What’s the best personal finance decision you’ve made?
And what’s the decision you wish you had taken?
Here’s my take on both.
I am glad I started my investment journey when I was 35.
How I wish I had started it at 25!
I lost 10 years’ time that could’ve given me a significant head start and helped me to better leverage the power of compounding.
Never mind the late start, thank God I started!
I may have further delayed my entry had it not been for my life experiences. My story may help make up your mind, if you haven’t ventured here already.
My late father-in-law Sudesh Kumar Kabi quit a flourishing career in a global engineering firm to start his own consultancy. Shortly after, he visited Hyderabad to meet prospective clients. While he was there, he suffered a brain stroke that paralysed one side of his body.
He was hospitalised for a month and the recovery process was slow and long. But his savings and investments took care of the family, his medical expenses, his son’s college education, and his daughter’s marriage over the next few years.
He had planned his finances well and made the right investments early. That saw him and his family through a long period where no steady income was flowing in.
I shudder to think what if he had not!
I had heard and read about the need to systematically invest. But it’s what I saw first-hand that drove me to start right then and follow it religiously. I had sporadically begun a few before my marriage but it was only after watching my father-in-law, that I structured monthly investments in a disciplined manner.
A tragic medical condition in the family taught me my most important lesson in personal finance. But you don’t need to wait for life to take a painful turn. Take control of your future financial security now. Before it is too late.
Ever since, I have upped the invested amount every two years, if not every year.
When your income grows, so does your expense. But there are some expenses you indulge in that may not be necessary. You undergo them because you’ve seen your neighbour, friend or colleague do it. You feel the need to ‘keep up with the Joneses.’
Don’t be under the illusion that people will admire or respect you because of your possessions. A few may be impressed by what you possess, and not by who possesses it.
One of my favourite quotes is by Morgan Housel in ‘The Psychology of Money.’
“Savings can be created by spending less. You can spend less if you desire less. And you will desire less if you care less about what others think of you.”
Don’t get me wrong. You don’t need to be stingy. You don’t need to curb all your desires. It’s one life, you’ve got to enjoy what you can. Just don’t overdo it.
Spend what you need to. Because YOU want to. Not to show off to others. They are not going to provide for you and your family when misfortune strikes. So why care what they think or don’t think.
You’ve got to save for a rainy day. To take care of yourself and your family’s future.
Why anticipate the worst, you may argue.
I get it. You are an optimist. Your life is smooth. And you expect that’s how it will continue to be.
But what if there’s a misfortune — a stroke, accident, debilitating disease or loss of life. You’ve to plan and provide for the worst, not just the good things in life.
Planning and preparing for such untoward life incidents does not make you a pessimist. It makes you a realist.
If you’re considering entering now, do note that investing is not a one-off action. It needs to be regular. And the investment amount should be hiked when your income increases.
I get it. It’s human tendency not to consider your income as enough. But once your basic requirements and a few good-to-have-needs are taken care of, you should divert the surplus to grow your wealth. To take care of both good and bad times.
God forbid, there are no bad times. But if they do arise, you are covered for it.
Start now! And if you’ve started, keep increasing while you can, as much as you can.
You can thank me later.
