My number is Rs.65 crores.
If I have this sum of money, my kid’s education, my holidays, my lifestyle upgrades would all get done. The super set of all my smaller goals – Rs.65 crores in liquid money. And that is to me is really exciting!
If you have been reading my posts, and following just a bit of it, two things must have happened by now
I had shared a formula that showed how much wealth you can build if both you and your investments deliver at peak performance levels.
‘Potential Wealth you can create = Current Wealth*26.46 + Annual Saving *161.43’
Mine came to Rs.65 cores. What is your number? Pull out your calculator now.
The goal is clear. Your wealth should now book the ticket, prepare the itinerary, pack up, step out and board the plane.
And that is exactly where a lot of plans get stuck… in the stepping out phase!
I met a couple recently at their home on a Saturday late morning. We discussed money experiences of the past, future plans, this and that. We had lunch together and tea followed too. I left after what I thought was a great meeting. They promised to come back to me soon.
They spoke to other advisers, didn't find anyone better (unfortunately so!) so agreed to sign on and meet next weekend to complete documentation.
And then the follow ups started. This weekend, next month, cash crunch, unexpected expenses have come up and more such reasons…
I even thought they were lying to me and have begun working with someone else. But no, they were really struggling with saving up money enough to invest at the end of the month. Unable to save from a close to 8 digit combined annual income is simply unbelievable! But it happens.
Managing expenses to make way for some saving is a challenge for many. If you live in a decent place, the kids go to reasonably good schools and you are used to a certain lifestyle; you would spend all that you make. Year after year. Your personal inflation rate is the rate at which your income grows.
To get to your Magic Number target – that inspiring number you can measure against and work towards...
You have 3 things to do
Your adviser will have 3 things to do – which is a discussion for another day.
Today we will explore why people struggle with saving up enough, how the common solutions are flawed and what you can do to break the jinx and start saving and investing like a breeze.
To squeeze out money to save, different people try different things. Many advisers prepare elaborate xl sheets and promote online apps that try to help too.
Let me tell you, from struggling with this myself and seeing up close over 200 – 300 families struggle with this - if nothing at all, I know what doesn’t work.
Especially for morons like me who multitask, hate taking instructions and are a bit unstructured all over…these simply don’t work.
I challenge every expert or financial adviser who advocates this to practice it themselves in real life, before asking others to do it. It is depressing to say the least. Even if not for you, definitely for the rest of the family.
This is like going on a crash diet. The cravings don’t go away and attacks with all vengeance at the slightest possibility.
I tried this for 3 months, gave up, beat myself about it, tried again for 3 months and gave up. It makes you feel in control for some time and then something else happens. Every time I sighted the app on my phone I would break a sweat. It becomes one more work not done – adding to my already kilometres long to do list. The charts stare are me pointing a finger saying “You loser… you loser!”
And after all this, it produces little result. Very little results.
All the above take you on long trips – guilt trips. And that’s no way to live.
So, what works?
If you want to build substantial wealth, you don’t play the small games. You play the big ones. You do what works, gives big results and is easy to follow for a long time.
And there is only one such thing. It is easy and produces substantial results.
I have seen my clients’ net worth grow 20% - 40% Y-o-Y despite equity market falls. I have a client who complains about everything I do, but sticks around for one reason. In his own words, “I hate most things you want me to do Bhuvana, but I get richer and I do it easily because of this one thing I got right with you”.
And that is….
Save At The Beginning of the Month. Automatically.
Pay Yourself First. Don’t wait for paying the EMIs, school fees, card bills, maids, drivers, all and sundry before saving money for yourself. You deserve a bit more respect surely.
When the salary hits the account, some of it (at least 10%, better at 20% or more) goes away immediately and automatically into a saving and investment account. Stopping this or taking it out should require at least 3 passwords and a nasty call from someone before you act. Put it in and allow your adviser to do the 3 things she is supposed to do. End of act.
You are free to spend the rest of the money without any guilt on anything that catches your fancy. You know how to figure that part out yourself.
Do this and your magic number will happen. For sure.