First, gain some control over your financial life. to have agency to drive your revenue, ExpenseSaving, investing, owning and donating is a good financial habit. Being in charge gives you the power to make decisions in your own interest. I regularly meet people who say they don’t know, or they don’t care enough, or don’t want to be closely involved, to know their options with money. Learn to enjoy making meaningful money decisions and make it a habit.
Second, know that macros matter and stay away from micro-managing your money. revenue Your ability to commensurate with your income is more important than the tax deduction; you are being intentionally Expense Decision making is better than writing a daily account of your expenses; Building a safety net is better than betting to make it big; Systematically allocating diversified asset classes will beat regular stock trading; And so on.
Third, learn to enjoy both spending and saving so that you make a habit of balancing both. Too much reckless spending leads to credit card debt and increases the interest burden; Being too tight with your earnings makes you unnecessarily frugal when you can easily afford something. While we mourn the spending habits of young people, we also know the untapped wealth of their parents who have not learned to spend.
Fourth, pay yourself first, always. The money you earn is mostly allocated to various providers of goods and services. As you buy, their revenue increases. What you make is not an indicator of your wealth; But whatever you keep adds to your wealth. When you set aside money to save and invest, you pay for yourself. Make a habit of putting yourself first while allocating your earnings.
Fifth, pay them taxes as applicable. Many misbranded schemes and products are sold with the label that they save you some tax. Many people buy these products simply to save tax, without thinking about whether they are beneficial to the best of their ability. Make it a habit to make decisions primarily to maximize your profits, your income, and your expenses. Tax saving alone does not make a bad investment a good one.
Sixth, take time to appreciate equity investments. Don’t give them away as speculative; And don’t get involved in day trading and mindless speculation. Look around you to ask which jobs are the most prestigious, which products attract you the most, and which businesses have practices that appeal to you. You will find the names of the businesses behind these successes. Take the time to watch their development and feel the excitement of riding along with the value of a good business. equity investment Have a habit that will provide a greater chance for your money to appreciate in value.
Seventh, complete the paperwork. Many people who love the joys of investing hate the paperwork that goes with it. Keeping records of investments, tracking them periodically, ensuring that the processes associated with them such as nominations and joint holdings are in place, monitoring, reviewing, reworking your assets and ultimately bequeathing your assets. Makes it easy to do.
Eighth, make money decisions easier by having the default option. A bank deposit, an index fund, a SIP are all simple default options that ensure that your money is deployed and made to work without being wasted. If you make it a habit to indulge in a complicated and involved process of choosing products to invest in, chances are that your money is lying idle in the banks. Make it easy to push your money to the default options already selected.
Ninth, review your investments at least once a year. You may find that you can perfectly fit your financial life and wealth into a single four-column worksheet if you list your assets’ value, rise, fall and final value chronologically at the beginning of a year. You will see the growth of your wealth in column 1, your savings and investments in the second, your life goals and spending demands in the third, and your net worth in the fourth. Feel comfortable checking this end result, and the decisions that led to this summary, at least once a year.
tenth, get into the habit of asking questions and understanding why the investment in front of you will make some money; how that money will be made; what are the fees and expenses; Who will run the operations and what are the risks. Do not blindly sign papers offered by others. If you make it a habit to take some time out with your investments, you will do better.
Eleventh, align your expenses with your income, present and future, and don’t deny that your debt will be forgiven and disappear. Behind every painful restructuring of personal loans of common people is the refusal to link expenses with income. Pay off high cost debt; Borrow only when you can repay; And be realistic with your spending abilities.
Twelfth, consider giving a portion of your income to the less privileged people around you. We live in times of very sharp income inequalities. A small amount in the hands of capable but poor people can go a long way. Enable health care, education, comfort and health benefits for those serving your homes. Giving is a habit to develop throughout life, hence meaning and purpose. The list is long and long enough to display in the second column. Good habits come from doing something over and over again until it becomes second nature. Enjoy making yourself out of your habits.
(The author is chairperson of the Center for Investment Education and Learning.)