Managing Finances

  • 6 Money Lessons during Covid-19

    1. Having an emergency fund

    Most people who lost their jobs or their monthly income was impacted because of Covid-19, have realized the importance of having an emergency fund.  These would be anywhere ranging from 3 months of living expenses to 12 months of living expenses depending on the number of earning members and type of source of income.


    2. We can save more than we think

    We realized that we can save more than before due to a tremendous drop in online and offline expenses. As avenues for spending money were limited to grocery shopping and on essentials, luxury items purchases were kept at bay. The shopping was confined to needs and wants only, resulting in a higher savings rate.


    3. Goal-based investment

    Hence the most important lesson we all learned that do not invest without a goal in mind. People who exited the stock market in the month of March 2020, have lost a significant amount of money and people who started their investment journey during Covid-19 have made huge profits. However, the new investor needs to realize that the stock market doesn’t go in one direction, and a correction is due sometime in the future. No one can predict that with precision, and hence invest the surpluses with a goal in mind for the exit. The money which you require for your short term needs must be kept in liquid assets. 


    4. Investing in learning new skills

    As most people had time in their hands, they spent it on learning new skills. People have attended webinars, paid for new courses, listened to podcasts, have taken exams for getting certifications to enhance their knowledge. Even the world-famous investor Warren Buffet mentioned once in an interview with Forbes  ” Nobody can take away what you’ve got in yourself, and everybody has potential they haven’t used yet.”  Many people have started their investment journey in direct equities, without understanding their risk appetite. One must use this opportunity to get rid of junk stocks otherwise a big loss awaits around the corner, without appropriate knowledge.

    5. Portfolio diversification

    Those who are heavily invested in equities and real estate had faced a lot of liquidity issues during the onset of the Covid-19 crises. Though the equity market has recovered and is hitting fresh highs every day, there is a lot of uncertainty involved. Gold which was supposed to be a dead investment has given historical returns. Portfolio diversification across various asset classes gives a lot of comfort during such stressful times. Investments go through their own cycle – highs and lows, we must be focussed on staying afloat and do not get carried away when the tide has turned.


    6. Budget and track expenses

    Budgeting and tracking one’s expenses has gained importance, as people had time in hand and have experienced a higher savings rate, they realized that budgeting would help them to keep their finances on track and be better prepared for such uncertainties in the future. People have also gone away with unnecessary expenses that they weren’t mindful of earlier such as unused subscriptions, excessive eating out and parties, entertainments, etc.

    Do you agree, would like to know what money lesson you learned during the Covid-19 pandemic

  • 30 Most popular Warren Buffet’s quotes about Investing

    Warren Buffet needs no introduction. Warren Edward Buffett, aged 90, is an American investor, business tycoon, philanthropist, and the chairman and CEO of Berkshire Hathaway. Berkshire Hathaway’s fundamental strategy has been to identify valuable companies and then acquire increasingly large portions of them. Warren Buffett’s Letters to Berkshire Shareholders are read over the last 40 years, across the investing world since they assist in providing insights of Warren Buffet and his team for the investment strategies, stock ownership, value investing, company culture, etc. Warren Buffett is also known as “Oracle of Omaha”. He is one of the most successful and wealthy investors in the world. Let’s explore these 30 popular Warren Buffet’s quotes about investing, life, success, and much more. These will definitely assist you to gain loads of information and help you to devise your investment strategies which would help you to create wealth without taking a high risk.

    Warren Buffet
    Warren Buffett, CEO of Berkshire Hathaway
    30 MOST POPULAR wARREN BUFFETT'S QUOTES ON INVESTING
    30 MOST POPULAR WARREN BUFFETT’S QUOTES ON INVESTING

    “Rule No. 1: Never lose money. Rule No 2: Never forget Rule No. 1.”

    The first and the foremost rule for investing according to Warren Buffet is that you should never lose your money in investing and that we should never forget this, is the rule no. 2. Most people enter stock market and lose money for various reasons. It could be not knowing the businesses, expensive valuation, buying without research, penny stocks, etc. According to him, one can invest in low-cost index funds without taking the risk and still get good returns from that passive investing.

    “I will tell you the secret of getting rich on Wall Street. You try to be greedy when others are fearful, and try to be fearful when others are greedy.”

    The fundamental investment principle is to buy low and sell high. But people generally do the opposite and hence they lose money. If we follow this rule and invest when others are fearful and de-invest when others are entering the market at high valuations, then we can make huge profits.

    “Money is not everything. Make sure you earn a lot before speaking such nonsense.”

    Money isn’t important is the statement which you hear from people who don’t have it. Rich people always value money. When people love is more important than money, then its the wrong comparison they are making. Can you choose between your two kids? No right, so money and love do not stand at opposite sides. You can have both in your life, in abundance.

    “I always knew I was going to be rich. I don’t think I ever doubted it for a minute.”

