Secret to save for long term goals, like retirement, kids studies etc, is simple. Start early, be disciplined in savings, increase the saving amount as your income increases and adjust savings allocation periodically.
Start early because it gives lots of freedom. First you have abundant time in your side and hence you can use power of compounding for you. Also, because you will be starting early, you can start with small amounts.
Being disciplined is important because you are trying to save for long term goal and it might happen that short term goals sweeps away all of your money. Hence, automate the savings as much as possible and then set short term goals based on leftover money.
Adjust your allocation as time passes. For example if you started to save 10% of your monthly income, increase it every time you get a hike.
Last but not the least, review your allocations periodically say once every year and do necessary changes. As and when you are approaching your goal, reduce risk in your portfolio. If you started with 70-30, 70% in equity and 30% in debt market, with age change this allocation to 50-50 and then to 30-70 eventually.
These all simple steps will make sure that you can save for any long term goal without much of pain.
Saturday, May 8, 2010
Friday, May 7, 2010
Handling Non-Fixed expenses in budget
Make use of fluctuating prices to build a hedge fund. I make monthly budget for my family and then try to run my house within that budget limits. Two things that ruin my budget most of the times are: Unplanned emergencies (well can emergencies be planned? ;)) and non-fixed costs. Emergency fund can take care of former, but what about latter?
There are so many not-fixed expenses in a month. Electricity bill, fuel costs, medicines, grocery and so on. How I deal with them? I open up my last years excel sheet, take an average spending of every category, adjust it for 10% up (to account for inflation). This new amount is now my monthly limit for that particular category. It gets that amount per month and whatever is saved gets carried forward in next months.
For example, if my gifts annual spending of last year is say Rs. 24,000. Monthly average comes out to Rs. 2,000 and 10% adjusted is Rs 2,200. I know that particular month, assume October, is going to be cash intensive because I have maximum occasions and festivals in there. In every month starting gifts category will get Rs. 2,200. Whatever amount is left gets carried forward in another month and so on. By the time October comes I have already saved Rs. 10,000 in it and hence I will be able to handle festival season without much of budget skewing. In fact, what I also do it put that money aside in one money multiplier account so that in the mean time it can also fetch some high interest.
How about you? Do you budget on actual or on averages?
There are so many not-fixed expenses in a month. Electricity bill, fuel costs, medicines, grocery and so on. How I deal with them? I open up my last years excel sheet, take an average spending of every category, adjust it for 10% up (to account for inflation). This new amount is now my monthly limit for that particular category. It gets that amount per month and whatever is saved gets carried forward in next months.
For example, if my gifts annual spending of last year is say Rs. 24,000. Monthly average comes out to Rs. 2,000 and 10% adjusted is Rs 2,200. I know that particular month, assume October, is going to be cash intensive because I have maximum occasions and festivals in there. In every month starting gifts category will get Rs. 2,200. Whatever amount is left gets carried forward in another month and so on. By the time October comes I have already saved Rs. 10,000 in it and hence I will be able to handle festival season without much of budget skewing. In fact, what I also do it put that money aside in one money multiplier account so that in the mean time it can also fetch some high interest.
How about you? Do you budget on actual or on averages?
Thursday, May 6, 2010
vicious circle
It says ‘life is to move on’ and I decided to move on and made new mistakes and it again told me to move on and I did and made new mistakes...
Life is a vicious circle, you do few things, some will be good from one outlook, some will be not so good, and some will be bad. You will realize your gaffe, your constraints and will try to move on. To move on, you will make more picks, followed by more actions. Again, few of them will be good, few not and life becomes a vicious circle.
No matter what you do, what you choose, you will have grudges, grievances, guilt’s, tears and smiles. But you keep moving on as it says that life is to move on.
Only way I can see to actually move on in life is not and never to look back in life. No matter what all says, even those who used to matter most at some time, don’t look back, as it also says that ‘don’t look back, because that is not the direction you are traveling in.’ In life, 100 people you will meet will not behave in a way you expected them to and similarly you can not behave in a way 100 others expect you from.
