Home loans generally have lower interest rates than other loans, plus that interest is tax deductible.

Education loans to pay for a college education is another example of good loan. First of all, education loans typically have lower interest rate compared to other types of loans. Secondly the interest paid on education loan is fully deductible from the income and thirdly, a college education increases your value as an employee and raises your potential future income.

An auto loan is another example of good debt, particularly if the vehicle is essential to doing business. Unlike homes, cars and trucks lose value over time, so it's in the buyer's best interest to pay as much as possible up front so as not to spend too much on high-interest monthly payments.

4. What is Bad Loans?

Bad loan is a loan incurred to purchase things that quickly lose their value and do not generate long-term income. Bad loan carries a high interest rate, like credit card debt and there will be no tax benefits as such. The general rule to avoid bad debt is: If you can't afford it and you don't need it, don't buy it.

Loan for expense which can be avoided like wedding, electronic gadgets and fancy items whose value erodes quickly are considered as bad loans and should be avoided.

Taking Loan for a new start up can turn out to be a bad idea. Starting our own business can often be a life changing experience. However, we should avoid taking a personal loan for the investment. This is because there are plenty of better options such as roping in co-investors or angel investors, or choosing asset-based loans, small business loans, etc.

And the UGLY

Taking loan for Investing in stock market is risky, although there are people who may have made a fortune from their investments. However, if you want to invest in stock market by taking a personal loan be careful as it can easily end badly. Companies go bankrupt all the time, and if your money is on one then you could end up paying EMIs for a loan that dissolved completely. It can be further worse if you take a loan for derivative trading as then the liabiliites goes beyond the loan amount due to leverage trading.

Credit card is worse for undisciplined spenders. As we do not hesitate to swipe a card, since the brain is unable to process the pain of parting with money, while we focus on the joys of spending. Outstanding amounts are charged usurious interest rates since the unpaid balance is an unsecured loan to the cardholder. The minimum amount due seems small and convenient, but instantly converts the unpaid balance into a high cost loan.

5. So, why we should not overburden ourselves with loans?

Indebtedness is not just a financial burden but also emotional burden.  It can create resentment in our life and may affect our family and office work. People who carry huge debts face anxiety and depression. People start living in denial and lie through their debts, creating a façade of well-being while avoiding the calls from creditors, or stashing unopened mails about overdue debt away from sight. Indebtedness makes us less capable of being a better version of ourselves. It also affects our self-respect and we try to avoid people or places from where we have taken loans. It is always better to take loan which we can comfortably reply.

6. So, what is the thumb rule while taking Loan?

1. First thing we should know that will this loan have a direct and measurable positive impact on future income? If the answer is yes, we may go for it. Like Crop loan when sowing is good or an education loan for a course in a reputed institute could be a good idea.

2. Is the loan small enough for me to pay without impacting my other regular expenses? Rather than looking how much finance company give me we must look at our own cash flow position to ascertain that how much EMI I can afford to. There is an old saying “ Pair utne hi failana chahiye jitni lambi chadar ho” We should spread our legs only as much as the length of the sheet.

3. Is the loan creating an obligation whose value is too risky given the size of your assets? For example in derivative trades the obligation goes beyond the purchase amount and can put a huge obligation for the investor and hence doing derivative trading by taking loan can be a very dangerous idea.

Few Final Words

Loan is a commitment to pay from our future income for the things which we want to have right now. Yes we may take some of the things in advance by loan but we should be careful to manage them in case the future income does not comes as per our expectations. We should also remember that our loan EMI’s should not result into the curtailment of the current necessary expenses.

Warrant Buffet has once said: “If we buy the things we actually don’t need then in future we would be selling the things which we actually need.”

Making Young Generation financially responsible

We all want in our heart that our children should become responsible adults, without facing any hardships due to their ill-thought out actions that results in regret and remorse. So how should we make them more sensible and literate about money and make them mature enough to handle it more sensibly. In this post we will discuss few important points which can be taken up during the teenager time of our children and help them to become a responsible person in future.

