I am not saying doing these steps will make you rich. However, if you do not do these things you will NOT get rich. The title should actually be “Necessary, but not sufficient things to do to get rich”. Let us call this ‘business lessons as applied to personal life”
- Only a PSU or a lucky company funded by indulgent shareholders can run at a loss permanently: Yes I have seen companies run purely for the ego of some idiot who has NEVER generated 4 years of positive cash flow, but YOU cannot run your life like that. You can never operate at a cash loss. Spend less than you earn. Much less because you need money for more than just day to day living. I am surprised by the number of people who live beyond their means. That is suicidal. The bad habit stays, and they continuously operate at a loss. When income increases expenses gallops.
- Assume taxes went up by Rs. 3000 a month. If your taxes went up by an X amount you will find a way to pay it. When a service tax was imposed on my business, I just learnt to live on less margins. So find a small amount that you can set aside. When it comes to saving money, people constantly find ways to rationalize their inability to save/ invest Rs. 4000 each month. Set up an automatic bank DEBIT so that as soon as you receive your salary, a small portion of it immediately goes into your sip account. You should pretend that money never came in. And a few years from now, you’ll thank yourself for reading this blog and implementing this one idea.
- Open a PPF account: Yes, keep it small. Invest Rs. 2000 a year. Too small? does not mind. If you can put away money for 15 years, you are just teaching yourself the pleasures of postponing the access to money. Let the money grow and start contributing Rs. 1000 more every year. So your contribution is 2000, 3000, 4000…..every year till you get to a stage when you can contribute say Rs. 150,000 a year. How will such a small amount help? Never mind you just start. In a few years time it will all add up.
- Open a SIP account: If you have never invested before, start with an ELSS – and start saving say Rs. 3000 a month. Remember PPF was Rs. 2000 a YEAR, here we are talking of a monthly saving of Rs. 3000. Keep growing the amount by doing a step up. So in year 2 your sip amount will be Rs. 3500, then Rs. 4000. I have just picked up some numbers at random. See what number suits you. It could be Rs. 12500 a month – the max that you can get tax benefit for, or a smaller amount that suits you today. Again 10 years later, I or this blog may not be around, but you will thank yourself for making that start.
- Do not ‘play’ the stock market: the stock exchange is not a game that you can go and play. It is a serious place where fortunes are made and fortunes are lost. Do not waste your time and money if you are not willing to invest in educating yourself about how markets work. Learn about the stock markets, and then become an investor. If you are too lazy to do this (or you do not have time) you are better off in a big large cap fund or even an index fund TILL YOU LEARN enough to pick your own schemes.
- Pay your credit cards on time: It does not matter how much you spend. It is important that you pay off your monthly bill on a monthly basis. Try paying it off the day the bill comes. There is no point in postponing it for the last date especially if you are a forgetful kinda person. Make sure that you do not put some big purchase on your card – like a refrigerator or an air conditioner. For big purchases start a Recurring deposit and as soon as you accumulate the necessary amount make a full cash down payment and buy it. No credit purchases. Never.
- Set long term, short term, medium term, 90 day goals, 6 monthly goals and of course annual goals. I have said enough about goals..so will leave it here.
- Be in the company of people who are financially free, financially responsible, and make sure that you learn from them.
- Live for yourself: Do not bother about what others think. This will mean you will buy things for YOUR goals.
- Monitor your promise (goals) vs how much you are investing on a monthly, weekly…whatever you are comfortable with…
do these and will come out with more money than what you have now….lets review it in some time!!
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