I love managing money. I love tracking expenses. Almost daily I track my expenses in excel sheet. Every time I get paid, I setup necessary transfers to various savings accounts for different savings goal. I spend time to make sure that there are sufficient funds in respective bank accounts so that none of the ECS or cheques gets bounce.
So, I am always in control of my money. My daily tracking makes sure that I am never spending more then what I am earning, I am not paying any unnecessary late fees on bills or any bank charges because of bounced cheque or ECS. But only this is not sufficient for my financial health.
A key aspect in Sound Financial Health is that one should know where one wants to be in next 10-15 years. One should know that what are his financial goals that he wants to achieve in next 10-15 years. The compiled list of long and mid term goals is the first step that is required before they can be achieved.
Once these are set, it's important that other then tracking expenses and setting up transfers, one spends some time understanding various tools how these goals can be achieved. If you don't know anything about real-estate market and one of your goals is to buy a house in next 5 years, then please make yourself aware with know-how of dealing in real estate. Same goes with Stock Markets, take out some time and read from Internet or so many good books on investing.
And as the last thing, do review your progress on the goals on fixed intervals, say every 6 months.
This along with managing expenses on daily bases will give you good and sound financial health.
Showing posts with label future. Show all posts
Showing posts with label future. Show all posts
Saturday, February 27, 2010
Sunday, February 7, 2010
Lets get rid of these things - Amen
In one of the articles in Times Money, they list some of the things that they might think that will disappear in coming years. That was fun to read. In this post I am trying to come of with my own list of the things that I think will vanish from India in coming years. I am also picking some from their list which I would love to see in Future India. :)
No More Water Needed to Clean Clothes
No More Cheques
No More Land Lines
No More Corrupt Politicians
No More Depending on Rain for Harvest
No More Bribes
No More Discrimination in Sexes
No More Dowry Deaths
No More Eve Teasing
No More Poverty
No More Bad Roads
Well this list can go on. How about you, what all things you will like to see vanished in coming years?
Friday, February 5, 2010
Don't delay savings - even small amounts matter
Saving money seems to be very tough. There are so many excuses to not save for future.
1) My current expenses are very high.
2) I am too young for retirement.
3) I believe in savings in lump sum, but I am never able to save enough lump sum.
4) I have just started my job.
This list can be endless. The circumstances that a non-saver gives as an excuse also exist in a saver's world. What differs is the attitude to save and understanding of basic rules to build wealth in long term, Compound Interest (CI).
CI has a magical power that works every time you don't want to cheat the system. If you will continue to be diligent with savings, CI will never let you down. And when you will let CI work for you for some years, you will end up with good sum of money. Just for illustration, consider following scenarios and results:
Example1:
A is 21, just started her job. She is not earning very high salary, say 15K per month. She for sure knows if nothing exceptional happens, then she want to work for next 25 years. She will be earning more with every passing year. How can she make CI work for her? Depending on her liabilities she might have some fixed expenses. Let's assume that she can at least manage to save Rs.10 per day, if she has few responsibilities on her shoulder. If she is a freebie, she can save even more.
Scheme1:
A saves same amount all her working life span, for 25 years and ends up with big lump sum compared what she invested. Click at the photographs for detailed look at the returns.
Scheme2:
A increases the amount she is saving by just one rupee every year, for 25 years and ends up with big lump sum compared what she invested. Click at following photograph to have detailed look at the returns and difference in returns of scheme1 and scheme2.
Example2:
A does not listen to advice about CI and now, at the age of 35, is worried that she doesn't have any money to quit job in 10 years. She decides to start saving now, for rest of her working life. As she has never saved, she is facing what everyone faces initially, difficulty to cutting down expenses, though her salary is many a times what she started with. She can somehow manage to save Rs. 500 per day. With that she manages to get Rs. 2698007 at the end of tenure which is almost same as she could get with saving Rs. 100 per month with scheme1 and scheme2, assuming same rate of interest.
That is the power of compounding; it lets you save money without much of the pain and with the maximum gains.
If you are just starting out, make the use of power of compounding. Start with a small amount, if not big, but don't waste on time. This will help you in the long term.
1) My current expenses are very high.
2) I am too young for retirement.
3) I believe in savings in lump sum, but I am never able to save enough lump sum.
4) I have just started my job.
This list can be endless. The circumstances that a non-saver gives as an excuse also exist in a saver's world. What differs is the attitude to save and understanding of basic rules to build wealth in long term, Compound Interest (CI).
CI has a magical power that works every time you don't want to cheat the system. If you will continue to be diligent with savings, CI will never let you down. And when you will let CI work for you for some years, you will end up with good sum of money. Just for illustration, consider following scenarios and results:
Example1:
A is 21, just started her job. She is not earning very high salary, say 15K per month. She for sure knows if nothing exceptional happens, then she want to work for next 25 years. She will be earning more with every passing year. How can she make CI work for her? Depending on her liabilities she might have some fixed expenses. Let's assume that she can at least manage to save Rs.10 per day, if she has few responsibilities on her shoulder. If she is a freebie, she can save even more.
Scheme1:
A saves same amount all her working life span, for 25 years and ends up with big lump sum compared what she invested. Click at the photographs for detailed look at the returns.
Scheme2:
A increases the amount she is saving by just one rupee every year, for 25 years and ends up with big lump sum compared what she invested. Click at following photograph to have detailed look at the returns and difference in returns of scheme1 and scheme2.
Example2:
A does not listen to advice about CI and now, at the age of 35, is worried that she doesn't have any money to quit job in 10 years. She decides to start saving now, for rest of her working life. As she has never saved, she is facing what everyone faces initially, difficulty to cutting down expenses, though her salary is many a times what she started with. She can somehow manage to save Rs. 500 per day. With that she manages to get Rs. 2698007 at the end of tenure which is almost same as she could get with saving Rs. 100 per month with scheme1 and scheme2, assuming same rate of interest.
That is the power of compounding; it lets you save money without much of the pain and with the maximum gains.
If you are just starting out, make the use of power of compounding. Start with a small amount, if not big, but don't waste on time. This will help you in the long term.
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