Neeta Khilnani is the Founder and Author of StockMusings.com, a collaborative website which publishes independent investing articles written by industry experts. Neeta started her career at CRISIL Equities, India’s first and largest Independent Equity Research house in 2009. She is an honours graduate in Bachelors in Management Studies from the University of Mumbai, a post graduate from National Institute of Industrial Engineering (NITIE), Mumbai and has passed one level of the international Chartered Financial Analyst program.
I have always been astonished with the stark gap between the rich and the poor in Mumbai, the city in which I reside. On one hand, there are industrialists and movie stars who make a couple of crores every month. On the other hand, there are people who struggle daily to make ends meet. In between is the middle class.
I hail from a middle class family. My parents provided me with all they could, -- sound education, good clothes, healthy food, street food, hotel food and everything else that is necessary for a happy and proper upbringing. However, life is all hunky dory in school. It is only when you grow up, have a family of your own that you realize the responsibility that rests on your shoulders
- Bargain Hunt: This is a very important skill which will help you save a lot of money. Whether you are buying vegetables, groceries, clothes, or stocks, you need to bargain hunt. Spend time searching the market place, find out who offers the lowest price without comprising on the quality greatly and you will end up saving quite a lot ( making a lot in case of stocks).
- Save and Spend: Save some portion of your monthly salary always and then spend. This can be as low as 5% or as high as 50%. There is no magic figure since it all depends on your requirements. Whatever little, but save. And let compounding do the rest.
- Pay bills at the last day: Pay all your bills not before their due date. Use the room given to you by the utilities for bill payment. But, please don’t extend beyond the due date, else you will have to only shell out some more.
- Plan ahead: You are aware of a major expenditure that will occur in future. Plan ahead for the same and allocate a set budget. Once you have a fixed budget in mind, do not overshoot it; under-cut your expenses if need be. After all, if you have fixed a budget, there must be a reason for it.
- Plan for the Unplanned: Keep aside some corpus for events that you cannot plan for. While you are saving every month, you could break-down your calculation of how much you should save as: % for pure savings + % for unplanned expenditure. Make sure that the money you save for unplanned expenditure is liquid i.e. available for withdrawal anytime.
- Making a huge investment? Be Well Researched: Buying a home is probably the biggest expenditure for any Indian family. Hence, you must be at least 10 times sure before plunging into it. Read news, blogs and forums for the property you have in mind. Do a primary check with brokers, existing residents or buyers, if possible. You do not want to be taking any chance since a huge portion of your hard earned money is involved.
These are the small things I practice to discipline myself with money. And after all, saving is a step to getting richer.
There is one last thing that I want to share. Working for yourself and creating an asset from scratch is the ultimate and also the most riskiest way to get rich. I left my very safe and secure job, 2 years back to give light to an idea that I had in mind. When you venture out on your own, you know the limit is endless. And so are the risks. By leaving your secure job, especially in such trying market times, without a clear plan in mind, , you are only taking a big risk. Plan, and be very sure of how you will achieve what you have planned. Keep in mind that it takes time to build a business. So be patient.
This is my journey to financial independence. I will love to hear from you on more experiences, tips, mistakes or anything that can make our journeys more rewarding!