Tag: Financial Planning

Planning to retire early? Here are a few tips.

Growing up, college seemed like the ultimate dream. But when we eventually got there, we realized how wrong the movies had it because having to attend lectures religiously and curtailing expenses wasn’t part of that dream! The next dream had us envisioning ourselves as working adults. And why not? All they had to do was go to work and get paid for it. Unfortunately, this bubble burst pretty soon as well because work was hard, hours were long and savings were hard to create. Next came an early retirement dream to enjoy the results of your hard work in the prior years.

Now, retiring as early as 45 seems like an appealing idea but with the ever-rising inflation rates and the unimaginable demands of future generations,  is retirement actually as comfortable and fun as we imagine it to be? Or is there a catch or a reality check that we fail to comprehend?

It’s important to remember that the grass is always greener on the other side but, only when one makes an effort to water it. This concept holds extremely true when it comes to retiring early. Many might think it to be a trivial thing to consider but, it is only with a purpose that a plan can become successful. So, once the purpose has been envisioned clearly, the next step towards an early retirement would be to strategize about how to get there.

The first step should be deciding upon the MAGICAL NUMBER, the one that will unbind you from all work-related obligations to let you breathe freely, without compromising on your current lifestyle or aspirations. It should also provide for any contingency in equal measure so as to empower you to leave behind a legacy for your loved ones.

Following the below-mentioned practices can help you set yourself up well for retirement.

1. Setting aside 25 % of your gross income every year

While this amount might seem quite less in the initial years, as your career advances and you reach your retirement age, the small amounts add up considerably. As you will progress in your career and reach your age of retirement, these savings could not only add comfort to your early retirement but, also come in very handy in paying off any sudden liability or unplanned requirement. This doesn’t mean that weekend trips and impulsive buys should stop completely. A few smart choices there as well will award you with inspirational financial freedom. This practice would also serve as a good lesson in planning for your future for the coming generations.

2. House yourself in a budget

There truly would be no point in early retirement if one had to worry about repaying a staggering amount of loans as opposed to having their basic needs like having a roof over their head fulfilled. Thus, it is very important to start EMI planning at the earliest. It is best advised to set aside a minimum of 30% of net income for EMI towards housing loans.

3. Invest in equity from the start, NOT debt

During the start of one’s career, one can afford to take a little risk, be aggressive in investments and opt for the equity option when building an investment portfolio. Of course, when nearing the age of retirement, one could move towards debt. But placing debt strongly before equity without having a profitable investment build-up would mean loads of interest payments being made from day one. thus, This would make early retirement almost impossible to achieve.

4. Prudently monitor all expenses

Human nature is such that it takes very little time to become habituated to a luxury which in turn becomes a necessity. A very apt example here would be the mobile phone. Earlier, it was a luxury before but now, it’s an absolute necessity. One cannot cut back on expenses when they become a necessity. Thus, savings become dependent on one’s growing needs. So, closely monitoring lifestyle choices and chalking out a monthly expenditure plan is imperative to retiring early and leading a comfortable retired life.

5. Invest any inherited asset cautiously

An inherited asset is always a valuable heritage. Thus, if one becomes fortunate enough to receive such an inheritance, prudent investment of it will double the asset value in no time. Hence, instead of blowing up the inheritance, it is always advised to do a quick financial check of it with respect to its market rate and inflation prospects.

What Is The Right Time To Exit Your Mutual Fund Investments?

Investors’ thought process and behaviour while choosing a Mutual Fund to invest in usually mirrors their behaviour while exiting the investment as well. If you have chosen a Mutual Fund because it was doing well in the past few months, then you’ll probably feel like selling it if it under-performs for few months. You will then move to another fund that is currently performing well and continue this vicious circle.

In reality, continuously worrying about market conditions and obsessively tracking your returns is futile. When the market is falling, most investors panic and want to exit their investments to ‘mitigate’ their losses. The trap of wanting to invest in a ‘better performing’ investment avenue is always very tempting but very harmful.

