Taking charge of your finances
It is important to gain some control of your financial life. One should have the agency to drive income, expenses, savings, investments, assets and charity is a good financial habit. Learn to enjoy making meaningful money decisions and make it a habit.
Learn that macros matter more than micro management of your money. Earnings that align to your potential are more important than the tax deduction; being deliberate with your spending decisions is better than writing daily accounts of your expenses; and so on.
Spending in moderation
Learn to enjoy both spending and saving so you make it a habit to balance both. Too much reckless spending leads to credit card debt and suffering from usurious interest burden; being too tight fisted with your earnings leaves you needlessly frugal when you can afford some comforts.
It starts with you
The money you earn is mostly allocated to the various providers of goods and services. When you set aside money to save and invest, you pay yourself.
Many buy ill-advised schemes merely to save taxes, without considering whether they are beneficial for their own merit. Tax savings alone won't make a poor investment a good one.
Take the time to see their growth and realise the exhilaration of riding with the value of a good business. Equity investing is a habit that will provide your money a great chance to appreciate.
Keeping records of the investments, tracking them periodically, ensuring that the processes associated with them such as nominations and joint holdings are in place, makes it easy to monitor, review, rework and eventually bequeath your assets.
Invest in conventional instruments
A bank deposit, an index fund, an SIP are all simple default options that ensure that your money is deployed and made to work without lying idle. Make it easy to push your money into pre-chosen default options.
Review investments once a year
You will find that you can fit your financial life and wealth in its entirety into a single worksheet of four columns if you simply listed chronologically the worth of your assets at the start of a year, accretions, drawdown and the end value.
Make it a habit to ask questions and figure why the investment in front of you will make some money; how that money will be made; what the charges and expenses are; who will run the operations and what might be the risk. Do not blindly sign off papers that are proposed by others.
Align your expenses to your income, current and future, and do not live in denial that your debt will be pardoned and vanish. Pay off high-cost debt; borrow only if you can repay; and be realistic with your abilities to spend.
Earmark some for charity
Giving is a habit to develop for life, so there is meaning and purpose. Consider giving a portion of your income to the less privileged around you. Enjoy making yourselves with your own habits.(Uma Shashikant is CIEL chairperson and ET Contributor)