Change

Studying Psychology for seven straight years in college and then working as HR professional for another seven years does give you some insight into human behaviour. One of the greatest epiphany I had in last 14 years of observing and studying human behaviour is this which I typed, printed and have stuck in my planner……

Motivation is fleeting. Discipline is permanent. Having Goals may or may not work. Habits always work. Any venture – personal or professional does not survive on Passion. But every venture will work if you have a System build to make it work. And Ethics are always more important than Intelligence

This pretty much has been my mantra of how I work. That does not mean I discard motivating myself or others or do not have any goals. I do all that too, but I now know for sure that setting goals is far less important than setting systems. That motivation is like fuel – needing frequent refill but discipline is who you really are. That spending time on developing a system or a habit increases your shot at succeeding than does anything else. And intelligence coupled with ethics and morals and good values will make a far better world than without it.

We all have a broad idea or a general long-standing dream of how we want different areas of our life to look like – work, family, health, personal growth. We all at some stage in our life have a goal that we believe will take us closer to that dream but most of us fail at it. More often than not, we fail because we do not have realistic plan, system and habits to achieve it. The goal or the plan to achieve that goal is not in tune with who we are at the present. That plan is not in sync with your current state of mind, skills and your immediate circumstances. So at some point it all comes crumbling down. We then feel demotivated and go back to living each day without direction.

CHANGE. Now that is a loaded word with enough literature written about it. But I will keep it short. There are two type of changes – 1) Evolutionary Change: slow, gradual, incremental and non-dramatic change that is all-encompassing, perpetual and ever-lasting 2) Revolutionary Change: an abrupt, kick-in-your-gut, disruptive change that is dramatic, shocking, speedy and short-lived. Both types of changes are equally important. A shock-to-the-system change is just as good as a slow-but-steady change. I am not going to say which change is better. But I will say this – not all of us have the energy, the focus and the drive for Revolution – be it in our personal life or on a larger scale. So when people make three months plan to reduce weight or quit smoking, what they are doing is planning a revolution in their lives – a disruptive, abrupt change. And they do this without thinking if they are the kind of person who can lead and sustain the drama that ensues in bringing an abrupt change. So the plan does not work and they feel like a failure.

All of us however can bring a slow change – a sort of change that is broader but focuses on one thing at a time and steadily evolves. The 1% progress each day kind of thing. That sort of change does not expect you to fully engage but rather only demands a small fraction your time, attention and energy each day. We can all survive that type of change. It comes from tweaking of habits and creating systems that forces a certain behaviour out of us. That change is not a leap but a step.

So back to goals and system now in the purview of personal finance. Someone who is relatively new to the whole personal finance and has a bigger dream of financial independence, here is my roadmap of achieving it through steady, incremental change:

The Big Dream: To be financially independent by the age of 45 or earlier. This means that after the age of 45, I would not like to work for money or be financially dependent on anyone.

The Cornerstone Habit: Earn more, spend less and save more and invest.

The Main system: Track every penny. And automate saving so that I do not have to stretch my willpower and decision-making energy to do it myself.

The Smaller Steps:

