Money Tips for young earners who just started their career

When a young person starts his/her career there is lot of energy and enthusiasm. That is the first them when he starts getting  his own money and some times gets carried away with that money. This is the time when we need to have some basic understanding on how to manage money because mistakes made is early days can cost dearly for a long time. So let us understand a few basics about managing money in initial working life.

1. Avoid front ending many big ticket purchases like Cars, high end gadgets, furnished apartments etc.

2. Manage liquidity efficiently. Be conscious about spendings, keep an eye on bank statements.

3. Setup auto pay for utilities like rent, phone, electricity etc.

4. Get a credit card only if you must and can pay the dues on time.

5. Develop the skills to make choices. Take time to make better money decisions like where to live, what to eat and what to buy etc.

6. Open an investment account. complete KYC and other paper work.

7. Check tax saving requirements. Don’t buy insurance to save taxes.

8. Do the splitting when you are doing something together.

9. Pay your debts on time, there is a heavy cost for delay and ruins your credit score.

10. Focus on career and growth, have flexibility to move in other cities, don’t burden your self by high home loan EMIs, paying rent is better option in initial years.

11. You can neither spend without guilt nor save without sacrifice, strike the balance. Percentage allocation is good technique where you allocate a limit to all the expenses you desire.

युवा (जिन्होंने अभी अपना करियर शुरू किया है) के लिए मनी टिप्स

जब कोई युवा अपना करियर शुरू करता है तो उसमें बहुत ऊर्जा और उत्साह होता है। वही सबसे पहले उन्हें अपना पैसा मिलने लगता है और कभी-कभी उस पैसे के बहकावे में आ जाते हैं। यह वह समय है जब हमें धन का प्रबंधन करने के बारे में कुछ बुनियादी समझ रखने की आवश्यकता है क्योंकि शुरुआती दिनों में की गई गलतियाँ लंबे समय तक महंगी पड़ सकती हैं। तो आइए प्रारंभिक कामकाजी जीवन में पैसे के प्रबंधन के बारे में कुछ मूलभूत बातों को समझें।

1. कार, हाई एंड गैजेट्स, फर्निश्ड अपार्टमेंट्स आदि जैसी कई बड़ी टिकटों की शुरुआती वर्षों में खरीदारी करने से बचें।

2. तरलता का कुशलता से प्रबंधन करें। खर्च को लेकर सचेत रहें, बैंक स्टेटमेंट पर नजर रखें।

3. किराया, फोन, बिजली आदि जैसी उपयोगिताओं के लिए ऑटो सेटअप भुगतान लागू करें।

4. क्रेडिट कार्ड तभी प्राप्त करें जब आपको बकाया राशि का भुगतान समय पर करना हो और कर सकते हों।

5. चुनाव करने का कौशल विकसित करें। धन संबंधी बेहतर निर्णय लेने के लिए समय निकालें जैसे कि कहाँ रहना है, क्या खाना है और क्या खरीदना है आदि।

6. एक निवेश खाता खोलें। केवाईसी और अन्य कागजी काम पूरा करें ।

7. कर बचत आवश्यकताओं की जाँच करें। कर बचाने के लिए बीमा न खरीदें।

8. जब आप एक साथ कुछ खर्च कर रहे हों तो विभाजन करें।

9. अपने ऋणों का समय पर भुगतान करें, देरी की भारी कीमत चुकानी पड़ती है और आपका क्रेडिट स्कोर भी खराब हो जाता है।

10. शुरुआती वर्षों में करियर और विकास पर ध्यान दें, दूसरे शहरों में जाने के लिए लचीलापन रखें, उच्च गृह ऋण ईएमआई द्वारा अपने ऊपर बोझ न डाले, प्रारंभिक वर्षों में किराए पर रहना बेहतर विकल्प है।

11. आप न तो बिना अपराधबोध के खर्च कर सकते हैं और न ही त्याग के बिना बचत कर सकते हैं, संतुलन बनाएं। प्रतिशत आवंटन एक अच्छी तकनीक है जहां आप अपनी इच्छानुसार सभी खर्चों की एक सीमा आवंटित करते हैं। 

Resolution for 2018: Be Healthy & Wealthy

2018 is almost here and we already have a plethora of plans and resolutions that we wish to accomplish. Considering that the New Year is the most motivating time to start with some new decisions which can change our life for the better, one excellent way to do it is by making some solid resolutions which can help us to be healthy and wealthy the two most important part of life. We can learn the good habits for healthy life and use them for a financial wealthy life as well.  Let’s chalked down the good habits for a healthy life and how can we learn from them to also have a wealthy life.