Before panicking in times when the markets aren’t doing well, you must realise that Mutual Funds are actually a portfolio of financial instruments like stocks and bonds. Thus, as they are diverse portfolios with instruments having varying risks and characteristics, a decline in one or a few of the stocks can be offset by other assets within the portfolio that are either steady or increasing in value.

So, while you may want to avoid worrying about market ups and downs, there are few circumstances when you may have to exit your investments due to some pressing needs. These are a few situations in which you should exit your Mutual Fund investment –

  • When you need the money for a goal: Most of us have tangible goals like buying a house, funding a dream vacation or providing for our child’s education, for which we save money. At least 6-12 months before you need money for a goal you should sell your equity investments and move the funds into a fixed deposit or floating rate fund. If the market is down at this point of time, see if you can utilize any other source of funds for your goal or check whether you can wait for an additional period of time. This decision on whether to ride the downturn a few months before you need money is completely based on your risk tolerance and varies from person to person.

  • When you need money for a personal emergency: There might be a time when a personal emergency warrants far more money than the money you have saved in your Contingency Fund. At such times when Bonds, PPF and Post Office instruments might have a lock-in, you can look at selling your Mutual Fund investment which is not performing.

  • When your investment has gone sour: There are periods where your investment will under-perform the broader market. Should you immediately sell at this point? We generally give any fund manager a couple of quarters of under-performance especially if he has a consistent track record of delivering risk-adjusted returns. Check out the reason for under-performance whether it’s due to high concentration to few sectors, or a fund manager change or bad market timing etc. Generally, when a fund does too well, there is a lot of money that flows into it and hence you might see some under-performance in the funds’ performance due to excess cash in its portfolio. However, if there is a change in the fundamental attribute of the scheme and it does not match the reason you invested in the fund, you could consider exiting it in consultation with your Financial Coach.

  • When you need to re-balance your portfolio: Asset Allocation is one of the key decisions that you must make when it comes to your money and studies have proved that Asset Allocation accounts for almost 91% of your investment performance. Suppose you decide on an exposure of 60% Equity and 40% Debt, but because of the bullish market conditions, your equity exposure has gone up to 80%, then to bring back the portfolio to its original allocation, you would need to sell Equity and buy Debt. In such cases you can shift from an Equity Mutual Fund to a Debt Mutual Fund also.

    This is where consulting a good Financial Coach will help and they will not only help you with your ideal Asset Allocation but will also review your portfolio at least once a year, to ensure it is on track with your goals and matches your risk profile.

Thus, as you can see above there are situations where you must exit your investment irrespective of how the market is performing. However, continuously panicking when the markets go down and trying to continuously time the market is futile. At Happyness Factory, we believe “It’s not about timing the market, but about your time IN the market”. When you stay invested for a long period of time and focus on achieving your financial goals, these phases of bad performance will not matter.

12 signs you need help with planning your finances

Sometimes while focusing on the next multi-bagger, top-performing fund, or booming real estate investment, we end up ignoring the most important factor that impacts our family’s financial well-being – our behavior and emotions towards money. Our emotions, previous experiences, and psychology play a big role in any financial decision-making process and may end up doing more harm than good.

Let’s look at 12 such signs which might indicate that sometimes we need a little bit of help making wise investment decisions.

 

12 Signs you need help with Financial Planning
 

With finance being such sensitive, yet integral aspect of your life, mistakes are bound to occur. These could either be because of your own fallacy or circumstances out of your control. Thus, the truth remains that you do need a good, qualified financial coach. Not only to help you rectify all the 12 signs listed above but also to stop you from making mistakes, help you be certain of your financial future and be your trusted partner in your financial journey.

Another important step is giving your money a purpose. When you have a goal in mind and are saving and investing towards achieving that goal, you are more likely to stay focused and not let your greed or indecision come in the way. Giving your money purpose and focusing on goals ensures you don’t get carried away by multiple investment avenues and select what suits your needs and requirements.