  1. Emergency Fund: First and foremost is to build and maintain a 3-6 months of emergency fund. This to help me focus on my other goals without having to worry about my current situation. This is building myself a primary safety net.
  2. Get rid of every possible debt: I don’t have any debt right now, but it is always a part of a plan. If I had any debt, after building myself an Emergency Fund (while making a minimum required contribution towards debt) I would attack the debt in big chunks. The way I see things, except for a home loan, most debts can be cleared over a period of 12-18 months top.
  3. Never get into debt again: Like seriously. Life is not about running in circles of getting into debt and getting out of it. We are talking incremental change here. I do not intend to get into debt again. And I will think a thousand times before planning to loan money for anything – even home.
  4. Reduce spending: No point in anything if you cannot sustain a life with what you have. I do not remember where exactly I read it, but this is smack-in-your-head truth that every permanent decrease in spending has a two advantages, it increases the amount of money you have each month to put into savings, and it lowers the amount you need every month for the rest of your life. Mic drop!
  5. Earn more: To upgrade my skills. Have a side hustle. Be good at my job. Take calculated risks. Learn about money and taxes and insurance and investments.
  6. Milestones: Depending on how I envision my life, I save for major milestones – Wedding, a House, Travel, Babies, Health. I have a fund for each of my future milestones – I have a Wedding Fund, a Career Fund (to invest back in upgrading my skills required for my career), A Baby Fund, A Travel Fund and so on. I have prioritized each of the fund and contribute to each fund accordingly, meaning my bigger chunk of money is going for Wedding Fund than Baby Fund right now.  This sounds cumbersome, but it is not. It keeps me on toes and prepares me emotionally and financially for major life events.
  7. Have fun: I still spend a pretty penny in buying books. I take big vacations with my boyfriend. I buy hot chocolate regularly at Starbucks. I spend money buying new cameras. I have a gym budget. I have not sacrificed on stuff I really enjoy. But I do not spend on things that I don’t care about (clothes, shoes, bags for example). I know my happy place and I have understood what is important to me in present. I spend accordingly.

With the above framework, I do not think there is anything else I need to do to achieve my goal in next fifteen years. All the above things are about slowly changing my behaviour and turning the new behaviour in habits. It is an evolutionary change and it requires observation, patience and a lot of trial and error. And because my plan is spread over a long period of time, quitting is not an option because I know I am not forcing myself for a temporary change. I am building myself into a person that fits perfectly with my idea of future.

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How I run my Financial Universe – Part II

This is an ongoing two-part series that will document how I run my financial universe. It will cover how I manage my money, how do I invest and put my money to work and how do I keep myself on top of it all. Hope you enjoy reading it and pick some important tips on the go. For Part I of the series click here.

Apologies for the big delay in the post. Things were hectic at work and then there was investment declaration season and I was down with viral fever for two weeks and then business travel. There is finally some semblance of normalcy back in my life and I felt ready to get back to writing.

In the second part I wanted to focus how I operate my investments every month. It took me a more than 24 months to be this disciplined about my savings and investments and it wasn’t without a few failures. The best advice I can give anyone who is trying to build a habit or working towards a goal and failing is this – Keep doing it. Just because you let yourself loose for a day or missed a week doesn’t mean you give up completely. Keep at it and forgive yourself a few slip-ups.

Cash Savings: I sit on a substantial pile of cash every month. Meaning a stash of cash is always lying my two accounts 1) Emergency Fund and 2) Vacation, Shopping & Big ticket item purchases. Every month the money automatically flows in these two accounts and I do not touch them unless I have an emergency expense or a shopping to do. The hardest part about building these cash pile was the fact that I would be tempted to use that money to invest in stocks. In my head a voice would go “But I could divert that money to my investments I can buy XYZ stock right now!…..savings account only give me 6% interest, I can earn much more if I invested that money!” I have been guilty of withdrawing money from Emergency Fund and buying stocks. After I would do that, guilt would hit me in waves and I would start worrying about actually having to face an emergency! Sounds stupid? It was stupid. So I made a plan.

I decided to set a goal for my Emergency Fund. Something like “Reach minimum of Rs 10k in this month and you are free to spend/invest the surplus from that account”. Next month, “So now I have 10k, let me target 30k this month and again any surplus over and above I can use to invest”. Gradually I kept increasing the threshold of the minimum balance I must have in my Emergency Fund and this past January I crossed a sweet mark of Rs 100,000/-. I keep doing that even today and it has totally worked for me.