    The law of attraction and manifestation works. The beliefs which you hold, become part of your sub-conscience mind and they lead to making the choices. That’s why no matter how much financial knowledge you get, if your money blueprints or beliefs are limited, then you might end making wrong choices. Hence along with the financial knowledge, the belief that you would achieve success and prosperity would play a bigger role in making you rich.

    “If you don’t find a way to earn money while you sleep, then you will work until you die.”

    Passive income is necessary to reduce dependency on one primary of income like salary income or business income. The money saved, must bWell e invested appropriately to create passive investment income to begin with and then explore options to hustle based on your skillset.

    “If you cannot control your emotions, you cannot control your money.”

    Well, this statement however daunting is true, most of the time it matters of the heart that rules the head. We end up making investment decisions which we regret later. Having a high emotional quotient is very important to make sound financial decisions.

    “Price is what you pay, value is what you get.”

    When one is investing in the blue-chip company then the pricing factor should not be the primary aspect of decision making. If the company is providing value to the shareholders even if the price is expensive it doesn’t matter.

    “In the business world, the rear view mirror is always clearer that the windshield.”

    With hindsight, we would all do things differently.With hindsight, we would all do things differently. Experience is the best teacher, it teaches us valuable lessons through mistakes.

    “Never depend on single income, make investment to create second income.”

    This is so true in today’s times when jobs are uncertain and businesses are hit due to the Covid-19 lockdown situation. Some say the worst is yet to come. Let’s gear up to the challenges ahead by creating sufficient liquid funds and alternate sources of income to support our families in these tough times.

    “Do not save what is left after spending, but spend what is left after saving.”

    Pay yourself first and then to others. That’s called financial discipline. This step helps you to create huge investment corpus and helps to keep the lifestyle creeps at bay. It also helps to give frugally and mindfully which is the important trait of most of the self made billionaires in the world.

    “Rich comes from not knowing what you’re doing.”

    When you know things, there is comfort. When you don’t know things, then there is anxiety. Always know where your money goes. Whether it gets lost to make you broke or grows to make your life rich and comfortable. You must take steps to align your finances to help you get that peace of mind

    “The stock market is a device for transferring money from the impatient to patient.”

    Wealth accumulation takes time. Time demands patience. Patience demands perseverance and perseverance demands commitment. Commitment demands will power and will power demands focus. Focus demands determination and determination demands goal setting. So if your goal is wealth accumulation then practice the above traits.

    “Our favorite period for holding is forever.”

    Long term investment must be made with the money which you don’t require for decades. This is sure shot way to build capital and reduce taxes, as you do not churn your portfolio.

    “Diversification is a protection against ignorance. It makes little sense for those who know what they’re doing.”

    When you know the businesses and the investments are made in your circle of influence then it makes little sense to diversify. You can make huge bets on it nad take advantage of the growing company and heap the benefits.

    “Sound investing can make you very wealthy, if you’re not in too big a hurry.”

    Do not invest in penny stocks if you haven’t done your research well and it is within the circle of competence. There is euphoria in the market, as we just witnessed the best investing quarter (Apr-Jun 20) in the last 11 years for both Sensex and Nifty and due to which even penny stocks are running at 52 weeks high. But not all penny stocks are here to stay, only the brokers get rich from your trading. You lose on the transaction costs, brokerage, and taxes too which many don’t calculate. This could be very detrimental to your finances. Think twice about it.

    “The best investment you can make, is an investment in yourself. The more you learn, the more you’ll earn.”

    Invest in self, because who else would have best interests other than you yourself. Strive for excellence and success would be yours.
    Successful people are exceptionally wealthy.

    Warren Buffett, CEO of Berkshire Hathaway Inc.

    “Only invest in simple businesses’ that you understand.”

    When we invest in something which we do not understand, then we are not sure and we can make mistakes. We invest our hard-earned money to make a better fortune and not to lose it. Hence it’s important that we know and are 100% sure that we don’t put our money in businesses, stocks, financial products which we don’t understand. Have you invested in complex financial products and are wondering what when wrong. Don’t wonder be sure and invest and then sit tight.

    “The happiest people do not necessarily have the best things. They simply appreciate the things they have.”

    Life is making the best use of what you have. If you always keep chasing for what you want rather than taking some time to enjoy what you already have, then you might be unhappy. Choose happiness by being grateful for the things you have, then pull up the horses to follow your dreams. This is true for money also. No matter how much money you have. Enjoy it and be grateful and then aspire for more. Manage the money you already have to create the money mindset for creating more.

    “Decide a business is worth investing in because it will last, not because it’s doing well right now.”

    When the markets are soaring and everyone is talking about the tips to invest in stocks, do not buy on recommendations, study before investing, research well, and only invest in businesses you understand and do not get into momentum stocks.

    “Much success is attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell.”

    The most successful investors are ones who buy thinking long term and just forget about it. Just by buying and holding blue chip companies like Apple, Facebook, Reliance, HDFC Bank, TCS, etc. for the next 10 years has the potential to give you handsome returns or if you are risk averse just invest in the index fund and continue holding it. Do not invest in stock market for speculation.

