I remember my first salary was 7950. It was suppose to be 8000 but the profession tax of Rs 50 was deducted. I thought of making some savings out of it but then I found that amount is too low for me to make any savings. I thought once I have an increment it would be much easier for me to save.
8 months down the line I switched a job with a 25% increase in salary and this is when I realized I am making lot more money now and so I can make some savings. I decided against it because still my income was tax-free. I found yet another reason not to save money.
4 months later I switched yet another job because I was not very satisfied with the kind of job I was doing but this time it was not a switch for a higher pay but then I was paid slightly more but yet nothing to make my income taxable still I decided to start some savings.
Remember I started saving money and not investing money.
The idea was to make myself feel richer by having money in my bank account and not investing money at that point. So I just opened a bank account where I could just dump the money so I don’t use it. The focus was not return on my investment.
Once I accumulated good amount of money I thought about investing and that is when I entered into market.
The whole point is not about how much money you make, but the point is to make your money work for you in best possible manner.
1. Rome wasn’t built in a day
The above story looks great but if you put a timeline, it will make much more sense. I joined my first job in June 2004 and in June 2005, I was into my third job and this is when I thought of making some savings. If you see my about page, you will see that I started in Market on 22nd June 2007. It took me almost 2 years to accumulate 50K.
You could argue that I should have used my savings in a better way but then couple of years into a job, you need to be a genius to be able to manage your money in a better way. Isn’t it?
On top of that like many others I was not sure if I can invest anything for as low as the amount I was able to save. Today we know about Mutual Funds SIP and Recurring deposits but those products were not very popular in those days. Apart from that I was also not willing to know about those products keenly.
So if you want your money to work for you the first step is to understand that it is important to save your money. No matter how little you think the amount is, make sure you create a habit of saving. Once you create a habit of saving money, you can start investing early.
2. Avoid Loans
If you follow my blogs regularly you may know that I am totally against loans. It is very easy to fall into a loan trap these days with so much loan products floating around. Even if you cannot avoid a loan, make sure you are not taking loans from credit cards and other such high interest loans because it does not make any sense to waste your hard earned money in paying higher interest.
People argue that home loan makes sense as you are creating an asset but here also I prefer a lesser contribution from loan and more self-contribution. Check out – Home Loan Or House Rent – How to Make The Right Choice.
3. Invest on your Own
The statement “Invest on your Own” may seem an impossible task but if you look at the other side of it, it will make lot more sense. Apart from your family members, there is no one on this planet that can help you make money without his own interest being served.
I am sure now the statement “Invest on your Own” may not sound impossible.
Hiring a financial planner is advisable but the aim of financial planner should not be to manage your money for you but to give you advice and ideas as to what investment option can work for you and where you can make the maximum out of your investment based on your income, liabilities and risk appetite.
Are you making your money work for you? Share your views and ideas in comments below.