5 Financial Goals to plan in your 40s

Mr. Joshi, a senior executive in his early 40s, lives in an upmarket apartment with his wife, a teacher, and their 12-year-old daughter Avani. His Facebook posts are a source of envy to his friends who see him taking exotic vacations and checking into new restaurants every weekend. Yet, he is vaguely stressed about maintaining his current lifestyle and planning for his major future financial goals. This is not Mr. Joshi’s story alone.

As a financial coach would say, Mr. Joshi is now in his peak earning years and it is in this phase that he has a great opportunity to create wealth for his future goals.

Mr. Joshi, like many others, has been making ad hoc investments to ensure he is saving. For him, investment is all about starting a SIP, asking his broker for the next big investment ‘tip’ – the upcoming IPO, that great stock tip or the ‘best’ insurance plan, or saving through PPF. As for his expenses, even though his earnings are high, his expenses (including EMIs, insurance premiums, and lifestyle and education expenses) are higher and there is practically nothing left every month. The question is – Is this approach going to help the Joshi family meet their future financial goals?

The truth is any decision you take about money impacts your overall finances. However, when we decide to invest in real estate or take a loan or buy stocks or mutual funds, we do it without considering the impact of one decision on the other and without considering how this impacts our future financial goals.

Like Mr. Joshi, most of us are unable to identify all our important financial goals and chart a simple, implementable plan to achieve these goals. However, if he were to begin the goal-based financial planning process now, let’s see what a few probable goals would look like –

 

Financial Goals for a 40 year old

Setting financial goals is the most important part of the financial planning process. Even if what you can actually invest might be lower than the required investment, it’s absolutely fine! Your earnings will increase every year and as long as you are disciplined with your investments and keep increasing your investments each year, your goals can be achieved.

Mr. Joshi’s story is often reflected by many people. The 40s are a great time to give serious thought to this planning process as a lot of your financial requirements can be met if a proper goal-based financial plan is made and implemented.

A Doctor Needs A Doctor Too – The One-Stop Guide For Doctors To Choose A Financial Coach

Whenever we have asked doctors who advise them on financial matters, we get almost the same answers-

  • My relative/father/brother/sister manages my finances
  • I approach my Chartered Accountant (CA) for all my finance-related needs
  • I have a friend who is a financial coach
  • I am a Privileged Customer in my Bank and have Relationship Managers
  • I get investment and stock tips from my colleagues or my patients

As you can see above, anyone with some knowledge of finance is assumed to be a Financial Coach. The truth is that doctors are so busy in their professions that they barely get time to look into their finances and when they do, they consult whoever is the easiest to approach and take their financial advice.

Consulting a Financial Coach is akin to seeking medical help from a Doctor. If you were seeking medical help, would you go to a Doctor or to a Chemist? Obviously, a Doctor, for his expertise and domain knowledge, right? Similarly, Financial Coaching is a field that requires specialized qualifications and expertise. A CA may be a tax wizard, but he is NOT a Financial Coach. Similarly, Financial Distributors and Bankers are also NOT Financial Coaches.

So, how should you choose your Financial Coach – one who will understand all your financial needs and goals and create a plan to ensure that you achieve those goals?

Questions To Ask To Choose A Financial Planner

 

Thus, as you can see above, choosing a Financial Coach is a very important decision that will not only help you secure your future but also help avoid making financial mistakes that doctors are prone to making. With almost everyone using similar designations in the Finance industry, differentiating between the noise and the real deal is becoming increasingly difficult. Make sure you understand your financial needs and consult only an expert for handling your hard-earned money.

Other than approaching a good Financial Coach, doctors should also focus on setting their financial goals. When you keep in mind the life cycle and unique financial requirements in each phase you can plan your finances better.