    “If a business does well, the stock market is bound to follow”

    The most successful investors are ones who buy thinking long term and just forget about it. Just by buying and holding blue chip companies like Reliance, HDFC Bank, TCS, etc. for the next 10 years has the potential to give you handsome returns or if you are risk averse just invest in the index fund and continue holding it. Do not invest in stock market for speculation.

    “Chains of habit are too light to be felt until they are too heavy to be broken”

    Chains of habits are too difficult to break, especially procrastination. It robs the time and we are left with nothing much on hand. Are you struggling to save atleast 10-15% of income per month or say to yourself that you will starting budgeting next month, or still thinking of reading a book on personal finance, then evaluate the habit of putting things to tomorrow and start today.

    “Someone’s sitting in the shade today because someone planted a tree a long time ago”

    That’s the power of compounding, just as a seed has a potential of growing into fruit bearing tree, which csn be enjoyed for generations, similarly long term systemic investments can lead to generational wealth. Think about it.

    “The difference between successful and really successful people, is that really successful people almost say no to almost everything.”

    Really successful people know that the resources are limited, especially time, and hence they value their time, and say almost no to everything.

    “The most important quality of an investor is temperament not intellect”

    The retail psychology is that buy when the market is up and sell when the market is tanking. Actually the reverse i. e. Buy when the market is low and sell when the market is on all-time high, makes you more money, and helps you accumulate wealth. Separate yourself from the tribe mentality and get the right temperament. The best time to make an investment is now.

    “The investment in knowledge pays the best interest.”

    Invest in learning and learn to make your own investment decisions, without the help or tips of friends, relatives, sales agent, advisors, brokers, media, print, etc. Be self-reliant.

    “It’s better to hang out with people who are better than you. Pick out associates whose behavior is better than yours and you’ll drift in that direction.”

    It’s said that you are the average of the top 5 people you interact with or spend the most time. Couldn’t agree more with this quote. Up the curve. Get more from life.

    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.

    Opportunities once identified should be seized in. When the stock market is bleeding in red, that’s the time to put your money into good quality stocks which are fundamentally strong and in the businesses you understand and reap the profits when the tide turns its way.

    Hope you enjoyed reading this, let me know in the comments what you you think about this. Hit the subscribe button to read more of such articles.

    Ms Wise (financial Coach)

    Ms Wise is a financial coach. She is a content writer for a personal finance blog. She is a chartered accountant with 15+ years of experience in the financial services industry. She loves to share her experiences with money management and personal finance. She shares great tips on saving, investing, and spending money wisely which would assist you in achieving financial freedom.

    Download her 30-Day Effective Money Management Challenge With A Daily Planner Template Freebie to elevate your financial health.

    You can reach her via email mswise@beingfinancialsavvy.com

  • 15 ways to increase savings with young kids

    Having a child is one of the most life-changing events in one’s life, saying this would not be an understatement. It has an impact on the decisions related to home, its decor, travel, career, and most importantly on finances. As parents, we want to give our children the best start in life, and the best is usually in most cases assumed as new things. One could go overboard with buying the cradle, cot bed, stroller, lots of toys, soft toys, different feeding bottles, sippy-cups, play gyms, and much other fancy stuff. Many items are known only when we become parents, even our parents had not heard of them.

    Most parents notice a decrease in the savings, as the expenses shoot up drastically and for few others, it is a wakeup call to align their finances. Savings with kids can be challenging but with mindful spending and intentional living, it’s not difficult. Let’s explore some of the ways to increase savings with kids aged 0 to 5 years to stay on the path to financial independence and early retirement (FIRE).

