Change the Channel

I’m a single mom, not exactly the best “stereotype”. It brings up certain preconceived notions, people automatically expect me to be poor, depressed, obese. While that’s certainly one of the available options, I prefer to watch a different channel (Thank you Pam Grout).

 
Here’s what my page says: “She is a world traveler, a loving mother, a budding millionaire, a best-selling author (well, you are already reading my post), maintains a figure to die for, and an inspiring witness to everyone she meets.”

 

I have been there, done that .. Being bankrupt to homeless. But this is not about me , This is about you. And you my dear friend, I want you to pay some attention to your life, your finances and your career.

Lets start with money

Do you feel secure financially ? Whatever be your profession , Doctor, Teacher, Scientist, I won't even ask how long have you been working...Don't you feel if you had saved 10% of what you earned over the years you would have been a millionaire by now ? It feels awesome to live a debt free life, to wake up and feel am 'rich'. Here is my definition of being rich. "Rich is when you don't have to think twice about buying anything."

Have I reached there yet ? No, but am on my way .... Let's do it together

Here are the golden rules:

 

Rule No. 1

Income - (minus) Expense is not equal to Savings

Income - (minus) Savings is equal to expenses.

 

Rule No. 2

Divide your income into 2 or 3 equal parts

Part 1 : Expenses

Part 2 : EMI (Home/car/any other)

Part 3 : Savings

 

As your income increases the equation should move to

Part 1 : Expense + EMI

Part 2 : Savings

 

Choose one of the rules from above which seems easier for you to follow. Will take you to financial freedom in 5 years flat ! But hey you and me are not the "rabbit" in the race but more of a "tortoise".

 

Here is an easier start, it helped me achieve a breakthrough.

•  Start with a small target in mind. For eg: Rs.5,000 or 10,000.
•  Open an RD account with the post office or recurring deposit   with your bank.
•  Transfer this on the first day of every month like you pay your utility bills.
• In your mind there is no pre-mature withdrawal option.

Year 2

• Open a SIP account in addition to the above RD and start investing Rs. 10,000 every month.
• Transfer this on the first day of every month like you pay your utility bills.
• In your mind there is no pre-mature withdrawal option.

These two are a part of your expense statement every month and your savings "quota"from the equation above  remains untouched. This should help you build an emergency fund , start with a goal of one month gross earnings and throw a party when you achieve 6 months earnings tucked away into a different bank account. Keep it as far as possible and if you resist the temptation for a year, then you are allowed to dip your hand into the candy jar and refill as soon as you can. You are free to keep me as the "guardian" for the "angel" fund !!!

Lets start with making ourselves happy. Along with feeding builders and designers , lets enjoy life as we earn.

Start with giving yourself a generous allowance. Its like dieting, if your start off with starving, your diet plan will backfire in less than a week. We are in this for a long haul. How much is a "good allowance" which includes

- Shopping Plan
- Eating out schedule
- Movies
- Miscellaneous (Anything else)

Can we agree on these principles.

Buying only one set of clothes at a time, however you are allowed to buy often, Now decide how much is your estimated budget. Let's say Rs. 1500-2000. Cool, that's line item 1. Keep buying every alternate month or even every month, and be in trend. When you buy 3-4 sets , they get faded together, go out of fashion together. And you hate all your clothes anyway, don't you. Buy the best ones, sale or no sale. But Summer or winter only one set at a time.

You like eating out ? I just love it. Lets decide on the frequency. Every weekend or twice a month ? If you are a fine dining person, is it possible to be happy with 2 visits to fancy restaurants ?  Now here is the trick. Stick to your 'favorite' food. Don't waste your energy just b'cos you haven't tried that fancy sounding dish. And for 2 people you don't need 4 dishes. Most of the time you can judge a persons character by the way they order food. Are you the kind who is like I wanna try this and that and also that yummy desert and your partner has to order something that he can have too. Think about it. World isn't ending today, you can always have that fancy dish next time. Can we agree at an allowance of  Rs. 4000 a month, that's for two lunch/dinner outings, right. Excellent, that's line item 2.

Movies : This could also be bi-monthly, add another Rs. 2000 to it.

All other pursuits : Keep a buffer of Rs. 4000. Do whatever else you like. Get a nice massage, or a session with the new hairstylist in town,  join belly dancing, or even kick boxing like me.

This sounds super cool. All 'you' need for your personal expenses is just 10K !!! You have already equivalent amount in your savings plan. Challenge yourself that you are allowed to increase your personal allowance at the same ratio of savings. So if you wanna spend 15k on a festive month, you first have to save 15k. What say ?? Trust me by third month you would say lemme spend 9k so that I have to only save 9k ...And there you have achieved your first milestone. Being in control. Its a mind game.

So what do you do if you exhaust your allowance by 25th of a month. Very simple stay at home and watch TV ..There is action, romance, drama..all yours.

Now there is more to life that just money..watch this space for more.