Investing the RIGHT WAY

Have you ever booked your flight tickets and packed your bags before deciding a destination for a vacation? Sounds ridiculous, right? Of course it is! But most of us follow this method when it comes to finances. We invest our money in various products before understanding our financial needs and goals. The ideal way to invest is to follow the 3 steps shown below –

Investing the right way

Investing the RIGHT WAY involves following the 3 steps below-

  • PLAN – Start with ‘WHY’

    • Planning your investments begins with understanding WHY you want to invest your money. Focusing on goals like ensuring a peaceful retirement, paying for your child’s education or purchasing your dream home will help you focus on what is important to you.

    Once you know your goals and how much money you need to achieve each goal, determine when you want to achieve these goals. Classifying goals as short, mid and long term, will make them more achievable.

  • PROCESS – Focus next on the ‘HOW’

    • Once you have defined your goals and timelines to achieve them, start planning on HOW to achieve these goals. Knowing how much money you will need to achieve your goals will help you determine how much you should save and invest to achieve these goals.

  • PRODUCT – Proceed with ‘WHAT’ to invest in

    • After defining your goals and saving for them, you should decide where to invest your hard-earned money so that it can grow and help you achieve your goals. With the vast range of investment avenues like Bank FDs, Insurance products, Real Estate, Equity, Mutual Funds, etc. it can get overwhelming to decide where to invest your money.

    This is where a good Financial Coach can be very helpful. An expert It really helps to have an expert help you navigate the sea of investment avenues and avoid the mis-selling which is rampant in the finance industry.

At Happyness Factory, we guide you through all these 3 steps in a well-planned and systematic manner. We help you understand your goals, place them on a timeline, and then create a plan to save and invest toward these goals. We also help you evaluate the various investment avenues you can invest your money in depending on your risk appetite and investment horizon.

Why a Goal Based Investment approach is your Best Bet

Traditionally, Indians have always been considered to be ‘good savers’. And while creating a savings corpus is a good thing and quite necessary to secure one’s future, this exercise can become quite pointless if these savings aren’t channelized into the right investments.

Over the years, we’ve moved from a savings mindset to a consumption one. Today, people would rather channel all their money into the next End of Season’s Sale rather than save and invest for the future. Of those who do invest, a majority are only concerned with and driven by one factor: Returns. But this is rather a foolhardy approach which ends up having the opposite effect on your wealth than the one you intended. By approaching your investments in the right way, you could end up creating a larger corpus, making the most of what the market has to offer and best of all, meeting your goals.

A goal-based approach to investing is the best way to make the most of your investments. The reason it is so successful is primarily because of two reasons. Firstly, when you set a particular goal, it caters to your unique needs. Therefore, you are emotionally invested in the process and tend to save diligently to meet the goal. Secondly, because this process accounts for your risk appetite and time horizon, the investment recommendations you receive are best suited to help you meet your needs. Therefore, those who invest towards goals end up more successful in their investment endeavours.

To begin the process of goal-based investing, you first need to figure out what your financial goals are. The basic idea is that unless you have a goal to work towards, you’ll end up going around in circles, even though you might have a general idea about your goals such as retirement, a trip to your favourite destination, children’s education, etc. It is upon further probing that realize that you need more clarity.

Start by asking yourself, “What’s important to me about money?”. Then go one step further and list down your answers in order of importance to you. There might be several goals you wish to achieve. Prioritizing your goals is imperative as it will help you zero in on your most important goals and channel your savings effectively. Once you’ve clearly defined your goals, begin quantifying them based on time; short-term goals for a period of 0-2 years, mid-term goals for 2-5 years and long-term goals for a duration of 5-25+ years.

Once you have established what your goals are, all you need to do is make payments towards each goal. This can be done either in the form of Lumpsum payments or by opting for a Systematic Investment Plan. Whatever option is chosen, the key is to be consistent with adding money towards each goal for maximum success.

There are a few important things to remember when you decide to go the goal-based investing way.