    1. Modern Cloth diapering – While traditional langots are used as cloth diapers but now most new parents have switched to disposable diapers. These synthetic diapers though convenient are quite heavy on pockets and are not eco-friendly. Now modern cloth diapers (MCD) are wash and wear diapers that have less harmful chemicals, make it easier to potty train, and helps you to save a significant amount of money. There are many types of MCDs such as pre-folds, flats, fitted, covers, pockets, all in one (AIO), all in twos, training pants, bamboo, microfiber, hemp & charcoal inserts amongst others. Indian brands include Bumpadum, Superbottoms, Mummamia, Easy Feel, Bumberry, etc. and international brands include Alva, Thirties, Blueberry, Grovia, Bambino, BumGenuis, etc.
    2. Breastfeeding and pumping milk – World Health Organization (WHO) and United Nations Children’s Fund (UNICEF) recommend early initiation of breastfeeding within 1 hour of birth. They recommend exclusive breastfeeding for 6 months of life and continued breastfeeding up to 2 years of age and beyond. There are natural ways to increase breast milk supply. Many new moms don’t know this resulting in stopping breastfeeding and switching to powdered milk. These powdered milk are quite expensive and less nutritious compared to breast milk. Breast milk is known as liquid gold and it’s free, moreover, the composition of the breast milk changes as per the child’s age and needs. When the child is sick, the breast produces antibodies to help fight infection. Cosleep with your baby to breastfeed easily. Mothers can pump milk and store it for more than 6 months in the freezer, if they need to return to work or while they are away for a brief period. Popular electric breast pumps include Medela, Spectra, and Lansinoh.
    3. Babywearing – You need not spend on strollers and buggy, as babywearing carriers are the best way to keep your baby with you and also helps in keeping your hands free. You can wear your baby for daily walks, travel, parks, gardens, and even do yoga and exercise (under expert supervision) while wearing your baby. Many types of carriers are available like ring slings, pouch, soft structured carriers, mehdai, toddler carriers, compact, onbu, grow with me, etc. Always buy ergonomic carriers that suits your needs. Indian brands include Anmol Baby Carriers, Soul Slings, Easyfeel, and international brands Tula, Boba among others.
    4. Baby-led weaning – You just need a booster seat or high chair, to begin with, infants start eating finger foods and pre-loaded spoons on their own with little encouragement. Even water can be given in steel, silver, or copper utensils. You don’t need to spend on baby food processors, BPA free bottles & containers, sippy cups, fancy cutlery, processed baby foods, etc. Buy organic wherever possible and give only homemade stuff without mashing.
    5. Avoid packaged baby food – Many advertisements make you feel that your growing child require packaged food right from the time when they are introduced solids. Later, they make you believe that protein and calcium drinks are very essential for their growing years but it’s not true, just look up the proportion of sugar in the ingredients list and you will understand that they do more harm than good. Processed sugars in a high proportion (30-50%) are not healthy for anyone, forget about young kids.
    6. Buy open-ended and wooden toys – To ensure the child brain development, you should invest in open-ended toys, as these enhance creativity and encourage eye-hand coordination and gross motor skills, which is highly essential for the brain development of the child. In battery-operated toys, plastic and musical toys, there isn’t much for the kids to do. Open-ended toys include Lego toys, magnetic tiles, Jenga blocks and other wooden toys easily available on Amazon, Flipkart, Firstcry, etc. These open-ended toys last long and can be passed on as preloved.
    7. Buy or use preloved stuff – Earlier families used to keep the clothes and give it the newborns of siblings, not because they couldn’t afford it, but because the used cloth is soft on the baby’s skin. From car seats to books, you can get good stuff at reasonable prices on WhatsApp group, second hand and preloved Facebook groups for all ages. Many times new or sparingly used clothes, toys, etc. are available at attractive prices as their babies have outgrown. You too can sell your unused toys, books, babywearing carriers stuff, and save some money in exchange.
    8. Low key birthday parties – Birthday parties need not be extravagant. Nowadays new parents spend a bomb on theme-based parties, beaches parties, McDonald’s parties, etc. You could plan for a simple celebration with few friends and relatives at home with polite messages to guests to not get any gifts. Nowadays kids have too many toys, colors, books, etc. and somewhere the value of things is disappearing. You too, might not like to encourage the concept of giving return gifts. The focus on creating memories, and having a great time is more valuable. You can use the money saved for traveling or investing.
    9. Traveling with kids – Kids are very flexible, hence traveling while they are young helps them to explore the various cultures, cuisines and meet different people. Airlines charge only 10% for infants below 2 years, with no extra seat. Besides, till about 12 years, you don’t need to pay extra charges for separate beds in hotels, as they are provided free of cost. The tickets to the attractions, amusement parks are less expensive or free for kids.
    10. Doing activities at home – Kids do not always need expensive toys to play.  You can search for DIY activities and games for toddlers and preschoolers that can be done at home to keep the kids occupied. You can also get fun engaging and educational worksheets for kids. They are happy to do simple activities at home like transferring items from one container to another, newspaper arts, playing with kitchen utensils, scissor activities, and you too can enjoy activity time.
    11. Playing games – Taking kids to malls, shopping centers would increase expenses on gaming, amusement activities, and shopping. These give momentary happiness and increase unnecessary consumption. Kids should have less screen time and play indoor games such as ludo, snakes and ladders, junior monopoly to understand money at an early age, etc. and outdoor games like football, basketball, cricket, sand games at beaches, parks, open places, etc. Most of these activities are less expensive and enhance the concentration and gross motor skills of kids.
    12. Education and Learning – Many parents want to put their kids in the most expensive school just to fit in with peers and society. Do not get in that pressure, do your research and then send to the school whose fees and curriculum suits your future aspirations for your kids and not to show off. Also, there is no rush to put your kid in playschool when the kid is barely 18 months old. Every day and in every way the kid is constantly learning, so don’t think that only that school or its methods are the best. Many parents are now open to the concept of homeschooling their children. Be flexible and open to new ideas.
    13. Green Parenting – One must plant your own fresh and organic micro-greens and vegetables by making your own compost at home. This helps to save on groceries, our kids eat lesser toxins, get good health, and learn about nature, waste management early on. There is excitement to see the new bud or even a leaf. One must try to become a home gardener and/or home harvester in a small way.
    14. Adopt frugality and minimalism – If you already have lots of stuff around then frugality and minimalism is an excellent solution for saving money. You would not need that extra cupboard or extra room to store unnecessary items. Fewer things mean less stress. Decluttering helps to save money, creates more space, increases creativity, and imaginative power. Kids learn to make the best use of what’s available. Buy only essential items Do not make an impulse purchase based on any recommendation, research, and then buy keeping in mind the need and longevity of that item.
    15. Make kids financially savvy – Talk about money, budgeting, saving, investing with kids right when they are young to make them savvy with finances as personal finance is not taught in schools. When they understand the value of money then, they would not make unnecessary demands and save money themselves and invest it for their future.

