November is the best time to make resolutions, not January. If you keep at it regularly, it will become a habit that you cannot shake off by January. So what better day to start than Diwali?! Here are five important money steps that you can consider working on from today and perfect by Jan 2019.
1 Work towards a second source of income
No, I am not referring to passive income. No such thing. Start today to list your skills and talents that people will find useful and pay for and think about how it can be turned into an active source of income in the coming years. If you work on this bit by bit and give yourself enough time, it will grow to a sizeable income in the next 5-10 years (no shortcuts). Your initial target should be to generate enough secondary income to match your monthy expenses. I would suggest that you look into yourself for ideas and not at what others do. In any case, if you are interested, here are some real-life examples: How to Make More Money In India: Forty real examples
As with investing most people seem to be impatient about getting that second income. What is the hurry? This is your long-term fall-back plan. Take your time, think about it, nurture the idea and start slow.
2 Start contributing 5-10% of your monthly income in an emergency fund
From 2019 onwards, we should not touch our investments for our emergencies and if possible not disturb the monthly investments that we make too. To work towards this, start contributing 5-10% of your monthly income into an SB account or liquid fund or a flexi-deposit account. Anything will work. Let us not be immature and ask “which is the best way?”!
3 Understand the importance of inflation for your long-term financial goals and find out how much you need to invest for them
All you need to do is to download the Freefincal Robo Advisory Software Template and punch in your numbers. You can create a start-to-finish financial plan and use my handpicked mutual Funds September 2018 (PlumbLine) if necessary. The amount that you need to invest may look too much now, but don’t worry. As long as you manage the next step, you should be doing ‘okay’.
4 Try to increase your monthly investment by 5-10% in 2019 and every year hence
Even if you cannot manage the total investment mentioned in the robo template, try to increase your current investments by 5-10% in 2019 and every year henceforth. It is tough, but no point setting yourself easy goals. Remember wealth is built from the capital you put in, how soon you do so and patience.
5 Think real hard before taking on any kind of debt
Debt is essential to the fabric of our existence and our economy today. However, it comes with a cost. The more EMI you pay and the longer you pay it for, the less you will be able to fund your future goals. So the best time to get take on debt (for a home or a car) is when your monthly investments will not get disrupted. So, understand the amount you need to invest for your long-term goals, start investing and then take on debt. You will have a much better perspective that way.
One more: Go on an information diet and focus on experiences
How well you manage your money depends upon how clear you are about your objective. The less you know about recent developments, the less you know about what experts have to about future market movements, the better you can manage your money. See: The Information Diet: How Less Information Can Make us More Informed
Therefore, unsubscribe from my blog, get out of Asan Ideas for Wealth (many smart ones have), do not follow any “finance guy” on social media or Whatsapp groups. Focus on experiences that will make you happy. Find a way to be creative and useful to others every single day. That would be the best use of our most precious resource – time
Wish you all a happy and safe Diwali. Even if you finished your Deepavali yesterday, today is a good time to work on this. Trust me, I did and it changed my life. Many readers have are in much better control of their time, life and finances.
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About the Author
M. Pattabiraman(PhD) is the author and owner of freefincal.com. He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Follow @freefincal “Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis.
He conducts free money management sessions for corporates and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)Connect with us on social media
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Freefincal has original unbiased, conflict-of-interest-free, topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. No promotional content. We do not accept sponsored posts and link exchange requests from content writers and agencies. This is our privacy policy Our website is non-profit in nature. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.Do check out my books
You Can Be Rich Too with Goal-Based Investing
My first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
My second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earnerThe ultimate guide to travel by Pranav Surya
This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for ₹199 (instant download)Free Apps for your Android Phone
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this is too good advice Dr. exactly what i require. thanks
Thank you
Do you have opensource format of your calculators? Can you make a copy of your calculators in opensource format(using libreoffice a free and opensource office suite? Tried opening your calculators in opensource office suites and it doesnt works.
Any excel sheet without macros with work anywhere. Those with macros will work only on Excel.