Mutual Funds: I invest in 7 Mutual Fund schemes every month through SIP. Each scheme I invest Rs 1000/- per month, so every month its Rs 7000/- The money is automatically transferred from my Salary Account to my Investments Account and debited from there. It’s the investment that has my least attention and care. Its automated. I have nothing to look into it. The Mutual Funds schemes were carefully selected and I keep a track of the progress and ROI through my google sheet. But I am more than happy with how my investments in Mutual Funds are shaping up. All I do is increase the principle amount of investment every year (anywhere between 10%-15% depending on my income and expense scenario). This investment is 50% of my total retirement investment so I never even think of messing with it. I treat it with utmost respect. Also redeeming from Mutual Funds usually take 3-5 working days and that’s a lot of time to withdraw money for small/petty/insignificant expenses so it never even crosses my mind to withdraw. I would rather hustle and find other ways to take care of such expenses.

Equity: I love following Stock Market and researching equities and IPOs and market trends. I am not a pro. Neither do I have any background in Finance. I read a lot and ask a lot of questions and attend as many seminars/conferences as I can. I have a Demat account (a mandatory thing in India if you want to invest in Equities/Commodities/Mutual Funds) with a well-known and well-respected brokerage firm in India. The USP of that firm is their research based analysis and recommendation. I read each newsletter from start to end. I then pick a stock I wish to invest, try a thorough analysis with my limited knowledge, check my broker’s stand on the same stock (to make sure there isn’t any upcoming event/government policy that may affect the investment), decide the tenure I want to invest (less than a year/a year/3-5 years etc) and then wait for a price range where I feel comfortable to buy. Typically it takes me roughly 3 months to invest from the day I pick a stock – it’s a game of patience and research and number crunching, but I love doing it in my spare time.

So every month, a small amount is transferred from my salary account to my Investment Account (besides the Mutual Funds transfer) and I do not touch that money till I am ready to take a plunge. There were days I would blindly follow the recommendations and buy stocks “Just because they are such a well-known, large-cap companies. Surely these cannot fail!” But now I am getting better at it. Investing in stock market is a skill and an art and any engaging mind will love it.

PPF: Public Provident Fund is a government scheme wherein you invest a fixed amount monthly or annually for a period of 15 years and earn a fixed return of roughly 8% interest (it keeps changing every year or so) which is 100% tax-free. It’s a safest investment an average Indian cannot resist and the safest bet for retirement saving. I have a PPF account, but I do not invest in it monthly. I only invest when I have spare cash to throw in. 8% for a lock-in period of 15 years in my mind is not the wisest investment move, but it is safest – your capital is protected. So I could not resist. The monthly amount I have committed is Rs 5000/- per month but I invest annually, so roughly Rs 50k-60k is the amount I invest anytime during the financial year. I don’t think about it too much. I look at investing in PPF as a good habit – nothing more.

Besides this, I also have PF (Provident Fund) account which is mandatory saving that is deducted from my salary and matched by my employer. I cannot withdraw my PF account unless I am unemployed for at least 2 months or I am 60 years old (law of the land!) That is another source of my retirement fund, but I have no control over it so I don’t think about it. I do keep a track of my PF balance but nothing more.

That is all the investment I voluntarily look after. I should add that I am an educated urban Indian girl – a privilege in my country that I am acutely aware of. I was also raised by family who has cultivated minds with deep-rooted sense of freedom and they taught me to be a grown-ass woman who can take care of herself. I do not take any of these privileges for granted and try to do the best I can with my situation (good or bad).

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How I run my Financial Universe – Part I

This is an ongoing two-part series that will document how I run my financial universe. It will cover how I manage my money, how do I invest and put my money to work and how do I keep myself on top of it all. Hope you enjoy reading it and pick some important tips on the go.