1.  Get up early in the Morning: Start Investing Early in Life

One very significant benefit of waking up early is reduced stress level. When we rise early, it eliminates the need to rush in the morning. We can then start your day on an optimistic note and such positivity often stays with you throughout the day. Early risers often go to bed early.

Similarly starting the investments early allows us to develop disciplined spending habits by focusing on budget and cutting expenses when needed. It gives more time to grow our investments and we get the amazing benefits due to power of compounding. Let’s understand it by an example: Ram starts saving Rs. 5000/- monthly at the age of 25 will get approx. 2.76 crs. At the age of 60. While Shyam who starts saving Rs. 5000/- at the age of 35 will get only 94 lakhs when he reached 60.

2. Have Balanced Diet: Diversify the Assets

A well-balanced diet provides important vitamins, minerals, and nutrients to keep the body and mind strong and healthy. Eating well can also help ward off numerous diseases and health complications, as well as help maintain a healthy body weight, provide energy, allow better sleep, and improve brain function.

Similarly we should diversify our capital across different investments to reduce your overall investment risk. This strategy is designed to help reduce the volatility of investment portfolio over time. For example a single scheme of mutual fund invests in 20-30 stocks and provides the needed diversification in a single investment.

3. Exercise Regularly: Invest Regularly

Regular exercise helps us to Control Your Weight, reduce the Risk of Cardiovascular Disease and Type 2 Diabetes and Metabolic Syndrome.  It also helps in reducing certain type of Reduce Cancers as well as it Strengthen our Bones and Muscles. Exercise also improves our Mental Health and Mood.

Trying to pick the top or bottom of markets is notoriously difficult, by making regular investments we can avoid timing the market. Regular investing helps to ensure that we don’t miss out on the best gains. Regular investments also helps to reduce the impact of periods of short-term volatility and gives our money the time it needs to grow, as markets will generally increase over the long term.

4. Drink enough Water: Have enough Liquidity

One of the best things we should do after waking up in the morning is to drink at least 500 ml of water. Water fires up our metabolism, hydrates and helps our body to flush out toxins. It gives our brain fuel, Improves Skin Complexion, Boosts Immune System and may even make us eat less.

Similarly we should have sufficient liquid assets. Liquid Assets are low-risk investment which can be converted to cash quickly and easily with little or no penalty. Examples of liquid assets are Treasury bills, savings accounts and money-market/liquid mutual funds. Flexibility and accessibility are just two of the ways liquid assets can help you stay ahead in the financial game. Liquidity is important. In case of emergency It is a safety net for us and our family.

5. Have Enough Sleep: Have enough Risk Cover

Adequate sleep is a key part of a healthy lifestyle, and can benefit our heart, weight, mind, and more. Sleep makes us feel better, but its importance goes way beyond just boosting mood or banishing under-eye circles. Sleep plays an important role in our physical health. For example, sleep is involved in healing and repair of our heart and blood vessels. Ongoing sleep deficiency is linked to an increased risk of heart disease, kidney disease, high blood pressure, diabetes, and stroke.

We should always have proper risk cover to face the uncertainties of life like health issues, loss of income, fire or theft at home etc. We should take proper Health insurance, life cover and also insure our valuable assets from the risks. By having proper risk cover we can have a much tension free life without bothering much for the uncertainties of life and can take also take some calculated risks in life.

6. Don’t diagnose yourself: Take Professional Help for analysing

In this day and age of limited time with doctors coupled with ample opportunity to google anything, the temptation for people to reach their own conclusions about their illness is strong. When we self-diagnose, we are essentially assuming that we know the subtleties that diagnosis constitutes. This can be very dangerous, as people who assume that they can surmise what is going on with themselves may miss the nuances of diagnosis. Another danger of self-diagnosis is that we may think that there is more wrong with us than there actually is. Then there is the fact that we can know and see ourselves, but sometimes, we need a mirror to see ourselves more clearly. The doctor is that mirror. To be fit and healthy we should always take Doctor’s guidance to know the exact problem and the right solution to cure it.

Similarly a Financial advisor examines an individual’s financial situation and health. He may pinpoint weak points that need strengthening. For example, the advisor may alert you about wasteful expenditure. He may identify investments that are not giving optimal returns. With the help of the advisor, we can chart out our financial goals–even the improbable and ambitious ones. The advisor can then help you create a plan to achieve these targets. He may suggest that you split your goals into short-term, medium-term, and long-term goals. This allows for better financial management. The advisor can recommend products to help you reach your goals faster. In this, the advisor would assess the risk profile, personality, and financial responsibilities. He would also explain the product features and suggest how to make the investments.