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  • 20 ways in which salaried class employees loses money

    1. Claiming company allowances and compensatory leave – Many employees do not read the fine print of the HR policies where the details of eligibility of claiming the allowances is given. Company allowances could be for travel allowance, cash allowance, meal allowance, stay allowance, per diems, compensatory off etc.
    2. Not claiming for Income tax rebates and tax allowances – Especially freshers do not understand the eligible contributions for 80C, 80D and other allowances under section 10. These directly assist in reducing the taxable income, and one must max all the possible sections to reduce the taxable salary and taxes.
    3. Charity – Most companies come up with the charity & other schemes where they ask employees to raise funds, many times they don’t provide tax certificate u/s 80G. If you have contributed, then you should get the tax certificate to claim tax deduction or else contribute to charity of your choice at individual level where you can get tax benefit.
    4. Attendance regularization – Many times employees forget to regularize their attendance, resulting in the loss of payment or reduction in leaves and entitled leave encashments.
    5. Salary slip reconciliation – Sometimes there can be some errors in salary credits, deductions, taxes etc. Check your salary payslip every month.
    6. Reimbursement claims – Many times, employees go out of office on tours, conferences, trips etc. on personal expenses and then forget to claim the reimbursement of those expenses and end up hurting their pockets.
    7. Not contributing to retirement – Especially young employees, wish to have more in hand salary component and hence do not opt for Employee Provident Fund (EPF) scheme and Employee’s Pension Scheme (EPS) contribution. More salary component means more expenditure in most of the cases in form of more taxes and lifestyle expenses.
    8. Health insurance – Most employers provide health insurance for your immediate family and also competitive rates for your parents without waiting period. If your parents do not have their insurance then it is best to enroll with such schemes, however read the fine print as there could be co-pay clause.
    9. Preventive health check-ups – Employees do not opt for health check-ups regularly due to procrastination and timely detection of lifestyle diseases such as diabetics, hypertension etc. goes unnoticed.
    10. Subscriptions & tie-ups – Some employers have tie-ups with certain retail chain shops, gyms, hotels, etc. Many employees do not smartly utilize this benefits to gain discounts, etc.
    11. Cheaper loans and competitive interest rates – Banks and other financial services employees get benefit of subsided home loans and competitive interest rates sometimes as low as 1- 3.5% against the market rate of 8.5%. Most employees do not use that benefit for fear of lock-in period.
    12. Advance salary – Some employees do not avail the benefit of advance salary when in need, they take personal loan which is at higher interest rate, thereby losing money on interest costs.
    13. Salary accounts – Many companies have salary accounts with top banks such as HDFC Bank, ICICI Bank, Citibank etc. which provide many benefits for corporate customers, many employees do not leverage that relationship and go for costlier options.
    14. Salary structure – Before signing the acceptance letter, one should study the salary structure and do the tax planning in the form of car lease, food coupons, etc. to get maximum benefit. Some employers allow employees to choose their salary structure once Cost to the Company (CTC) is fixed. There are other insurance which employers provide like disability, accident and loss of pay which differ from organization to organization.
    15. Negotiation – Most of the employees and largely women employees, fear to ask for a raise or negotiate the salary when the offer is made or during appraisals. Some lose out of joining bonus, buy out the notice period, some on designation and certain perks associated with it like company car, driver allowance, car lease etc. which could assist in reducing taxes. Make a strong case and negotiate while on job or seeking the job.
    16. Gratuity – Gratuity is tax free component of salary which is received once you complete 5 years of service. But did you know that if the employee completes 4 years 240 days, then too, they are eligible for that payout. Read your HR policies for further details.
    17. Resignation – Some employees do not negotiate the joining period and buy out by the new employer and also do not negotiate to waive off the notice period or salary recovery from the old employer, ending up paying for notice period shortfall.
    18. Severance packages – Most employees do not negotiate for severance packages if the terms with company gets bitter and they are asked to go. You have nothing to lose, once you are out of job, understand that.
    19. Transfer of EPF, Pension accounts – Many employees do not transfer the PF once they leave the organization, as the result lakhs of rupees are gone unclaimed. Also the interest on PF stops crediting in your account after 3 years if there is no credit by your employer. Many do not know this fact. In case something happens to them, their family is deprived of their hard earned money.
    20. Retirement benefits – Some employees do not claim their retirement benefits like insurance or medical facilities, superannuation, pension, gratuity, etc.

