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Why is your wallet empty at the end of the month?

by Money Puzzle   ·  February 16, 2021   ·  

Why is your wallet empty at the end of the month?

by Money Puzzle   ·  February 16, 2021   ·  

Photo by Tatiana from Pexels

Do you begin each month waiting for your salary to get credited into your bank account, only to see the account empty even before you get to the last day of the month?

Do you see your friends trying to make a return in the equity market or buying property and you wonder when you will have enough to do the same?

Comparing with what others are doing will not get you ahead. Rather understand that perhaps you are focused more on using your money for signaling prosperity by spending it today rather than focusing on how you can put it to work for tomorrow.

This is the harsh reality of what’s happening to the money in your wallet.

How to start?

The first step is always saving before you spend. If you have access to the internet and have found this blog to read, you have a basic income. What you need to start doing is saving that income. But that is the problem, you don’t have enough to save?

Do this: take one rupee on the 1st of the month and put it into a jar. Next day double that and put ₹2 into the jar; continue doubling this figure every day till you reach the maximum amount you think you will be able to put in the jar every day. On the 8th day you will reach ₹128, on the 9th day ₹256 and on the 10th day ₹512. Now for the rest of the days in the month, just add this last amount – whichever one you choose – and keep adding that in every day. If you stop increasing the amount after day 8, you will have ₹3071 in the jar by day 30. Stopping the increase on the 9th day will give you ₹5,887 by day 30 and stopping on the 10th day will give you ₹11,263 at the end of the month.

Now take this amount and start a mutual fund systematic investment plan (SIP); an SIP can be started for as little as ₹500.

You can stop even sooner than 8 days if that is what you can afford or continue to day 12 if that’s your comfort.

Hard to do? Not at all. If you are a smoker, you probably spend ₹7000-8000 or more each month on cigarettes. You may be spending just as much on eating out each month or on new T-shirts and tops. Slow down, chip away a little bit less on the spending activity and a little more on savings.

Everyone can save something; you just need the will.

What’s next?

The next step is investing. This is not as simple as saving, neither do you have to make it complicated. However, with the ascent of several investment apps and digital investing initiatives, along with ability to make small sized investments, you no longer have an excuse to not get started.

Remember these few things before you do get started:

  1. No investment is risk free
  2. Don’t put all your eggs in one basket or in other words, don’t just invest in one type of financial security or asset
  3. Start with low-risk market linked investments as a larger portion of your investment basket
  4. Use the above to build an emergency fund
  5. Don’t miss out on investing in long term growth assets like equity, but focus on risk here for selection
  6. Automate your investments and ensure you are regular
  7. Increase your investment amount by 10% every year
  8. Where you lack the expertise choose a good digital or human advisor to help you

Start like this and continue for the next 2-3 years. You will be surprised at how much you are able to accumulate and grow simply by starting small but being regular.

Now even if your wallet is empty at the end of the month, you will realise that your wealth basket is filling up a little every month. Slowly the idea of seeing this basket grow in size will become a lot more satisfying than spending on a cup of coffee, a pizza or your third pair of sunglasses.


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