1. The kids grew in the family so the first lesson towards money is also learnt in the family environment. If we deliberate and discuss the merits of every financial decision with other family members, our kids will also pickup this habit. We should make them understand that money is a limited source and we should be avoiding impulsive buying or swiping credit cards carelessly. Be careful and clear why we are buying anything.  For kids we may fix a monthly allowance and stick with it to make them understand the meaning of budget and spending within their means.

2. As money is a limited source so we should also plan it properly. Making budget a joint affair with all family members will make them understand the value of money and the limitations we have towards spending it. During this exercise we will make them aware the priorities of various expenses and how should we allocate funds towards them. They will understand the importance and difference between various expenses i.e. food, basic amenities over discretionary/leisure items as costly electronic gadgets.

3. Let the kids also maintain their own income and expense records and we may check it once in a while. This will help them to review their past expenses and correct the unnecessary things on regular basis. Nowadays many online apps are available which can be very handy for this.

4. Encourage our kids to do some works (howsoever small or menial it is) if they need more money for buying luxury items so as to make them understand the importance of work and value of money.

5. Make them value others money also. Encourage them to pool money for joint expenses like eating out with friends so that everyone contributes and values others money. This will help them to take joint decisions in equitable manner which is good for everyone and does not becomes a burden for few.

6. We should guide them about few basics of banks and finances. Open their own bank accounts and let them learn basics of banking like doing banking transactions, using ATM/Debit cards or online transaction with proper safety. This will make them more confident and also make them understand how different system works.

These small habits will make them self-independent and help them to become a responsible person in future while they grow older and have their own families.

Are we Financially Independent ?

This month we have completed 70 years of Independence, so have we also got financially independent. If not then it’s high time to think of our financial independence.

Financial independence occurs when we have saved enough to support for the rest of our life without needing to work for money. We can still choose to work for other purposes – like for some passion/hobbies or any other purpose - but we no longer need an income to meet our expenses.

Attaining financial independence requires discipline and limitation of wasteful spending especially on non-essential items. It's a myth that financial independence can be achieved only by wealthy, It all depends on developing good money management skills.

Achieving financial independence is an ongoing process; it's a behaviour pattern that must be practised consistently. We are outlining some tips for achieving financial freedom:

1. Invest on self to increase future Income

We should continuously improve our skills. By being better at our profession will pay us more for what we do. We should learn new technologies, on-going trends and future of particular business so as to keep ourselves updated with them and learn to use the best from them.

2. Choose the lifestyle

It Is always advisable not to spend all our Income just to maintain certain lifestyle.

Also never use debt to fund the lifestyle; the use of credit cards to fund a particular lifestyle will only move backwards. First we should conduct a careful analysis of where most of our money is spent and we may figure out the wasteful expenditures that are unnecessary and can be removed from the list. This is all about gauging what is important enough for me to spend our money on. You can use our calculators at www.capstreetconsultants.com to gauge the money required for future necessities.

3. Evaluate financial decisions carefully

Before making any financial commitments, we should look at our financial situation holistically, for example, Instead of buying something we really want on credit rather save for it. It's better to save for the items we want to buy, it's delayed gratification but much cheaper. Start a Systematic Investment Plan to fuel our dreams.

4. Not just Save but Invest Wisely

By putting money aside we let your money work for us. We should also take advantage of the Tax Saving plans too by which we can save tax as well as invest the money for future. We should Invest in Equity and equity oriented funds for achieving long term goals. Ignore financial news and the fluctuations of the market keep investing In good times and bad.

5. Be sufficiently insured

Life Insurance provides the much needed peace of mind while we Plan for our Financial Independence. Health Insurance is also very important to keep ourselves secure for medical emergencies. Though people argue that if you have Financial independence, then you don't really NEED Life Insurance. However, real life is usually more complicated than what we think.

Staying Financially Independent is not one day job but is an ongoing process, even after we have realised our goal off financial freedom, We need to ensure it stays that way. We should stay abreast with our economic conditions and how they affect us personally. Our financial needs will change according to various life stages. We must ensure that our finances are also tuned according to the stage of our life.

Credit Cards!! Are they Good or Bad & How can we use it smartly!!

