The importance of making every rupee pay


We never realise what productivity and efficiency can do to improve our finances significantly. This is especially true of late-bloomers in financial planning.
| Photo Credit: VectorInspiration

Shyam Sekhar

We live in times when salary growth is higher than ever before. Incomes are rising fast and lifestyles rapidly upscaling.

Yet, we don’t seem to be translating our higher incomes into commensurate wealth. Clearly, most people aren’t conscious of their potential and are simply going with the flow.

They feel secure because their incomes are high and growing. This security is what stops them from critically evaluating their personal finances. But, life keeps changing, and we arrive at a point where we need to act fast. Usually, a crisis is what triggers the rethink.

Big-ticket expenses

Life circumstances, sudden bursts of big-ticket expenditure and expanding budgets make you wonder if everything is alright.

Rahul got this feeling when faced with an unexpected health event in the family. He was financially unprepared for the event and had no option but to contribute significantly towards ballooning hospital expenses. While the health outcome was positive, the damage to Rahul’s personal finances was significant. He was now uncertain about how he would recoup his finances back to good health. Other financial responsibilities to his immediate family were coming up and he needed to think and act fast. But, he was clearly lost.

At some point in time, everybody feels that they could have done more with their savings.

They are unclear about whether their finances are in good shape or if they are running late.

At the age of 40, for the first time, Rahul woke up to these worries. He decided to take the advice of a financial planner. His friends suggested drawing a financial plan to sort out finances and get the much-needed clarity.

The first thing that Rahul learnt was that he had actually missed out on a lot he needed to do in his 30s.

Now, he needed to speed up things so that he could catch up some of what he had missed doing earlier. His life-goals were fast advancing and most of them could not be put off to a later date.

Catching up fast

Times had changed, and the financial flexibility that he had in the 30’s was not going to be available to him in his 40s. Rahul had to catch up on the fast-approaching goals like higher education and still try to produce more out of his present income. Clearly, doing more in lesser time needed precise planning, prescient actions, and proper strategy. When you need to produce more out of lesser time, a lot needs to change in your life. So what could Rahul do differently to rebuild his personal finances?

He needed to take his finances seriously and work on them continuously. Productivity and efficiency are watchwords usually not associated with personal finance. We relate them more to producing goods or delivering services.

But, personal finance is seen as what we do more for our own needs. Yet, personal finance needs more of the two than anything else. We never realise what productivity and efficiency can do to improve our finances significantly. This is especially true of late-bloomers in financial planning.

Efficient investing

When you need to grow your monies precisely within a shorter timeline, you need to ensure that your savings are strong, investing is efficient, and the investment process is productive. You will need regular reviewing, monitoring, course corrections and repurposing of investments. One cannot follow a more casual spray and pray approach like regular monthly SIP investing.

A specialist must keep watch over your finances, the investment performance, the evolving decision needs and guide you every step of the way.

Rahul knew he needed help. And, he accepted that he could never do everything by himself. This acceptance is usually what most people find difficult to bring themselves to.

By recognising this in a timely way, Rahul decided to move forward and fix his finances right. The planner would guide him every step of the way and ensure that he gets to where he needs to be in a time-bound manner.

He cannot afford delays or failures and knows it only too well.

Reaching this state of decision making is what will take your finances forward. The gains you need are probably much more than just financial.

Financial planning done in a timely and disciplined manner delivers purpose and peace of mind.

(The writer is the Founder of ithought, a SEBI-registered RIA and PMS firm)

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