No matter what anyone claims, no one can ever completely understand your circumstances and what you went through. So, a learning hard learnt, never stop to or try to explain same to anyone. That will increase fault and stews and will make moving on difficult.
I said in one of my blogs that ‘expect and give a lot in any relationship, because that’s what makes a relationship stronger’, but one more conclusion I have drawn is, as soon as a relationship ends, get rid of all expectations from it. That is the true way to move on.
So cheer up and move on as it says ‘life is to move on’.
Last to say, 'life can be tough, circumstances can be tougher, keep on living with dignity, because there is no other way to live the life.’
Life is a vicious circle, you do few things, some will be good from one outlook, some will be not so good, and some will be bad. You will realize your gaffe, your constraints and will try to move on. To move on, you will make more picks, followed by more actions. Again, few of them will be good, few not and life becomes a vicious circle.
No matter what you do, what you choose, you will have grudges, grievances, guilt’s, tears and smiles. But you keep moving on as it says that life is to move on.
Only way I can see to actually move on in life is not and never to look back in life. No matter what all says, even those who used to matter most at some time, don’t look back, as it also says that ‘don’t look back, because that is not the direction you are traveling in.’ In life, 100 people you will meet will not behave in a way you expected them to and similarly you can not behave in a way 100 others expect you from.
No matter what anyone claims, no one can ever completely understand your circumstances and what you went through. So, a learning hard learnt, never stop to or try to explain same to anyone. That will increase fault and stews and will make moving on difficult.
I said in one of my blogs that ‘expect and give a lot in any relationship, because that’s what makes a relationship stronger’, but one more conclusion I have drawn is, as soon as a relationship ends, get rid of all expectations from it. That is the true way to move on.
So cheer up and move on as it says ‘life is to move on’.
Last to say, 'life can be tough, circumstances can be tougher, keep on living with dignity, because there is no other way to live the life.’
Wednesday, May 5, 2010
What is your financial personality?
I came across lots of people in my daily life and no two are similar. But when it comes to financial pattern, I see some common types of personality:
Dominant Miser - They are the one's who will never offer you an extra scoop of ice-cream over smoothie when they are treating and will always order the expensive most thing on the Menu when someone else is treating. They never forget when others owe them money but will never remember if they owe the money to you. And they are so dominantly miser, that even their partners will dread spending in their presence. (A very personal experience of a real-life couple I know.)
Recessive Miser - Their heart aches to spend money. They will never buy a gift for you on any occasion. They just don't feel the need to buy something for this occasion. But when in the group, they are absolutely OK to pick the tabs. When they go shopping with their partner, they find it hard to spend for themselves, then for their home and hardly any problem in buying for the partner. Buying gifts for others if they are not around is still a problem. So basically they are miser, but recessive in a way because it is not transferrable to their partners.
Recessive Spender - Personally I find them most irritating. They are the ones who will not think twice before buying something for themselves. They will have latest gadgets, branded clothes but will never have money when it comes to treating others or picking tabs when in group. They never refuse a treat from you but will be super busy post 2 months of their birthday. Their partners have to save because of all the financial goals. Not FAIR! I remember that Fabulously Broke once mentioned a story of her brother who falls in this category. And no I still not read her.
Dominant Spender - Well, they are the ones who love spending money. They are the one's who will not think twice before buying something for them, for their family and friends. They are so cheerful doing it that their partners feel obliged. When they are around, even miser partners want to splurge on themselves.
I think I am little bit of Recessive Miser and little more of Dominant Spender.
How about you? What kind of person are you?
Dominant Miser - They are the one's who will never offer you an extra scoop of ice-cream over smoothie when they are treating and will always order the expensive most thing on the Menu when someone else is treating. They never forget when others owe them money but will never remember if they owe the money to you. And they are so dominantly miser, that even their partners will dread spending in their presence. (A very personal experience of a real-life couple I know.)