I have multiple bank accounts, four to be exact. Friends and family think of it as my quirk among other things. But I know it’s not. I have multiple savings accounts not because I love them or it makes me feel “adult-y”, but because that is how I keep myself accountable on multiple financial goals. It took me a good one year to figure out that I am not good with accumulating all my money in one account and mentally dividing the pile for various money goals. So instead I opened 3 more banks accounts besides my usual checking account and now I sleep in peace knowing exactly how far I have come on any goal and how much do I need to go. This is how my Financial Universe operate:

  1. Salary Account: The mother of all accounts. I receive my paycheck in this account and all other bank accounts are linked to this account and the fund transfers are automated. So when my monthly salary is credited on 1st of every month, on 2nd the automation kicks in and my money flows into all other 3 accounts. The balance is the money I am left with to spend on my personal expenses (Commute, Entertainment, Books, and miscellaneous costs) and the bill payments (Electricity, Mobile, cable etc).
  2. Fuck Off Fund Account: Since I am a big fan of Fuck Off Fund/Emergency Fund/War Chest, this was the account that I first opened to separate my savings and spending. I add money in this account at every opportunity I can no matter how small the amount maybe. This is the Holy Grail account – the most respected Bank account in my eyes. Its my primary safety net against any unexpected cost or emergency. Its my I-CAN-BE-AN-ADULT-AND-HERE-IS-THE PROOF account. The balance of the account equals to the size of my self-respect – bigger the balance, bigger self respect. Simple as that.
  3. Investment Account: I heavily invest in equities and mutual funds so every month a small percentage of my salary goes into my investment account. My monthly mutual funds SIP deduction happens from this account. If I buy equities, I pay from this account. If I receive dividend, it is credited in this account. Basically all transactions related to my investments happens in this account.
  4. Vacation & Shopping Fund: Me and boyfriend take at least 2 big vacations every year. And we both go dutch. In the past whenever we talked about planning for vacation I would scramble and panic to think where do I fund my vacation from and then my monthly budgets would go on toss or I would not contribute to my savings and divert that money towards vacation expenses. So last July I had this idea to create an account for my Vacation and Big ticket shopping (furniture for example). So I created an account where I deposit some money every month irrespective of whether I have any vacation coming up or wanting to buy a big-ticket item. When time actually comes to go on vacation or shop or buy any big ticket item I simply check the balance and declare my budget. During vacation I use this account to swipe all my expenses and never feel guilty of contributing less to my savings for that month or using a credit card.

Of course I have my other short-term saving goals such as Wedding Fund, Europe Trip Fund, Future Home Fund and Maybe Future Kid Fund. But for all these goals I have one account which is a Recurring Deposit (RD) in one of the above bank account and the funds are automatically transferred. So I never had to open a separate account for it yet. Maybe I will in near future.

People think that having multiple banks accounts must be cumbersome but in reality it is not. Automation and technology makes everything easier. Once the automation of fund happens, I check the balance and simply update my google sheet which has all the information of my financial universe. One time activity every month. Simple as it can be.

On the positive side, having multiple bank accounts have made me more accountable towards my goals and brought more discipline in me. All the above accounts also earn me some money in interest so that can’t be bad, can it? It has also reduced all the stress of not knowing how to go about saving/investing. It is one of my most recommended tip to anyone who will listen – separate the spending and saving accounts and see the magic happen.

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Money Funnel: January 2017 edition

So at the end of last year, I completely  re-hauled and simplified my savings strategy. I created a Money Funnel – a simple, sequential & prioritized list of where my savings will go. I had hoped it will bring me clarity of thought, help me prioritize my money goals and simplify my life. January 2017 was the first month of actually executing the Money Funnel and this is how I fared.

