Greetings,
Let’s
say that you are fasting just like that… you say “Not feeling like eating... I will not eat today” and there
is no specific motive for avoiding food.
And wow… in front of you, your best friend opens his Lunch Box and
there you see your favorite Pizza… 99 out of 100 times, you will
lose your resolve, succumb to the tempting yummy Pizza and go ahead to munch on
the cheesy delight breaking your fast!
Do you know why this happened?
There
was no clarity on the PURPOSE behind the fast and thus getting lured and swayed
by the yummy food is natural.
But
if you were fasting due to a religious belief…say Ekadashi, Dasara
festival, or a Ramzan, you wouldn’t get tempted come whatsoever as there
is a CAUSE behind your action.
The
strength behind you maintaining your fast in this case remains resilient and
you wouldn’t budge no matter how tempting the Panner Butter Masala may be as now
you have a PURPOSE and a REASON behind the fasting.
Without a clear purpose behind your fast, you are more
vulnerable to being influenced by enticing options that appear in front of you.
Likewise, having no specific financial goal for your savings can
lead to reckless spending or diverging from your investment plan when
attractive but unplanned expenditures arise.
=======================================
We
keep meeting all varieties of Investors. Some are truly well-intentioned but
still not able to create Wealth.
Let
me give you an example.
Last
week, I had a new investor through a reference. He said “Sir, me and my wife do save
religiously. We save for months but suddenly something comes up and we end up
using not only our savings but even our Credit Card. We assure you, Sir, we both
are SAVERS and not at all spendthrifts”
They literally begged, “Please help us
ACTUALLY SAVE”!!
This
was not peculiar to me at all.
This
happened to them as they did not have a FINANCIAL GOAL in Mind.
While every one of us is driven by Financial Aspirations and a promise of a better
tomorrow, somehow the bag of money saved vanishes when an Amazon Prime Day
Sale comes up or one of our cousins puts up a photo on Instagram
enjoying a Scuba Diving in the Maldives and lo! We too must do
the Scuba Diving or similar and end up spending ……totally unplanned!
The
Key to Successful Saving (and investing) lies in linking these to Well-defined
Goals.
You
first need to understand “WHY YOU NEED MONEY”
Just saying “I need lots of
money” is not enough.
Answer the WHY… Know the purpose and the reason for needing the money.
WHY DO WE NEED MONEY?
The
need for money could be varied and needs to have a target. It could be anything
like a wish fulfillment, making your life better, lifestyle expenses, or reducing
loans! It could be anything.
To
make it easier for you, I have listed some here.
To
get rid of a Loan (Home loan, Education Loan, Personal Loan)
To
start a new business, a new factory, a new branch
To
travel, to explore new places.
To
plan for kids’ future (education, wedding)
To
plan for my own RETIREMENT!!
When
you know why you need the money (purpose), you will be in a better position to
make the BEST USE OF RESOURCES you have to achieve Financial Freedom
The
goals can be anything. It could be your Annual Vacation, your new car, or your
down payment for that dream home. Now that the goals are linked, you will find
a purpose, motivation, discipline, and direction for your savings.
Visualizing you achieving your goal will keep you motivated enough and ensure
you don’t redeem that FD / Mutual Fund which is growing quite well.
This
linking of goals will also make you more motivated to find ways to increase your percentage of savings and maybe even your ways of
increasing your income!
And once you achieve a Goal, it
will give you that confidence that yes… you can do it. It will give you a sense
of fulfillment and reaffirms your own ability to take control of
your financial life.
THE MORE SPECIFIC
YOU ARE, THE BETTER
In
fact, having a SPECIFIC goal will help you not only visualize better but be motivated much more in saving and achieving that goal.
For
example, I want to buy a car
is a goal but “I want to buy a 6-seater Toyota
SUV is very specific”.
This
will give you an idea of “How much” is needed for that goal and “When” you can
reach that goal.
Begin
with Short Term Goals and then gradually go for Medium Term Goals and finally
the big ones. And that’s your Long-Term Goals
Setting
short-term goals is the perfect way to build confidence and establish a
foundation for greater success. Small
wins lead to big accomplishments!
Now
that we know the goal…it’s easy to PLAN.
Suppose you say I need Rs.2 lakhs
for my Singapore Trip 2 years from now. Good. Now that we know you need Rs.2 lakhs and we
have 2 years’ time.
It becomes now easy to calculate how much you should keep aside
every month for that Singapore Trip and you can achieve the same.
FOR THE LONG TERM TOO:
This
can and must be applied for the long term too.
Instead
of saying “I want to retire
rich”, you can
have a specific number in mind and say, “I want to retire with Rs.5 crores of Net worth”.
Now
that you know you need Rs.5 crores when you are 60 and suppose you are 35 now.,
you have a good 25 years to plan.
Let’s
look at an example.
Suppose
you start with zero (0) and start saving at age 35.
All you need is less
than Rs.30,000 per month! And now you know that 30k is enough for your 5cr retirement target
corpus, you can plan easily and direct savings to that goal.
Having
a financial goal will help you stay focused and be disciplined with your money.
It
gives you a reason to save, and invest rather than splurge on impulsive purchases.
With a goal in mind, you will
also be able to track your progress and celebrate the reaching of goals.
DON’T SAVE… INVEST!!!
I have seen many who save religiously but do not invest
wisely. Saving is only the 1st step but the 2nd and most crucial
step is INVESTING.
Saving is like putting your money in a Piggy Bank. It will
keep your money safe but will not grow due to the effects of inflation and taxes.
Investing is like planting a variety of seeds in a garden. The
seeds may and will take time to grow into plants and then trees but the effort
is worth it as you can reap the rewards regularly.
Investing is the right way to grow your wealth and reach
all your financial goals on time.
Yes… Investing is a difficult process especially when it comes to not only
identifying the right asset class but also the right instruments and the
percentage of amount that needs to divide among these many varieties
That’s where
the requirement of an Experience Investment Expert will come in handy. She will
help you navigate the market fluctuations, maximise returns without
compromising on risk by understanding your risk profile, asset allocation, and
guide accordingly.
THE BIGGEST ADVANTAGE:
Once the Goal/Purpose/Target is identified, automatically the WANTS will get
reduced and may even be eliminated as now the inner mindset will be focused on
reaching the goals.
Making
sure you INVEST the saved amount in Equities is what will ensure that you just
DONT RETIRE RICH but retire WEALTHY!!
So
don’t just save, invest. Saving is good, but investing is better. Saving
is necessary, but investing is smart.
Saving
keeps you safe in a cage.
Investing
will elevate your financial status and help you soar to new heights.
Invest…don’t just save.
THE ULTIMATE WEALTH CREATION TIP IS
a. HAVE A GOAL FOR YOUR SAVINGS
b. DON’T SAVE BUT INVEST FOR THAT GOAL
All the very best to your Financial Freedom Journey
Srikanth Matrubai
Author — Don’t Retire Rich
You are strongly encouraged to consult your financial planner before making any decision regarding this investment.
The views expressed here are the author's personal views and should not be interpreted as a recommendation to invest/avoid.
