Feb 16, 2007 06:54 PM
5060 Views
(Updated Feb 19, 2007 01:51 PM)
How do you manage money?
This is a question most middle class citizens around the world fail to ask themselves.
I myself didn’t feel like asking this question until I got married and had a kid. Now I am more interested to manage my own money. But one thing I observed is it is very easy to manage money when you are single. So for all you guys who are single and rocking please take this advice seriously and follow your own path to financial abundance.
The following is applicable to Indians even though I have fair bit of knowledge and experience in dealing with American life in relation to money.
1) Start to save early in life preferably even before you start earning or at least immediately after you start earning.
2) Invest in high growth areas at a younger age. Like real estate(Govt approved) and Stocks.
3) Invest in Life insurance from a young age to keep the premiums low. Also do not go for short term payments as you will need insurance again after this policy matures and your premium will be costly at that age. Make sure you choose policies where you pay premiums for as long as possible. Go for nationalized insurance companies they do not have hidden charges.
4) Pump as much money into 2 and 3 based on your risk tolerance profile before you get married. Then you can be assured that you have made very stable beginning for your responsible adult life.
5) Shopping: 10 Yrs back ladies were the driving force for shopping. Now it looks like everybody shops regardless. I am not against shopping. Shopping drives the economy and without growing economy there would no jobs. But shop wisely. Shop within budget, Shop for needs first and then wants within the budget. The order in which you have to spend money is Needs-Saving-Charity-Wants. Unless you are the head of a gaming magazine the latest PS3 is a luxury want. The pastry is a small luxury but luxury nonetheless. I hope you don’t want yourself to be poor when the economy grows at 10%.
6) The trap that people with no financial control go into is unnecessary payments.
a. Interest payments on credit cards for purchasing ‘wants’.
b. Paying monthly rentals on services where there are options without rental like cell phone prepaid is preferable over postpaid, credit cards with no fees are preferable over cards with fees.
c.Going for loans for small ticket items like bike, computer etc unless they somehow make money during the loan payment period.
7) Saving tips –
a. Go for local groceries which are fresh and mostly not GM foods rather than going for food bazaar or food world. You can see 10-20% markup on several other items other than the ones advertised.
b. If you are getting a deal on normal days that is a real deal than the one you are getting on special promotional days advertised. These you will get in your local shops than braded super markets.
c. If you are a habitual impulse buyer like me then develop a new habit of delaying your purchases as much as possible. Especially the big ticket items.
8) The big advice that really makes big difference.
a. Build a home that is just right for you. Too big a house the furnishing and maintenance costs will bite. Too small you will have to flip it in a shorter period and it will add to your cost of housing unless you are going to keep and rent the first one.
b. Don’t trade too often the blue chip stocks or you will make your broker rich.
c. Buy second hand items like Cars & bikes which are 1-2 year old. With electronics don’t take this risk.
d. Get an influential and rich father-in-law.(No Kidding)
After following all the above advice if you are able to save money put it back in advice 2 and 3.
All the above may not guarantee you a Bentley like the one Small B drives nowadays. But most likely you will have financial security and money for the rainy day. And you will be able to provide adequately for your near and dear ones. Most importantly how you manage your money teaches your children how they should manage their money.
If you inherited filthy amount of money and have a regular income that is again a filthy amount then sorry for wasting your valuable time. I did'nt hope you will read this review.
Disclaimer: The above advice is derived from mistakes committed by the writer over the past 12 years.