One of my friend has taken a credit card long time back. He got a good credit limit and as soon as he got the card he started using it freely: anywhere and everywhere for items which he may not have otherwise bought, without bothering how will he pay the bill which will come next month. When the bill came he realised that he cannot pay the entire amount in one go so he used the rollover (part payment) facility. By the time he actually cleared the full amount he realised that the total amount paid was almost double the amount of actual purchase. Finally he surrendered the credit card by cursing the credit card company.

Are credit card really so bad or dangerous? Well it’s the way we use a product determines the good or bad about it. Any particular thing could be good if used in limited way and can be very dangerous if used without limits/precautions. So how can we use credit cards so that it is good for our financial health and does not create any hazards? We would be discussing about it in this post, let’s understand it in details:

How To Use Your Credit Card Prudently…          

1.                We should know our limit:

All credit cards come with a ceiling limit. If we are a free spender we should choose a card with a low limit and moderately utilise the credit limit, say 30%-40% of our overall limit while keeping our repayment capacity in mind. 

2.               Clear entire dues on or before due date:

Credit card companies provide a free credit period, which means, if we make payments before the payment cycle ends and by the due date, No interest will be charged. However, if we do not make the payments within the due time, we are likely to pay interest which is usually as high as 36%-42% p.a., i.e. 3-3.5% on the outstanding amount due each month. Another important thing is when we don’t clear the dues on time the interest is charged from the date of purchase not from due date so the benefits which we get by the due dates are not available. Further the service tax/GST is also applicable on the interest amount.

3.               Better to avoid using grace period: 

Few credit card companies offer a grace period to settle your dues. Ideally, we shouldn’t wait this long to settle our credit card account. It is better to pay within the free credit period. As availing the grace period may dampen the credit score, and in turn, weaken our eligibility for loan proposals in the future. 

4.               Don’t get carried away by reward points & other benefits :

This is plain business, the credit card company will make money based on how much we use. That’s why they offer credit reward points and various other offers to make us use our credit card as much as possible. That’s a way they earn more revenue. Further in case we don’t make a payment in time, the interest charged turns out to be an additional benefits for them. So, one marketing strategy is to launch attractive reward-point systems that encourage people to spend more on a credit card. We should control impulsive purchases and keep the usage of plastic money under strict control.

5.               Secure the card details:

Now credit card frauds are very common things if we do not take proper precautions while using the cards. We should not store card details, while using the credit card to make online purchases, as they can be misused if the merchant site fails to protect the secrecy of your data. We should always use two-step authentication and don’t allow any ‘fast-forward’ transaction. 

Unless is “https://” on the payment page, don’t enter any payment/personal/card details. By viewing the site information, we can also check if the communication between you and the website is private and protected. Be careful when using at a merchant outlet as well. 

6.               Don’t withdraw cash by the credit card:

If we use credit card, even in an emergency, to withdraw money from an ATM, there is an exorbitant fees charged by credit card companies. We should maintain a contingency reserve, so that we do not require to use credit card to borrow cash. This is very important as it credit card company charges fees in case of cash withdrawal even if we pay by due dates.

Few other points to remember while opting for a credit card

• ·        If we are a spending freak, it is better that we use a debit card instead of a credit card—the first step to rationalise your expenditure pattern.
• ·        Revisit the lifestyle options if our credit card bills are major part of our monthly income. This is a sign that we are overspending.
• ·     We should not use another credit card to settle your old credit card dues called as balanced transfer—this is the beginning of a big debt trap that may haunt over a long time.
• ·    If we are unable to keep our expenses under control, perhaps it is time to take expert’s assistance.

Credit cards can be of great help if we are judicious. If we keep the above things in mind like not making only minimum payments, not paying the bills late and exceeding the credit limit, credit cards can be real handy. 

The lessons we can learn from the rich

The billionaires have specific habits which make them like that, we can learn few things from them to how become a billionaire and remain so.

1.   Smart Rich people live below their means

Most of the super-rich people do not splurge, or spend just to show-off. They choose modest houses, drive ordinary cars, and fly economy class. Warren Buffett still lives in the 5-bedroom house he purchased more than four decades ago for a mere $31,500. Mark Zuckerberg, founder and CEO of Facebook, drives a manual-transmission Volkswagen hatchback.