  • 1) First, understand that when you’re investing in goals, particularly of a long-term nature, don’t be hasty in making judgements about this approach not being profitable. This is because short-term performance isn’t the best indicator of your overall position and shouldn’t be used to gauge your success. If you stick to your goal-based investment plan diligently, you’ll find that you will be able to spend a lot more in the future than you think you are capable of.
  • 2) Second, due to our lives undergoing constant change, our priorities and goals tend to keep changing. So, it is extremely important to review and re-plan any goals that might become void because of changing life situations and circumstances.
  • 3) Third, money holds different meanings for different people. For some, it could mean a secure future or access to education, while for others, it could mean the ability to travel or buy whatever they wish to. No two people will ever have the same goals that make them happy and so trying to match your goals with someone else is a pointless exercise.
  • 4) Fourth, when it comes to getting advice regarding money matters, there’s no shortage of sources; family, friends, colleagues, insurance agents, etc. Be smart in what advice you take on. If you end up taking on all the advice given to you, it would result in a combination of products that might not necessarily go together and could end up hurting you instead.

Making enough money to lead a secure, comfortable and happy life is very important. But, a lot of times, people go too far in this bid to make money. A far more effective option is investing the money you have, even if it might not be a large sum, to make the most of your savings. Ask yourself what’s important about money to you and your financial goals will appear, giving you a clearer picture of how to best use your money to achieve those goals. So, go ahead and start listing down your financial goals to create a blueprint for your vision for your future.

5 Big Money Questions You Should be Asking Yourself

“The importance of money flows from it being a link between the present and the future.”- John Maynard Keynes

With the amount of time people spend thinking about making more money in the present, it is quite surprising that planning one’s finances and maximizing them the right way for the future falls low on the priority list. People would have a financial masterpiece on their hands if only they spent more time on planning and allocating available funds in a systematic way as opposed to spending time and effort on accumulating money in the first place.

People often procrastinate when it comes to planning their finances. ‘I’m still too young to do this’, “The time isn’t right”, and “The market isn’t in the best shape right now”; are very common laments by people who stall their financial coaching process. But while chasing perfection is good, wasting precious investment time while pursuing it is a foolhardy thing to do.

Like with any other venture, the beginning is the hardest part. The right time to start, the tools needed for success, and how to get ahead are only a FEW questions that arise in people’s minds. In this case, however, the questions answer themselves. Carl Richards in his book, ‘The Behaviour Gap’ has provided a framework of the ‘5 big money questions’ that simplifies the planning process till it’s just a matter of striking the right balance.

1. How much can you reasonably save?

Creating a savings corpus for the future doesn’t mean that present-day needs should be compromised upon. The ideal plan involves keeping a portion aside from one’s take-home salary after considering current lifestyle and spending habits. In this way, the future gets slowly secured while the present is lived to the fullest.

2. What is your rate of return?

Returns need to be looked at as something that will enable you to meet your financial goals. This along with the level of risk one is willing to take while investing is what dictates the rate of return one should chase. Having either an over or under-par risk profile can be detrimental to the final corpus created.

3. How much do you need?

Estimating the amount of money required in the future is very important. A thorough assessment of one’s current lifestyle and needs must be done, following which inflation must be considered. This ensures that one doesn’t fall short of money in the future or cramp up their lifestyle in the present.

4. When will you need the money?

Money can be needed at any time. As such, certain goals need to be set to make sure that you have enough funds to combat whatever need arises. This can be done by setting specific goals and a fixed end date. This way specific needs such as funds for education, home, and the car can be prepared for and emergencies too can be tackled with relative ease.

5. What do you want to leave?

For a lot of people, leaving behind a legacy that will be remembered fondly is very important. It’s like leaving one’s stamp on the future. And one of the best ways to do this is to ensure that your future generations are secure. By planning the right way, it is possible to lead a comfortable life in the present AND provide sufficient for future generations.

