₹e-Assemble Step 2: Lay the Foundations to Get Rich

₹e-assemble is a video series covering the basics of money management and goal-based investing for absolute beginners. Last week, in step 1 we consider the need to list our Goals, Dreams and Nightmares. In part 2, we will consider the essential foundations for getting rich and staying rich.

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When we talk about getting rich or building wealth, we often focus on investments – where, when, how much, how effective etc. While that is important, an unexpected expense can result in redemptions. So before we talk about investing, we need to anticipate the unforeseeable! Account for possible unexpected/unsavoury expenses.

The next four steps are:

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  • Building an emergency insurance (discussed in this video)
  • Getting life insurance
  • Health insurance
  • Accidence insurance

Once these essentials are in place,  we would feel that much more secure and in peace. Debts can be handled better and investing started when possible.

In the video, I list common ways in which emergencies can arise. It is not possible to have a fund large enough to accommodate all of them at the same time. However, it is important to be able to handle at least two of them simultaneously. This means accumulating an emergency fund for life!

When I talk about this, someone in the audience always goes, “but life is uncertain, no? No matter how much we plan, there will always be something that we did not anticipate, so why worry too much?”

Well, only when we can prepare for sudden expenses that can be anticipated, can we be ready (mentally and financially) if our entire wealth becomes an emergency fund!

Please do not get scared of what I am trying to say below. Start small and build your emergency fund gradually. Remember that this would be one of the best investment that you would ever be making!

There were some focussing and sync issues in the youtube video of the first part. Hopefully, things have improved now. The drawings that you see on the left side are my son’s. My entire house is filled with his doodling.

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Would you like me to speak on the basics of money management to your co-workers? Then you could write to me at freefincal [at] gmail.com. I do not charge a fee for this and only request that my travel expenses be compensated.

Click this to follow other steps of ₹e-assemble

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8 thoughts on “₹e-Assemble Step 2: Lay the Foundations to Get Rich

  1. Hello Pattu,
    I always follow your blog and now this video series is just awesome.

    I have a suggestion while you are building this video series – pls consider people who are earning outside India and still wants to manage assets/funds/LIFE within India.

    The reason I ask is, I always find it difficult to fill out input sheets when it asks for income and expenses. It wont be correct to convert foreign currency directly into INR to fill those sheets. Not sure how to manage future financial aspects while earning outside India. Maybe, you will have a better idea to solve this 🙂

    Thanks again for all your efforts.

  2. Summing up all emergency funds components like
    12 months monthly expenses
    50% of Sum assured Medical cover
    Appliances list values
    ( I do not have any EMIs !!!)

    Altogether the amount is equal to my Son Education goal value (at todays cost.)

    Should i map existing MF holdings to an Emergency funds.

    and then start fresh investments for other long term goals.

  3. Regarding Appliances breakage corpus – Should i sum up all the appliances values and keep it as target . or Just very few expensive Appliance values as target.

    Because counting all Appliances values requires huge corpus 🙂

Do let us know what you think about the article