Three Key Factors that decide how we achieve our financial goals

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All of us dream. Some of our dreams are serious enough to become goals and like it or not, many dreams are financial. That is they require money to implement. Here are three key factors that decide how well we can achieve our financial goals. Although each individual is different, there are some similarities. This post is inspired by a discussion with fee-only SEBI registered investment advisor Swapnil Kendhe.

Here are the three Key Factors that decide how we achieve our financial goals

1: Being debt-free for the first few years of earning plus small investing

2: Understanding the difference between a job and a career

3: An understanding, co-operative and non-interfering life partner (if you choose to have one)

Before we begin, it is crucial to recognise that we cannot control everything that happens to us. Our role/responsibility in all of the above is only partial. Many cannot avoid debt even before they start earning. Most of us settle for a job instead of a career because of family circumstances or because we do not know what to do with ourselves – after school, after college or even now (like me). How our life partner will turn out is, well pot-luck. The point of this post is only to recognise the importance of these factors. Often, not much more can be done about it. However, if you are less than 30, chances are that you have time to turn it around. If you cannot, regret will not help.

1: Being debt-free for the first few years of earning plus small investing

Building wealth depends on two factors primarily: when you start investing and how much you invest. Where you invest is important, but secondary.

Most young earners today start their earning careers in debt. Aside from an education loan (which is, in one sense an investment), these are car loan/personal loan or credit card debt. There is a home loan too but is often a bit down the line, so not too bad.

If you could repeat, if you could avoid paying EMIs for the first 5 years after you start earning and invest only what you can  (enjoy your spending), it will make a huge difference to the corpus you will create 20 years or 25 years later.

Rs. 12,000 a year invested at 10% return for 20 years gives about 6.9 Lakh. If you had started 5 years earlier, the corpus will be 1.7 times higher. If you had started 10 years earlier, the corpus will be about 2.9 times higher. Time is not just the ultimate currency, but it is also the ultimate wealth builder.

2: Understanding the difference between a job and a career

In the early 90s when Star TV was it its infancy, I saw a movie scene that changed my perspective on work. A mother tells her young son, who says he will go to a job after college

not a job, son a career

Unfortunately, I am unable to recollect the name of the movie. That scene made me understand the difference between a job – doing as told and a career – a chance to progress from “doing as told” to tell others what to do. There are of course many other definitions for “job vs career”.

Swapnil Kendhe’s point is: If a person spends several years after college focussed on building a career, she can start investing late and catch up comfortably as the salary would be pretty high (but would arrive late). Completely agree.

I started earning at 32 and spent 11 years after school pursuing BSc + MSc + Phd + post-doctoral assignments to land a tenured academic position. Though I started investing only by age 34, I could manage.

The point is, young earners even if currently employed can still appreciate the importance of a career and develop their skills. In today’s world, I would wager that it is still possible for anyone below about 40 years of age to move from a job to a career. This transition will cost time. However if productive, the extra money can be put to good use.

As a parent, our job should be to gently help children understand this difference and push them to work hard. It is not easy and not always possible, but try we must (more on this later).

3: An understanding, co-operative and non-interfering life partner

An understanding spouse is both a lever and fulcrum combined to move the world! There is no greater gift for those who to share their life. Unfortunately, it almost always a gift. We either get lucky or we don’t. If we are not lucky, then we will have to make do with what we have and hope for the best.

Is there anything that I can do?

1: Avoid debt for at least the first few years of earning

2: Whether you are in a job or career, learn something new. These days, it is easy to make money with new/existing skills. You never know, your skill could become your new passion and your career!

3: Discuss your goals dreams and nightmares with your partner or partner-to-be. Be ready to change and meet her half-way.

May the force be with all of us.

Re-Assemble: a recap of the steps

Many of you may be on vacation this week. Now would be a perfect time to work on these steps.

Step 1: Listing your goals dreams and nightmares

Step 2: Lay the Foundations to Get Rich creating an emergency fund

Step 3: How to buy Term Life Insurance

Step 4: How to choose a suitable health insurance policy

* Apollo Munich Optima Restore Benefit vs Max Bupa Re-fill Benefit 

* Star Health Comprehensive Insurance vs Religare Care Comprehensive Insurance

Building a health insurance comparison chart + Cigna TTK vs Royal Sundaram Health Policies

*  How to buy a Super Top-up Health Insurance policy

How I selected a health insurance policy

Why we all need a corpus for medical expenses and how to build it

Step 5: How to select a credit card for maximum benefit

Step 6: How to track monthly expenses and manage them efficiently

Step 7:  How to close your loans and live debt-free

Step 8:  How to buy a personal accident insurance policy

Step 9: Are you ready to let go and let your money grow?

Step 10: Investment planning case study 1: How to create an investment plan

Step 11: Case study 2: Retirement planning for 27-year old Amar

Step 12: This post.


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About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. 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)
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