    Hope these pointers were helpful. Since you might have received your salary credit, this may assist you to make better decisions. Let me know your feedback.

  • 10 steps to align your finances

    As Indians, we have a saving rate of 30%, as per the data from the central statistical organization, in fiscal year 2019; compared to United States which was just 7.6% in the year 2019. We are ingrained since childhood to save for the future, however saving is just not enough, we should invest it appropriately. You spend so many years to build your career life, to get that income, but perhaps don’t pay heed on where that incomes goes. Financial Literacy is very important, and you just cannot take random tips from relatives, friends or follow blindly some investment advice given on television, print etc. Financial education is not taught in schools and colleges, yet money management is so important. You can’t outsource this, and it is important life skill from my point of view. Money management can be learned, it just needs your time and attention. Personal finance is very personal, however, these steps might be useful to start aligning your finances.

    Do finances together, it not complicated, take control and learn about money money management
    1. Have a financial plan – This is the first step for aligning the finances, as this creates a roadmap where the money should go. It should have all your financial goals, investment framework, financial strategies (paying off/eliminate debt, build and stick to budget, increase your credit score, etc.) asset allocation, investments (equities, fixed deposits, etc.), risk management by knowing your risk profile, asset portfolio (real estate, properties, etc.), insurance plan, and other important aspects related to your finances. Write your short term goals (0-12 months), medium term goals (1-5 years) and long term goals (5-20+ years). Know the future value of all the goals in present value and allocate the percentages of savings against each category and then decide what type of investments (i.e. equity, debt, fixed deposit) should you be making for each time horizon. For example, if your child is in 10th standard and you require to fund his college education then 6 months before, you shouldn’t invest that money in stock market. Another example if you are funding for retirement which is 30-40 years from now, then no point in keeping the entire money in Fixed deposits. Asset allocation is another important aspect here. Have a plan for appropriate mix of equity and debt in you plan. Usually the debt portion is your age and the equity portion is (100-age), however it depends on your financially position, current assets and time horizon of your goals. Your financial plan would give you and your money a clear direction. Revisit & update your financial plan annually or in case of change in any of the factors.
    2. Know your net worth – List down all your assets and liabilities at book value and estimated present marketable value. Assets are real estate investments, car, building, corporate fixed deposits, bank fixed deposits, shares, debentures, gold etc. Liabilities are mortgage loans, vehicle loans, items taken on installments, guarantees given to anyone’s loan, etc. If you do not know the exact market value, find out the nearest market value. Calculate the net worth by subtracting net liabilities by net assets at both book value and the present market value. This will also help to understand what price your assets has grown against book value.
    3. Insure yourself – The earning member in the family must insure themselves for at least 10-15 times of the gross annual income till the retirement starts or the person is financially free, to prevent the family from struggling from finances after that person is gone. Buy these policies online and early on to prevent paying high premiums. Pro tip – Make all the necessary disclosures such as preexisting illness, smoking and drinking habits, etc. even if it results in higher premium to avoid any claim rejections in future.
    4. Provide for health related contingencies – Even if you have corporate health insurance, then also insure yourself and your family by taking family floater policies and individual health policies for senior citizens. You should have a base cover of 20 lakhs and super top of 1-2 crores depending on the health condition of the family. Take into account the rising medical costs if you think this number is quite huge. Know these terms like exclusions, pre-existing waiting period (opt for the least waiting period), co-pay (avoid such policy if possible), sub limits (avoid if too many), special coverage (avoid if not needed e.g. maternity benefit if you already have children), etc. and read the fine print to understand what’s not covered, the benefits and always have health cash reserves handy. Port if your existing insurance policy doesn’t meet your requirements. Pro tip – Make all the necessary disclosures such as preexisting illness, smoking and drinking habits, etc. even if it results in higher premium to avoid any claim rejections in future.
    5. Prepare a budget – While everyone has a fair idea of how much was spend and how much they earn, unless you list down each and each expense. If you do not tell your money where it must go then you will not realize where it went.  Hence track your expenses for at least 3 months and then prepare the budget. Don’t forget to include taxes in the calculation, do the tracking on gross income and not on net income. Roughly, 50% of the incomes goes towards needs (groceries, basic clothing, rent, mortgages, bills and utilities, insurances, transportation, etc.), 20% towards wants (dining out, partying, vacations, weekend trips, events, shopping, hobbies, etc.), and 30% towards savings (debt/loans repayments, cash funds, liquid funds, health cash reserves, vacation funds, fun funds, retirement funding, child education, etc.). Label the expenses into fixed, variable, intermittent and discretionary expense. Fixed expenses are known expenses like rents, school fees, tuition fees, study classes, society maintenance charges, maid and cook expenses, etc. Variable expenses include groceries, electricity bills, gas, petrol, transportation, books, school and college related expenses etc. Intermittent expenses are expenses which pop up any time of the year such as repairs, maintenance of car, home, sudden unavoidable expenses, etc. Discretionary expenses include the expenses which you expend as per your wish such as gifts, birthday and wedding parties, dining out, weekend travel, dining out, etc.  