Recessive Miser - Their heart aches to spend money. They will never buy a gift for you on any occasion. They just don't feel the need to buy something for this occasion. But when in the group, they are absolutely OK to pick the tabs. When they go shopping with their partner, they find it hard to spend for themselves, then for their home and hardly any problem in buying for the partner. Buying gifts for others if they are not around is still a problem. So basically they are miser, but recessive in a way because it is not transferrable to their partners.
Recessive Spender - Personally I find them most irritating. They are the ones who will not think twice before buying something for themselves. They will have latest gadgets, branded clothes but will never have money when it comes to treating others or picking tabs when in group. They never refuse a treat from you but will be super busy post 2 months of their birthday. Their partners have to save because of all the financial goals. Not FAIR! I remember that Fabulously Broke once mentioned a story of her brother who falls in this category. And no I still not read her.
Dominant Spender - Well, they are the ones who love spending money. They are the one's who will not think twice before buying something for them, for their family and friends. They are so cheerful doing it that their partners feel obliged. When they are around, even miser partners want to splurge on themselves.
I think I am little bit of Recessive Miser and little more of Dominant Spender.
How about you? What kind of person are you?
Kurukshetra Trip - Some Memories
I promised to post my kurukshetra trip photographs but delayed it for so long.
Here are some of the best moments captured in these beautiful photogarphs.
This one is some kund in kurukshetra (I am sorry but i have really forgotten its name:-()
This one is my favourite favourite of all.
This is shekh chilli's makbra, an awesome place to visit.
Well what can I say about this, "Hare Krishna Hare Ram"
From the place where lord krishna delivered Geeta Updesh.
I hope you liked them.
Here are some of the best moments captured in these beautiful photogarphs.
This one is some kund in kurukshetra (I am sorry but i have really forgotten its name:-()
This one is my favourite favourite of all.
This is shekh chilli's makbra, an awesome place to visit.
Well what can I say about this, "Hare Krishna Hare Ram"
From the place where lord krishna delivered Geeta Updesh.
I hope you liked them.
Monday, May 3, 2010
2010 Goals Tracking - April End
These are my goals for 2010.
1)Continue learning new dishes to cook. One new dish per week.
2)Continue to be on budget.
3)Start saving for prepayment of mortgage. 2L should be saved for same.
4)Contribute to retirement as per the plan.
5)Be less obsessive on daily tracking of things.
6)Learn to swim.
7)Improve healthy eating.
8)Earning Rs 50250 (2010*25) extra in 2010
It's April end and let's see how am I fairing in these goals.
Goal 1 - Cooking - PASS - Finally.
Goal 2 - Budget - PASS.
Goal 3 - Save for Mortgage - PASS.
Goal 4 - Save for Retirement - PASS.
Goal 5 - Obsession for tracking - PASS.
Goal 6 - Swimming - Don't Know - Have dropped it for now. No mood for this. I am feeling low in energy almost all the time. :(
Goal 7 - Healthy Eating - PASS.
Goal 8 - Extra Earnings - PASS.
Recap:
January Recap
February Recap
March Recap
1)Continue learning new dishes to cook. One new dish per week.
2)Continue to be on budget.
3)Start saving for prepayment of mortgage. 2L should be saved for same.
4)Contribute to retirement as per the plan.
5)Be less obsessive on daily tracking of things.
6)Learn to swim.
7)Improve healthy eating.
8)Earning Rs 50250 (2010*25) extra in 2010
It's April end and let's see how am I fairing in these goals.
Goal 1 - Cooking - PASS - Finally.
Goal 2 - Budget - PASS.
Goal 3 - Save for Mortgage - PASS.
Goal 4 - Save for Retirement - PASS.
Goal 5 - Obsession for tracking - PASS.
Goal 6 - Swimming - Don't Know - Have dropped it for now. No mood for this. I am feeling low in energy almost all the time. :(
Goal 7 - Healthy Eating - PASS.
Goal 8 - Extra Earnings - PASS.
Recap:
January Recap
February Recap
March Recap
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