  1. War Chest/Fuck-Off Fund: 0.64% of the total savings. The smallest contribution this month was towards my Fuck-off fund because I had recently replenished enough money to swell my account of 4-5 months worth of income. So I decided to reduce the contribution and divert it towards long-term investments.
  2. Equity: 56.41% of the total savings. The lion’s share of my savings in January was put towards buying stocks. I had been researching 7 companies that I was keen to buy stock of and eventually when I felt it right I bought them. I did not buy all 7 stocks in one day or at one go. I spread my contribution throughout the month and tried to get the best price I could.
  3. Mutual Funds: 4.21% of the total savings. I did not add more than my usual contribution towards ongoing SIP. I am pretty happy with them.
  4. Short term goals: 12.15% of the total savings. My second biggest chunk of savings went towards my Short term goal. Currently the money is equally split between my Europe Trip fund and Wedding Fund.
  5. PPF: 3.01% of the total savings. The second smallest bit of my savings went to PPF. I suspect it will continue to be the last on my priority list and will have smallest contribution because of its long lock-in period and not so attractive interest rate. Nevertheless its a saving and I get tax exemption so I do not want to make a lot of fuss about it.

So from the above you can see that I did not stick to the original percentage allocation towards each goal. But that is ok since January was a different month financially. By February I know my Money Funnel will resemble the actual percentages I had planned.

My actual savings was 45.39% of the total net income. I did not hit the 50% mark but 45% is no small number. As long as I am saving money and investing it sensibly I really have nothing to worry about. I am saving a healthy chunk of my salary, I am debt-free, at prime of my age and my career seems fine. I truly have no complaints. Thank-you Universe!

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Be prepared to stand-up for yourself

Washington: One woman held a sign reading: 'build the wall... around Trump'

Yesterday was Women’s March on Washington. People and not just women came together across the globe to display solidarity on an issue of women’s rights, equality and mutual respect. People took up issues of LGBT, minority, feminism and refugees. The protest was against a man occupying a highest office in one of the most powerful country in the world because he as a leader will not stand-up for women, LGBT, minority and refugees. Because he speaks of building walls not bridges, because his administration will deny funds to an organization that helps women take care of their own reproductive rights. Because he is vile and disrespectful. When I was discussing about the March while seeing the news on TV about it to my mother she said “If my daughter still needs to fight for being treated as a human being in 2017 then maybe I did not fight hard enough when I could”. She felt sad and disappointed for not being able to do more as woman (by the way – my mom is a single parent who raised her only child, a daughter to have a Master’s degree without anyone’s help). Mom then looked at me and said “Do not give up Nimi, we will work hard and take care of each other – that’s the only way we will never have to compromise on our dignity”.

Her words rings in my ears again and again. To work hard. And to take care of myself. In a way that has been the mantra of my life all along – learning to take care of myself. And therefore it has bolstered me to passionately speak to all those who can hear me “Watch your own back. Have a bloody, goddamn Fuck-Off Fund” Why?

  • You should not have to rely on your father, brother, boyfriend, husband or son to protect your dignity, rights and respect. Your dignity and your respect is yours to take care of. It must be your priority – save money to watch your own back.
  • At some point as a women we may face an uncomfortable situation – an abusive father, an asshole boyfriend, a cheating husband, sexually harassing boss or an ungrateful child – save money to get out of that uncomfortable situation without feeling helpless.
  • Rather than learning to do a perfect eye-liner, learn to do your own taxes. Rather than spending on clothes that will make you look thin, spend on books that will make you smart as whip.
  • Even if you have a text-book perfect men in your life – a loving father, an encouraging brother, a feminist boyfriend (I do) or an egalitarian husband you still need money to take care of them. Your father may lose a job, your brother may be in a bad debt, your boyfriend or husband is stuck in a bad job, your child may need more money for their education than your partner can fork out. Be an equal and pick up the battle when the men in your life can’t. That way your womanhood will not let them down.
  • We may have bad governments that do not fund organizations like Planned Parenthood. Medicine prices may go up. We may be denied subsidized rates to contraceptives. We may be denied right to pro-choice. Always have money to shell out whatever price it is that you have to pay to do what you want.
  • Next time any man says “You look fat/thin/small/clown/ in that dress/shoes” or jokes about feminine fashion speak up saying “Thank you for the compliment. You must be relieved that I did not use your money to look like this”
  • Save money to buy you own diamond ring. Own your sparkle.
  • When your boyfriend/husband picks up the tab, stop him and look straight in his eyes and say “We go dutch”
  • Earn the fucking respect of all the men in your life. Not because you are a woman and they must. Not because you cook their food and do their laundry and take care of their homes and have their babies. But because they see you as an actual partner in life – they know they can rely on you when things go wrong. Because they can look at you and know that you will share a burden.  Because you will not assign either of you to a gender specific role in a relationship.
  • When any man calls you “silly/stupid” have an unwavering courage to say “If you say that next time, we are over” Save money to have confidence to say that.
  • When the world elects people like Trump, be ready to fight for your kind. Even if you lose be ready to not have to be forced into a situation you do not want to be in.
  • Be ready for your mother, sister, daughter and best friend. Have money to be able to help them get out of a bad situation.
  • Be a financial inspiration and not a financial burden for the men in your life.
  • Save money and be ready to say “Fuck-off” if anything makes you uncomfortable. Have a Fuck-Off Fund.