You could further bifurcate this into money jars and separate the finances as per the requirement i.e. immediate needs and wants fund (55%), future retirement fund (10%), vacation fund (10%), child education fund (10%), cash reserves (10%) such as cash funds (6-12 months of living expenses), liquid funds (2-3 years of living expenses), health reserves (depending on health profile, at least 20 lakhs), and gifts and charity fund (5%) or your own personal allocation etc. This is a great money management tool. Whenever you receive a lumpsum amount like yearly bonus, income tax refund, etc., you and your money exactly knows where to go. This way you aren’t depriving yourself of anything but planning in advance. You can save up to 75-80% if you are aiming for financial freedom. Pro tip – All earning members should participant in the budgeting process for saving, spending and investments to a fair percentage, this helps to prevent high tax liabilities on one person and helps to accumulate assets for all members. This is especially for women who give all the money to their fathers and husbands to manage or in case they have to manage then just keep it in low interest yield savings accounts and lose opportunity to grow wealth.
    6. Use your credit card wisely – If you use the credit card towards all the possible expenses, then you get a complete picture of the spends and you can earn those points too. This is useful for funding your future travels without having a dent on your finances. It also assists to save by availing the discounts, cash backs, promotions, etc. Align your credit card billing cycle with your salary credit dates, so that you never miss that. Use CRED to pay and manage credit bill payments. Prudent credit cards usage helps to build good credit score and establishes credit worthiness, resulting in savings of lakhs of rupees by getting a better interest rate while availing a future housing loan. Pro-tip – Negotiate well and consider taking women home loan as it saves a lot of interest, even 0.25% over a long period of time is lot of money and at least pay 20% + down payment to reduce the loan amount.
    7. Automate everything – You have to automate your payments, savings and investments. As soon as you receive that salary or credit, allocate as per your budgeted percentages. Set with standing instructions, pay yourself that 30% + first, set up SIPs or schedule lump sum investments on shares or bonds, set up that cash funds, liquid funds, reserve funds, and contribute monthly towards it (remember money jars philosophy), transfer your expenses to joint account as per the share decided, pay credit card dues in full, set aside some money for cash expenses, save money for wants and desires as based your goals. Execute prudent goal based planning.
    8. Investments – Every member in the family must have investments in their name, this helps with better tax planning and in case things go bitter, then you have money to take care of yourself and your finances. Ensure that asset allocation of equity and debt is per your financial plan if not then rebalance your portfolio as and when needed. Invest according to your risk profile and ensure that you are investing in simple products which you understand. Do not chase that extra 1% and invest in the riskier investment like co-operative bank, get rich quickly schemes which gives higher interest rate. Return of capital is more important than return on capital. Any product which is complicated and you cannot understand is not worth considering as investment. Keep it simple. Consider the cost, time, liquidity and risk involved before committing your money towards that investment. Remember that whatever investment you chose, never lose money. Match your investments to your goals, and shift to low risk investment products when you come nearer to your goal. This is important aspect of goal based planning.  Look beyond fixed deposits and LIC for investments, as they would not beat inflation and not grow your wealth. This is where many people go wrong. Increase your financial knowledge. If you want to have equity exposure, go with low cost index funds. Do not mix your insurance with your investments. Get rid of the ULIPs, Child Insurance plans, Retirement plans, Endowment plans, etc. after calculating the Internal rate of return (IRR) of these products. You would be surprised that the cover given by these type of policies is so low and they do not give better returns too. Pro-tip – Before going full-on with investments towards long term investments, vacation fund investments, child education fund, etc. do consider repayment of all the debts including home loans if possible and save the lakhs of interest payments which would assist in building your wealth, as debt is secret destroyer of wealth.
    9. Track your progress – The first weekend of every month must go your tracking the progress and reconciling with the actuals. Take your credit card and your bank statements and classify each and every expense into needs, wants and investments and see how much did you stick to your budget. Track your no spend days initially and then set the days in your calendar for no spend days. Do not forget to reconcile your points earned through credit cards, debit cards, memberships, etc. Track your retirement contributions to Employees Provident Fund (EPF), Public Provident Fund (PPF), National Pension Scheme (NPS), Pension Fund (PF), too. Transfer your EPFs immediately when you change your job. Look critically into each item and see if you can do better by not expending towards unwanted or unneeded items. Cut costs brutally, look for reduction in variable and discretionary, expenses to begin with. Switch to unbranded items, stop impulse purchases. Schedule money dates, everyone’s buy-in is quite necessary to make this work.
    10. Filing of documents – Keep all the necessary documents in physical or soft copies for claiming income tax rebates, deductions and refunds. Also keep the spreadsheet for tracking all the investments, bank accounts, demat accounts, shares, bonds, retirement accounts, property details, nominations, passwords and let your family members know about it. Update this periodically and inform your family members from time to time. Make a will and get it registered.