 

While only five questions might seem insufficient to build your entire financial future upon, they can be thought of as five separate choices that provide the necessary balance to your plan. There definitely are many more questions that can be asked but these basic questions are difficult enough to answer by themselves and they must be truthfully answered to get the best results.

The hallmark of planning this way is that the focus isn’t on investments and their rate of return. This works because the rate of return is only a small fraction of the investment equation. Several other factors like, “Can I make a trade-off if I don’t want to take the risk of investing in the stock market?” Or “Is it possible for me to save more or if not?”, “Can I retire a little later or think about pursuing a second career?” must be considered.

Building a financial portfolio cannot be the single-minded pursuit of the highest available returns. It requires forethought, frequent course corrections according to the demands of the situation, and more than anything else, an effort to maintain a healthy balance.

10 Common Mistakes That Women Make About Money

The Indian woman is quite possibly among the best money managers in the world. Whether you look at the smallest household in a remote village or an ultra-modern family living in the city, the Indian woman has always adopted and followed various methods of saving to cater to her family’s needs over generations. From the money that is handed to a housewife to manage the household expenses, small portions are cleverly set aside, irrespective of the woman’s knowledge, education or literacy. She is capable of saving money for a contingency or for a need without anyone teaching her the same; she just learns it instinctively. However, with changing times, despite our cultural reverence for saving, modern Indian women are becoming increasingly prone to financial mistakes. Here are the 10 most common ones women commit when it comes to money. These, most often, work in tandem with each other.

 

1) Leaving all the planning to the man

  • In most Indian families, money management is still very male dominated. Generally, two scenarios prevail; one where either the man doesn’t want the woman to know everything or the other where the man is more than willing to teach but the woman is unwilling to learn and understand. This could be because paying bills, tracking the payments, checking from where money needs to be received and how much, doing online payments, dropping off cheques, depositing cheques/cash in the bank, withdrawing cash from the bank/ATM, maintaining records all this sounds boring and tedious. But they also might not have the time to dedicate to these jobs because of their work at home.
  • There is also the aspect of shame. Can you imagine doing all this yourself if you were alone and there was no one to help you do it? How dumb would you sound if you asked someone – at a “not- so-appropriate point in life” – how do I make a credit card payment, or how do I pay my electricity bill online? But this doesn’t matter. Even if you don’t need to do this yourself, you need to be aware of how to do daily transactions. Don’t leave this for tomorrow; understanding banking transactions, making payments physically or online, knowing who owes you how much and how much your family owes someone is important. All this information must be known by both, the man and the woman in the house.

2) Not understanding math

  • Most women are reluctant to understand or retool their understanding of basic math. Handling basic money transactions such as buying vegetables and paying parlour bills is a breeze but when it comes to paying home loan EMIs or taxes, women get scared of seeing complicated figures and refuse to broach the topic and understand it, even though it might not be too difficult to understand.
  • Why does this happen? All you need to do is be patient and understand the workings and the calculations. In the Internet era, things are going to speed up in terms of money transactions and one needs to be able to do math to understand how much he/she is paying for a product or service to avoid being duped by anyone. Don’t shy away from refreshing your math skills or doing your calculations. Slowly, with practice, you will get faster but if you avoid doing this, things will progressively get worse.

3) Always on the look-out for deals, especially free deals – decision making starts at the price

  • When you go to buy your vegetables, you check them, bargain and go for the best value for money. Why is it that when someone offers you an “ek pe ek” free deal, you lose your sanity and assume this is the best deal by default? Is it simply because it “seems’ like a better offer? Getting the cheapest is not necessarily the wisest thing to do. You can get conned into very big scams; of buying expensive jewellery, a house, expensive insurance policies or white goods, if you get taken in by bargain deals. Focusing on smaller things and not looking at the big picture is not always a smart thing to do.
  • ‘Special deals’ are the reason why most women are taken for a ride. For us, everything seems to begin with the price and not with what is the quality of the product. Therefore, men score over us when they can walk into a store and pick the one thing they like the best at the first glance. Women keep pondering about the price and the product’s worth. Why should price be the focus when you are clear about what you need? Very often you buy things you don’t need just because there is a deal going on and then later you wonder what you are thinking of while making the purchase. It’s like the salesman knew your weak point about looking out for a bargain and conned you with a hair dryer when you are actually bald!!

