By Amit Kukreja
Do you want to make money work for you? Have you taken a stock of the direction your money has taken to work for you? Does it fund your financial goals? Regardless of whether you’re already doing well in managing your money or in need of a direction, I would like you to succeed in doing so — which involves knowing what not to do as much as knowing what to do.
Do make sure that you don’t do the following things, to enable money to help you live a life of passion.
Buy latest version of all the hot products
We all decide, at some point in our life, to own nice and latest materialistic possessions be it a smart-phone, a laptop, or a nice car. Sometimes we get into the habit of renewing our products to keep pace with the technology advancements happening in these products. But have you kept a track of money you shell out to buy them vis-a-vis the same amount of money that goes as investment to fund your financial goals? Do a simple comparison of future value of the amount that goes to fund your kids education 10 years later vis-a-vis product that you would have bought now with the same amount. It’s a no-brainer. Don’t get me wrong; new things are good and only if you have your priorities in order.
Live in the past
Stop thinking about how you got into a bad financial situation – a bad loan, poor rate of return in money invested in a house property or mutual fund, not having availed an employee benefit scheme while others did, getting locked into a fixed deposit that loses tax efficiency or getting stuck with insurance plans that do not beat inflation and are still termed as ‘investment’ schemes. What you need now is to move on! Look forward to having a plan to get out of them. You can beat yourself up relentlessly, but that will only make your situation worse. The fact that you’ve acknowledged the problem is good enough to plan for change. Go for it!
Make others responsible
When our money decisions yield unfavorable outcomes, we tend to think that others who were involved in the situation, when we took those decisions, are the ones to blame. We get into ‘victim’ state of mind and feel betrayed. We feel exceptionally ‘unfortunate’. However one should realise that everyone goes through rough patches in life. Whether you took a home loan decision, or a property purchase decision with no loans or financial leverage, or an exposure to a multi-cap and mid-cap funds when you needed money for your child’s education in a short-term, it was you who made that call. It was your inadequate homework that led you to make that decision. Preserve your common sense. When in doubt validate your actions and decision with a professional who understands your financial life holistically.
Expect others to help you
If you’re waiting for others like parents, siblings, in-laws, friends, cousins, partners, employers and/or any professional network to change your money life, then you better accept — it’s going to take a while. An alternative for you is to take charge of your own money-life. The buck stops and starts with you. You are in charge of your life.
Listen to all that ‘un-solicited’ advice
You would be a very lucky person, if you attend dinners hosted by your friends and families, unscathed by financial advice. While uncles would advise you to buy those money-back plans and ULIPs, cousins would advise to buy those star rated mutual funds, class-mates would share their success story of how they made it big by investing in real estate and parents would recommend you to keep your money in fixed deposits. Having learnt from people around and their life experiences, you would feel you have all the wisdom to manage your money well. One of the best ways to lose money is to take advice from people who lost it themselves by not understanding the fact that every individual’s financial life is unique. And he/she needs a completely tailor-made strategy and approach to make his/her money work for him/her.
Don’t plan for it
“Good fortune is what happens when the opportunity meets with the plan,” said Thomas Alva Edison. Have your plan ready for making money work for you. Don’t spend first and think about investments later. Make your plan. Make your budget – monthly, annual or any other frequency that suits you. Write down your short and long-term financial goals. If you are unsure where to start, take professional help. Money is the ‘fuel’ of your life. It will take you places if you plan for it.
If while thinking about your financial goals you say something like “This is not a good time to plan for money because I don’t have surplus,” then you’ve already set yourself up for failure. This is your time. This is the right year. Unless you just enjoy the stress that lack of money creates in your life.
Remember, that you track fuel efficiency of your car when you drive. You need to track fuel efficiency of your money as well when it works for you. Ensure your investments are beating inflation, creating tax efficiency, costing you less and magnifying your returns!
Source: Previously published on Moneycontrol.com in March, 2016 | All views, thoughts and opinions expressed belong solely to the author.