The last time we had discussed the idea of the circle of control; focus on the inner circle where you can control outcomes and don’t stress about the outer circle which consists of all external events that happen around us. The inner circle essentially is about our reactions and our behaviour, that is what we can control.
We are talking about this because in today’s times it is becoming clearer that most things are out of our control and life can change at the blink of an eye. What we can do is prepare for this uncertainty, not knowing when or how it will strike again.
The next question is, how does one prepare? This is the easy part because this part is completely in your control. There are things you can do today, sitting at home to prepare your life for tomorrow. It requires no involvement from anyone else and yet it can help you be at better footing once times change and we are all back out there scurrying around outdoors.
Here goes, the three things you can do today to prepare yourself better for tomorrow.
Build your skill
It’s not a welcoming world out there for job seekers and its turning grey for those who are fresh into the workforce. The economy is in the doldrums, no one is hiring in a hurry and job offers even for those who have graduated from coveted institutions like IIT and IIM are getting revoked. In such times don’t get discouraged, focus on building more skill not less.
You can do that by signing up for online courses and webinars which offer quality training and are backed by experienced and qualified professionals. It is your skill and ability which will make you indispensable to an organisation or to a venture.
At all points in your life keep upskilling, there is no end to it. Ensure that your focus on upskilling actually gives you an edge over your peers, makes you stand out rather than blending into the crowd.
Your day job or your enterprise is going to be the way to make yourself financially secure and independent. Never assume that you are the best at what you do, instead keep working towards making yourself better. Today, most of us are at home with time and several digital resources at the tip of our fingers – use it constructively and build, build, build your skill.
When we get back out there, you’ll thank yourself as you stand taller on your own feet.
Save your money
The spending comes easy and saving is hard. All the advertising around us is constantly nudging us to spend more and it’s easy too, you just have to tap on your screen to confirm an order. But think about it, if you spend everything today what will you do tomorrow? If anything, you now know that jobs, ventures, cashflow all of it is unpredictable in a second. What you can predict with utmost confidence is in your ability to save for a rainy day.
Whatever cash inflow you have, be it pocket money from parents, salary, inheritance or funds raised from an investor for your innovative venture, save before you spend.
How much you can save will depend on many factors including needs and lifestyle, but if your needs cost more than your earnings, then you need to go back to square one and build your skill. Be worth more than you can spend in a month. Or cut back on lifestyle.
Some might have an unlimited pot of funds, it’s not because they did something unusual to get it early in life, it’s because the generations that came before had slogged and saved.
There is no substitute for a good savings habit and its never too late to start.
Be an early investor
It’s the one regret I have in my money life, I should have started investing sooner, not later. An early start means you have that many more years for An investment is made to give you a return. You make an investment if you use your money to buy either physical assets like property or financial assets like bonds and equity with an aim to receive income or gains... More returns to compound. Compounding is the concept of earning return on both your principle investment and your profit. It is a way of calculating return that assumes you pull back your return till yesterday and remain invested so that any change in value... More means earning returns on returns. So, you have invested ₹5,000 and it grows to ₹6,050 in two years at a growth rate of 10%; you leave it invested and at the same rate of growth, in the next two years you will have ₹7,320 and in another two you will have ₹8,860. Post Inflation is a common term thrown around in economics lessons and by politicians around election time. What it means in simple language is that prices of things you buy, stuff, keeps increasing every year. It happens because the economy in... More that will be around ₹6,610. If you leave the ₹5,000 under your mattress or in your bank for these six years you will have around ₹6,330, after accounting for annual Inflation is a common term thrown around in economics lessons and by politicians around election time. What it means in simple language is that prices of things you buy, stuff, keeps increasing every year. It happens because the economy in... More at 5%, the value of your money will be worth ₹4,720. It’s true, you will have less than what you started with.
₹10,000 invested every month in an equity diversified portfolio can be worth ₹1.9 crores in 25 years and ₹2.8 crores in 28 years. Do you have 25 or 28 years ahead for which you can keep investing ₹10,000 a month? In 10 years this regular An investment is made to give you a return. You make an investment if you use your money to buy either physical assets like property or financial assets like bonds and equity with an aim to receive income or gains... More will be worth ₹23.5 lakhs.
There is a huge difference between ₹23.5 lakhs and ₹2.8 crores. Your An investment is made to give you a return. You make an investment if you use your money to buy either physical assets like property or financial assets like bonds and equity with an aim to receive income or gains... More amount remains the same throughout each month, but the difference in earning comes from the time you remain invested.
The longer you give your investments, the more you will earn. In order to give your investments more time, you have to start early.
Whatever small amount you can start with is a bonus if you start early. The key is to remain invested for long and be regular in your investments.
Like I said before, implementing these three things requires no one else other than you. You have to change behaviour and focus on how you can be useful to yourself. Incorporating these changes in your life today is going to increase the probability of a comfortable life in the future.
Never forget, the circle of control and your ability to impact your life outcomes.
Stay safe. Stay invested.