Have you ever gone to ‘SATSANG’. I know 90% of you will say no – we all think that at satsang they just talk about god. Few months back I visited one such event, but was, surprised to see what they speak. They talk about people’s life experiences & how you can learn from them. The correlation was amazing. It was so easy to relate those examples to real life – both personal & professional.
3 things I am passionate about – 1st personal finance, 2nd reading, 3rd playing sports & bonus traveling. And during the New Year I was fulfilling the bonus one. So I thought of sharing few learnings from my New Year trip to Uttrakhand & you can relate them to your personal finance. That is the reason we call Financial Plan a Road Map.
- Plan for Trip – This is really so important. We plan for vacations well in advance – we check if we can spare time from work, will kids suffer school classes, who all in the family would accompany, what location, which hotel, budget etc. Do we put in same efforts for our financial life? Think!!
- If you know you are traveling 500 kms, will it make sense that you check the milometer every km? This is just wasting time. Similarly monitor your investments at a gap and not on day to day basis.
- Can you reach this long distance at speed of 40 Kmph? You can but it will take triple time and efforts. So maintain a speed which is rational. In personal finance also the speed of investment has to be constant and with less turbulence.
- It is unlikely that the road will be smooth throughout the way – there will be pot holes, fog & traffic jams that you will not be able to avoid. Similarly in life there will be periods of uncertainty, unwanted events – keep time and liquidity on your side.
- Can you cover such long distance with an auto? Auto driver will drive from 1 point to point 2 & then back to his stand. Equity trading is similar to this. Here you will never earn a penny and loose your hair due to hypertension.
- Selection of vehicle is equally important. By train, ship or car? Similarly choosing an asset to invest is equally important. All assets have there pros and cons, hence you need to take your goals and risk appetite to decide the correct mix. Asset allocation is the key.
- Can you drive 600 km yourself or you need some driver. If you love driving you can, but you will miss the time together with the fellow travelers and will not enjoy. Also you will exhaust yourself. Alternative can be to hire a driver. Similarly hiring an advisor for planning your finance can guide and make your journey pleasant. And why I am saying hiring is, when you pay adequately for services you have full right to demand quality. Pay you advisor so that he work for your goals.
- If you realize that you are on wrong road, you seek help – so in personal finance never be afraid of taking help of a professional. The professional ensures that you choose the right goals for your life and he reviews that you are on a correct path towards your goal.
- Negative surprises – When we reached our resort at Jim Corbett, we came to know that for New Year Party the charges would be extra, and worst was that the charges were almost 25% of the total cost of the trip. So take calculated decisions. Check before you leap when you are making investments as there can be hidden charges. Also put in an emergency fund to meet such surprises.
- Accident can happen & they do happen, so take insurance. Lot of times it is not the question of “I” as “My” gets more important. Make sure you have all adequate insurance covers so that your family has full chances to reach the destination.
- Avoid Credit cards – Best way to avoid debt is to actually not getting into it. But modern lifestyle and requirements force us to leverage. Manage debt and make sure debt is taken for a productive use and not for the depreciating assets.
- Journey is equally important to destination. Life is short and so we have a full right to enjoy it. Do not wait to throw a party when you finally achieve something. Enjoy the small achievements, instead of waiting for the big day. Remember Alexander the Great, passed away before he could reach his country to celebrate after conquering the world.