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Amidst all the chaos that is unraveling, it’s a fact that those who have their financial matters in order are breathing easy. This may not seem like the most appropriate time to talk about money, but when situations are crumbling if you are financially stable it helps keep your focus on other matters where your immediate attention is a priority.

Financial stability is not a random outcome, rather a focused plan on what you want to achieve. Focusing on this plan means achieving outcomes which can cushion you even if the rest of your life plan is in anarchy.

The state of affairs today, as we all battle with the pandemic is quite bad. When will it get better? Will it get worse before it gets better? The answers to these questions are up for grabs, the real answer is simply, we don’t know.

Having a plan can help us bide through this period with somewhat less anxiety and be well prepared for what’s coming up next.

Here are three things you can do to move closer to being financially prepared.

1. Start your saving and investing journey early.

Today you can start investing in growth assetsGrowth assets as against fixed return assets are those which grow your capital or principle investment. The most common forms of growth assets are equity stocks and property. Investing in equity stocks means you buy a portion of the underlying... More like equity with as little as Rs 500 a month. There is no excuse for waiting and the price you pay for a late start is huge. A Rs 500 monthly SIP done for 10 years will give you Rs 1.2 lakh at a rate of return of 12% a year; done for 20 years you will make Rs 5 lakh.

Starting 10 years late sets you back 80% in terms of gains.

It’s the amount invested in the first ten years which compound to a much bigger figure in the next ten.

2. Diversify your investmentAn 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.

It’s true that some new age investments like cryptocurrencies have delivered 500%-100% and higher return in 2020. Why not just invest in those instead of waiting 10-20 years. These are risky assets with no underlying value other than investor faith in demand and in some cases restricted supply. There is a narrative on inflationInflation 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 hedge and digital gold which is keeping prices high but there is nothing else to hold prices.

The fall in price can be just as sudden and sharp as the rise.

If you like what these assets bring to table, go ahead and invest. However, don’t make it your entire investmentAn 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. These are new, risky, untested assets, to which you should allocate much smaller amounts.

For the larger part of your long-term savings stick to the tried and tested wealth creation format.

There is no free lunch and the crypto party right now is looking like one.

Your best approach is to diversify and add long term assets like equity for wealth creation and for portfolio stability add some fixed-income funds or deposits.

When chaos strikes all the risk assets fall in value, what will provide a cushion is the fixed income portion. That will also help you keep your neck out of water if chaos hits too close to home.

3. Reign in your spending.

In your 20s and 30s, its best to focus on wealth accumulation rather than spending. Take at least 20% of your pay cheque and invest it at the start of the month itself. Don’t wait. Waiting only increases the temptation to spend it all.

Saving early will let you have the freedom to live life on your terms after a decade or so.

This is not just a financial milestone but important for overall health and emotional well-being. Having more time on your hands because you are financially secure means having more time for your family, means having less stress.

Save before you spend, learn that mantra now and reap the benefits tomorrow.

If you do just these three things, your job is almost half done and you are on the right path. More importantly, you are on the right path early in life.

This chaos may be a temporary health calamity, but for those who are unprepared financially, it can become a permanent wealth disaster. Don’t let that happen to you. Save first and invest wisely. Also watch this video interview with Vasanth Kamath, CEO and co-founder, Smallcase, where he speaks about his tryst with savings, spending and making money. Watch till the end.