4) Inertia, maintaining status quo – not taking out time

  • As an extension to not wanting to do anything with money management, staying put and postponing things that you have to learn to do is a big issue with women. This is never at the top of the priority list or it’s always last on the list of things to be done. It doesn’t feel exciting or easy enough to do so you keep pushing it for later and so it never gets done.

5) Not enhancing one’s financial knowledge

  • Usually Indians learn the basics about money from their parents. Today’s younger generation need more training on money since we are in a world that’s way ahead in terms of business, economy and competition. One needs to be aware of various concepts of money to be financially smart today. This could be through reading, watching some good TV shows or taking help from a certified financial coach.

6) To think you know everything

  • Today’s women who are well educated i.e. are either CAs or MBAs or are well-placed in good jobs or run their own businesses – think they know it all. I have come across many women who are unwilling to listen to others and understand what costly mistakes they are making with money, large portions of which belong to their respective families. They feel they know it all and they don’t need to listen to professionals in the business of managing money to consider their options.
  • Professional, seemingly savvy women and the rest who don’t claim to know much, are equally vulnerable to acting on tips, wrong advice from all and sundry – right from your friendly neighbour to your broker to your insurance agent. This could lead to a huge hole in your pocket. It’s always wise to hire a good professional financial coach and get good unbiased advice. 

7) Making an expense budget but not a savings budget

  • We have been taught how to write down our expenses and keep a watch on the same month to month. The idea behind this is to know if you are over-shooting your expenses in a particular month, when compared to the rest of the year; so you may save some money in a month and you may fall short the next month.
  • A better way to manage your budget is to decide how much you wish to save from your monthly income. Fix a percentage of the same. For example, if you get Rs. 10,000 per month, you decide to save 25% every month. So, you save Rs. 2,500 and spend only Rs. 7,500 per month. You need to figure how much is the percentage you wish to and can comfortably save every month for the future. This automatically curbs additional expenses and also helps you save for emergencies and other specific needs for the future. The best way to do this is through SIPs i.e. Systematic Investment Plans where the money gets automatically debited from your bank account at the beginning of the month as soon as you receive it.

8) Rather spend than save for the future – live for today

  • This is a common feature of the younger ‘moneyed’ generation. Women who earn well are living well for just today and do not care about tomorrow. They would rather have all the latest gizmos, gadgets and consumables than derive value out of their acquisition till it gets a little old. Envying the neighbour and getting the latest before she gets it has become a fad. This only burns a deeper hole in your pocket and prohibits you from getting what you really want and have planned for later in life.

9) Someone else will provide for me – why be financially independent?

  • To live on one’s own earnings, to provide for one’s needs, is a thing of today. Most women don’t plan at all for tomorrow. They think either their parents or brother or spouse and then their kids would look after them for the rest of their lives. They don’t believe in wanting to contribute to the family corpus that would be needed especially for their old age and health. This is a huge mistake. To follow one’s passion, to do what one really derives happiness and satisfaction from should eventually help you in earning for your needs and dreams of the future.

10) Not being aware of the need to plan finances

  • Each and everyone needs to plan for their financial future. You need to list down goals that you wish to achieve in life. For example, I need to buy a car worth Rs. 4 lacs in 2015. Quantify your goals. Write down the year you need it. Then you can start working towards saving for it. Keep on revisiting and revising your goals, tick them off when they are done and you will feel a sense of achievement that is unparalleled because you managed to accomplish the goal with your own hard work and money.