Managing your personal finances is not rocket science. People have been doing it for years with success. But it is all a matter of trial and experience. Choosing the right financial advisor is crucial to the success of any financial plan.

7. Periodic Reports & Regular visits to Doctor: Periodic review & regular interaction with advisor

Our health is our greatest treasure. Taking care of our health is utmost important. But in our daily life, we keep on looking for excuses to not visit our doctor. Be it for saving money or for other reasons like ‘I am too young and healthy to go to a doc’, ‘I don’t have time today; may be next week, I’ll get an appointment…”, we keep on ignoring our health. We ignore the fact that performing regular health check –ups from young age can actually reduce the risk of occurrence of several health issues in future.

Similarly we should have regular interaction with our financial advisor. Given the ever changing economic landscape, it is prudent to keep in touch with your financial advisor at least once in six months. This communication can take the form of a telephone call, an e-mail, text or meeting to discuss our current financial situation and any changes in our goals and needs. It is also important to have a face-to-face meeting at least once a year, or upon the event of any major significant changes in our or family’s life such as birth, marriage, divorce, death, inheritance, sale of house, purchase of house, change of job, loss of job, illness, pending retirement, or reaching Medicare age etc. Topics of discussion could include subjects such as tax situation, financial evaluation and estate planning, structure of portfolio, total assets, current and future growth or earnings, non-market related assets such as a private company or real estate.

7. Have qualified family Doctor: Have qualified & Certified Financial Planner

We should have a good doctor who is learned, honest, kind, humble, enthusiastic, optimistic, and efficient. He or she inspires total confidence in patients and develop a good relationship that by itself constitutes good treatment for any kind of ailment and the best starting point for confronting all causes of pain and suffering.

Similarly we should have a good and well qualified Financial Advisor who understand our requirements and also qualified to advise to client’s best interest in mind and can help in sorting out the income, expenses, needs, wants and financial ambitions as required for a person and his family.

If we follow these basic principles in life we may stay healthy & wealthy and live life peacefully.

Investment Success plan for Young Professionals

Current around 60% of the population in India is young below 35 yrs age and they are the ones who are actually running the whole economy. They are the major contributors to the GDP and also are the current and future leaders of the nation. While everyone is considering them to be instrumental to the success of this country, there are concerns about what makes the young generation successful financially and how to do it.

The changes in the job sectors and high growth in the employment by private sectors, the financial power of an individual is significantly higher in the hands of younger people as compared to few decades back. However the spending patterns for them has also changed along with this high income, buying consumer durable items (electronic gadgets), eating out and shopping is not a rare phenomenon anymore, rather a common weekend activity. With such sharp changes in lifestyle we increasingly miss out on an old school thought, the emphasis on savings. The tales of youngster being in debt and depending upon credit cards is becoming a common phenomenon. Hence, the old habit of savings is slowly being replaced by overspending. In such a state, we need to think about why despite having more financial ability we still suffer from lack. ‘Enough’ is not a commonly used word and this points to an unfortunately common phenomenon of the lack of savings and investment.

There are people who despite starting the months with good money in account left with hardly any money at month end. Sometimes despite being serious about savings we are unable to save, and the intentions are often not reflected in the action. Why is this generation not being able to save and invest successfully? A miniscule percentage in our country invests. A simple change in lifestyle could possibly change this habit. Let us see what steps can be taken to make your investment journey a success.

1.   First asses the Income and Spending

It is essential for anyone to know how much he is earning. The distinction between gross income and net income should be clear in the mind of everyone. Gross income is the salary from which tax deductions, and contributions to Employees Provident Fund is made. The balance is known as the net salary or the salary we take home. After that we should asses how much we are spending we can do it by keeping the shopping bills, credit card bills and checking the list of transactions on the net banking account. After that we have to decide about savings, the basic way to save is by analysing how much we spend and the avenues of of expenditures. Then we should try to identify the areas where we can cut down and slowly start savings. Simply speaking, total spending deducted from net income is your savings. Hence, if we don’t have any funds at the end of the month, we need to start figuring out our spending habits and start saving.