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  • 20 ways to save your grocery bill

    Money saved is money earned

    There are smart ways of savings on the grocery bills, without compromising on the purchases you need. Lets take a deep dive.

    1. Prepare a list before shopping : Whether you shop online or in the stores, always check what is needed in the kitchen. Scan through your storage boxes to see whats already there, otherwise you would end up buying the same item again. Stick to the shopping list once ready.
    2. Plan budget : Not more than 10-15% of your monthly expenses should be spent towards grocery bills. Plan the budget. Do the calculation and have a number in mind and purchase within that.
    3. Meal Plans : Always have a weekly or monthly meal plans in place and then buy as per the meal plans. Don’t buy when you are hungry, otherwise you would pick up ready to eat foods, unhealthy chips, etc. Many times, people pick whatever is available on the store and then stock it, and end up throwing it away when unused.
    4. Buy as per yours needs : Do not buy what you don’t need. Just because there was an offer or promotion running, you don’t want to stock up and spend money on unwanted items.
    5. Buy organic : Opt for the organic versions of the food grains, pulses, vegetables, etc. It would seem as a pricey today, but in the long run it has many health benefits and save on the medical costs. There are farmers’ markets, big basket and many other options are available these days.
    6. Don’t waste : If you are not able to finish the prepared food at one go, then be innovative and create frankie, briyani, and other recipes with left over food. Do not throw it. If that is not possible, at least give the leftover food to the security personnel or food collection centers for giving it to the needy.
    7. Grow at home : There is no pleasure ever, than watching your plants grow. Plant your vegetables, herbs and micro greens at home. The concept of kitchen gardening is slowly gaining significance. Even you can grow collectively in the society compound if you have people with similar interests.
    8. Buy online : Always try to buy online, as the chances of impulse buying are lesser there. In departmental stores, they use customer psychology and marketing techniques such as display, promotions, freebies, and other offers, which result in buying items which you don’t need.
    9. Buy seasonal fruits and vegetables : Always buy seasonal fruits and vegetables, because they are fresh and healthy. It is available in bulk and hence the price is not high, they don’t dent your pockets too.
    10. Buy local : Don’t increase your bill for imported products like Californian almonds, Kashmiri apples, etc. Try to buy foods which have traveled less to reach you i.e. food mile is less.
    11. Avoid packaged foods : There are a variety of packaged and frozen foods which are very costly and unhealthy as they contain a lot of preservatives. Cook home made food, try OPOS (One pot One shot) techniques for cooking, slow cooking, etc.
    12. Explore options : Don’t always buy from the place which you always do, explore cost savings options, like switch from local departmental store to online purchases.
    13. Use coupon codes : Always check if there are coupon codes available on using certain credit cards, discount codes, etc. This helps to reduce the bill for at least 5-15%.
    14. Buy all at one go : Generally during the start of the month, there are many spend based offers which are running, leverage them. For e.g. Big basket (1-5th), Amazon Great Indian Sale or monthly Maha Bachat offer, etc.
    15. Buy unbranded products : There are many substitutes available in market for everything. Some of the products are as good as the branded ones but cost less. E.g. Big basket, Reliance Smart, etc. have their own products which are sold cheaper on their websites or physical stores.
    16. Memberships : If you are a loyal customer of a particular brand, then you should always subscribe to the membership plans. Most of the times these are free or pay back the nominal fee charged. Earn the points on every single purchase and track the expiry of those points. Redeem when the points are sufficient enough.
    17. Affiliate websites : There are websites like Timeprime, Cashkaro, Intermiles, Smartbuy etc. which give the points or cash discounts when the purchase is routed through their websites. Explore such options if you are a member with them.
    18. Sale Offers & Promotions : In case there are certain anniversary sale offers, Amazon Big Sale, Big Basket Independence sale, Grofers sale, then plan to buy the regular items for 2-3 months in advance, if the deals are really good. This saves a lot of money.
    19. Payment Options : Use the credit cards and earn those points and sometimes discounts. This would help to achieve the spend criteria of the card on certain cards. Sometimes are are offers on wallets, like patym, lazypay etc. In such cases use the credit card to charge the wallet either before or after the purchase is made. This way you get benefit of the credit card points and discount from the wallet also.
    20. Carry your own bag : If you shop from malls, departmental stores, then always carry your own bag. It will save the environment and also reduce the garbage at home too. It would add the surcharge on your purchases.

    Hope those tips were useful. Please comment below if it helped you.