The learning

               i.        We shouldn’t buy a house on loan if we can't afford the EMI.

              ii.        EMI or rent of the house should not be more than 40%

            iii.        We shouldn’t spend more than 5% of our income on car loans.

            iv.        We shouldn’t stretch our finances to compete with others or just to show off.

2.   Smart Rich People save & invest first, spend later

There is a famous saying by legendry investor Warren Buffet “If you buy things you don't need, you will soon sell things you need,“.

Most smart rich people pay themselves first by saving and investing at least 20% of their income and spending the rest. Even if we are earning less, the disciplined saving habit will ensure a secure future and we won't have to struggle close in later part of our life. We should also make sure that we have an emergency corpus for rainy days.

The learning

               i.        We should automate our investing.

              ii.        We should ensure that our regular investments i.e. SIPs get invested as soon as we get our pay check.

            iii.        We should keep at least six months of monthly expenses for emergencies.

3.   They spend less on clothes, shoes, food

The smart rich people use their money on productive purposes. They don't usually run behind brands for designer clothes, shoes or accessories etc just for the sake of it. They spend on things that will keep them and their progeny rich in the future, not what will make them look rich in the present. This is the reason facebook;s   founder Mark Zuckerberg's in simple t-shirts or filmstar Rajnikanth is dressed in plain dhoti-kurta off screen.

The learning

               i.        We should control our expenses in those assets whose value is likely to go down only. Like clothes, accessories, cars etc.

              ii.        For example we shouldn’t spend more than 3-4% on clothes, 5-7% on vacations, and 10-12% on food.

            iii.        We should invest more in those assets which will increase our wealth, 3 They save & invest first, spend later.

4.   They look for discounts, coupons and ways to cut costs

Most of the smart rich people are smart spenders. They use discounts, sales, coupons, rewards or loyalty points to save money wherever they can. We should not forget small discounts add up to big money over time.

Whether it's US stars like Kristen Bell or Premji, who ensures his employees switch off lights in offices, they know how to cut costs.

The learning

               i.        We can use mobile apps like Paytm etc to pay bills or book tickets since they offer cash backs and discounts.

              ii.        Use discount sites and online price comparison sites to avail of discounts on various kind of purchases.

5.   Smart Rich people use credit cards wisely and limit their cash expenses

Sometimes if we have lot of cash in our pocket we indulge in buying unnecessary things.

Mostly the smart rich people don't carry too much cash. They also prefer to use credit cards wisely. There is debate whether plastic money makes us to spend more? This can be answered that prudent and disciplined use of credit card can be good rather than bad. We should repay the entire dues of the card in full and squeezing all benefits out of these.

The learning

               i.        Use credit cards wisely as this helps to keep better track of expenses.

              ii.        They offer free money in terms of rewards and benefits.

            iii.        It also creates a good credit history which helps to get loans at competitive rates when we actually need

            iv.        Now chip based cards also offer greater security from theft as compared to cash.

6.   They value quality over cost

There is a famous hindi saying “Sasta roye Barbar, Mahnga roye ek baar”.  It Means  a person who buys cheap things have to repent many times while the person who buys costly things have to repent only once. Here the costly thing does not mean costly by price but buy quality.

Smart rich people do not buy stuff because it's cheap, but because it's good quality that will last them longer. For example if we buy a cheaper home appliance, we may end up spending more on maintenance and repairs, or replacing it with a new item in a shorter interval.

The learning

               i.        We should conduct a cost-value comparison before buying a product.

              ii.        We should not buy something very expensive which is not going to be used for long and have very limited life clothes and expensive mobiles etc.

7.   They give back to society

Most of the rich people like Bill Gates, Warrant Buffet, Azim Premji have donated huge sums to charities and pledged their wealth for philanthropic purposes. Even common people also donate to the social wellbeing. However we should keep our net worth in mind while giving back to society and do not be over enthusiastic.

The learning

               i.        Before donating we should ensure our own financial well-being first.

              ii.        We should try to get tax benefits under Section 80G by donating to recognised institutions.

            iii.        This also ensures that money is used for the real benefits of the needy people

To become rich and remain so is also like a habit where we have to consciously make efforts to be careful with regard to our incomes and expenses. If we do it prudently we will remain rich forever.