‘What money can do, only MONEY can do’ – is a Marwari saying. Add to that my take ‘What Time can do to your money, only TIME can do’.

Let’s see how you can force yourself to save or invest MORE and EARLY for your Retirement or Financial Freedom…

  1. Understand the impact of TIME on your saving / investing: Most wealth planners will be tongue tied if you removed the words ‘compounding’ and ‘start early’ from their vocabulary. All over the web you will find stories about Ram and Shyam saving money and how Ram started at 22 and Shyam started at 32 – and what a huge difference it made at age 65. I see no need to repeat the story here. Just accept that a 10 year heads up in a 40 year investment cycle is HUGE. In a longer cycle it is even greater. So if you are 22 start now, if you are 32 start now, and if you are 42, start NOW!! If you are a 42 year old with a 14 year old kid, make that kid understand the power of compounding and the IMPACT of time on investing and saving. Read this article that appeared in Moneycontrol long ago http://www.subramoney.com/2013/12/how-much-should-i-invest-sir/
  2. Prioritize your Goals and THEREFORE your money: When it comes to prioritizing goals, say I want to reduce weight..and somebody offers me a sugar laden sweet, I have to have the maturity to say NO. Exactly like that when I get my income, I have to choose my priorities – Financial freedom or pleasure for TODAY? the urgent need is not really the important need. How do you do that?- well  what really works – keep transport costs low, keep housing costs reasonable, be focused on financial freedom goals. If you miss out on one month for whatever reasons, do not brood. If you can save 11 months in a year it is still much better than 7 or 8 – and 3 months lost to brooding!
  3. Track your expenses and your investments: tracking does not mean whipping yourselves black and blue because you did something wrong, but to know where your money is going. Once you start investing to see whether the financial freedom goal is realistic. Unrealistic goals cause stress. Goals should be TOUGH but not IMPOSSIBLE. There are many online tools and apps that will help you track your goals.
  4. AUTOMATE: This is the easy part these days..You can set up an automatic SIP from your account and a fixed amount will be debited on a regular basis from your bank account. Many mutual funds have now introduced an INCREASING SIP also. Thus even if you start off with a small SIP of say Rs. 5000 a month, you can step this up with a fixed amount every year – say Rs. 500. Thus the amount being set aside for your goal PER MONTH will keep increasing – 5000, 5500, 6000, 6500….as long as you wish it to happen. Icici Prudential has recently introduced a PERCENTAGE top up – so you can choose a % age top up – and OBVIOUSLY this is better because of the power of compounding. Franklin Templeton does not have this facility and I keep wondering why they do not have this even though they have a ‘Family Solutions’ – where top up makes a lot of sense. Just inertia I guess. Thank you Icici Prudential.

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