2.   Define the Goals

Saving without goals is like a journey without destination. Goals are milestones/destinations in life which we wish to achieve for personal gratification. To be able to make a list of goals, the best and probably the most effective way is to put the goals along a timeline. Goals can be defined as:

• Short Term Goals: These are goals that have to be achieved in a short span of time say a year or two years. These are goals for which we may need money immediately.
• Intermediary Goals: These are goals that are a little further away. There is still time left for investments and wait for the returns to generate a decent corpus. These goals could be five years or seven years down the timeline.
• Long Term Goals: These are goals which are usually to be achieved at an advanced age like retirement or goals set out that you wish to achiever after ten years, or fifteen years or even further.

Once we have decided about our goals based on the above mentioned three broader timelines, we can start planning our investments based on these.

3.   Find Out Your Total Savings

Savings means the money that is lying idle or in savings accounts for more than six months and is not being utilized to generate returns of any kind. We can collect all the money and get a definite number on your total savings. If we are been working for a few years now and only have few thousands in the account means not very good sign. The amount we save speaks about our finances more than our net earnings. Hence, it is time we should took an assessment of our savings and see where we stand financially.

4.   Know Your Investment Needs and Risk Taking Ability

Another important aspect that defines our investments is our risk taking ability. There is nothing wrong in being careful or even wanting to make profits. In most personal goals it is seen that calculated risk is an essential component to generate returns and facilitate the growth of the corpus. The everlasting question a lot of investors ask is, does the risk determine the investment need or the investment need determine the risk. Let us consider a scenario where our personal goal is buying a house in the next five years. It means we might need a big corpus and traditional method of investment may not going to be enough. In this scenario, investment in stocks or equity mutual funds becomes necessary to give that extra boost. We should not let our risk taking ability be a hindrance to your investment needs; however we should avoid having unrealistic expectations and taking unnecessary risks.

5.   Have a Proper Investment Plan

A proper investment plan is a comprehensive map which shows how the money is being channelled into various investment instruments. Investment plan also becomes our personal guide which tells us regarding various due dates for investments i.e. when the insurance premiums have to be paid, or monthly date for Systematic Investment Plans (SIPs). As an investor we can make our own investment plan. However, seeking a financial advisers help may give a better and holistic approach for investments.

6.   Cover for Life and Health: It’s very Important

We can fulfil our financial goals only if we live a healthy life. However, we cannot get so optimistic that we ignore the inevitable death. Get a term plan based on earnings which gives sufficient coverage of as long as 70 - 75 years at least. You can get a higher term plan or have a greater coverage in the same term plan once our income increases. If we are switching jobs and your new organization does not provide insurance facilities then we may have to increase the coverage or if we  are becoming an entrepreneur then we must increase our term plan. we could also look into family floater options  for health insurance that covers an entire family for a stipulated premium.

Insurance not only covers us for health but it also protects our family in case of an untoward situation.

7.   Start Your Retirement Planning

As investors we tend to ignore the long term goals. Ignoring the goal of retirement planning can be the biggest mistake and cost dearly at the time of no regular earnings. This corpus is to support us during the retirement days. Hence, planning for it is absolutely crucial. We do not have to start investing lump sums at an early stage because we will have other goals to focus on. However, a small sum invested every month through SIPs could take you far. Just disciplined investments, even if they are small sums could be enough for a retirement corpus.

Hence, start retirement planning and do it now.

8.   Emergency Fund is for Emergencies

An emergency fund is what we will rely upon when we have to tackle a difficult financial situation that was not anticipated. An emergency fund should consist of 3 to 6 months of monthly income. The key to having an emergency fund is easy access to funds without disturbing ongoing investments. Hence, we should not invest the corpus for emergency fund in instruments that have a lock up period such as Equity Linked Savings Scheme or fixed deposits. Liquid funds in Mutual funds could be a good option for such corpus where we can invest for as less as a week. A successful investment plan must include an emergency fund so that despite adversities we can lead a well-planned life and the corresponding investments continue to run smoothly.

9.   Rebalance and Readjust Your Portfolio:  It’s an ongoing process not just one time

Making an investment plan is an ongoing and continuous process we should not think it as a onetime thing. Investments are instruments that have to be changed based on our needs and time. The investment plan that was ideal when at the starting may not be the same when the investors are middle aged and at the peak of their income. An investor in their 60s will have a different investment plan than an investor in their 20s. A successful investment plan is that which is reviewed and boosted periodically.

.                 10. To Conclude

The young generation is the backbone of the country as well as the economy. They represent the present and the future of the country. This young generation has to ensure that they, the driving factor, are also driven by the right objectives. As professionals one should and must enjoy their lives and grasp all that life has to offer. However, it should not come at a heavy cost to our future needs. The young generation should become aware about the investing options and slowly the wave should change from savings to investments.