Dedicating this post to all strong women out there. May we know them. May we be them. May we raise them. #Womenrightsarehumanrights

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Comfortably poor!

Recently I came into a lot of sudden windfall money! Not really “sudden” sudden, I knew it was coming. But yes it was neither a big bonus, or a hike in salary or anything. It was my full and final settlement that I received after I left my last employer. It was my first job and to put it mildly I busted my ass for 6.5 straight years. So when I left I had a giant pile of unused leaves and gratuity that at the time of full and final settlement turned into a big amount.

When it was credited in December, I bought a laptop, replenished my war chest, invested heavily in stock, added to my Someday Wedding Fund and bought myself a small diamond locket that also turns into a ring (I always wanted a diamond jewelry that I earned on my own) and still had some money left.

But then I started having weird thoughts; about upgrading my camera (my current one is fine), getting more jewelry (I actually don’t wear it that often), maybe finally an air conditioner (in Mumbai we need it for only 3 months of summer), get hiking boots (haven’t went for a hike in last 4 years), more books (my Achilles heel), buy GoPro for boyfriend (he never even showed any interest in one), upgrade washing machine for Mom (why not) and on and on and on…..

It was during New Year’s eve that I was sitting with my buddies in a bar that happened to be inside a mall when my friends very sweetly brought me down on earth. After our drinks and dinner we came out and to while some time till our respective Uber arrived we took a trip in an electronics shop nearby. I was unusually high (pun intended) on my recent cash-rich status. As I was almost making up my mind that I absolutely must have the fancy new camera, my friend quipped in “Its funny to see you say things like you don’t need it but are buying it! You are always a voice of reason in the group and the one person who lives so comfortably poor that its envious!”

I have been introspecting since. Do I live comfortably poor? What does that even mean? Then about a week after that incident, I pinged the same friend asking what did he actually meant (I am slow) and he laughed and said “You seem to need so less of everything all the time and are always so rational about spending money that whenever we see you, I think how comfortable you are with so less of everything!”

I then realized two things. 1) That for how long have I be so restrained and rational about all things money that everyone around me has started seeing it as my nature and 2) I still have a long long way to go after observing my recent irrationals thoughts on blowing money.

Yes I live comfortable poor by:

  1. Not having a big wardrobe. Never owned more than 25 pieces of clothes at any time. Never felt like it.
  2. Very little partying/ socializing. When I do, it is mostly at local pubs and I only drink a glass of wine. Not fond of any other liquor all that much.
  3. Not having any debt. Got rid of every last one I had.
  4. Walking to and fro from work.
  5. Not spending on fancy grooming (spas, fancy hair cuts and colouring are alien topics)
  6. Spending money on stuff that I actually enjoy spending on like travelling, photography and books and sometimes a quiet nook in Starbucks with hot chocolate.
  7. Saving/investing money and protecting myself for the future because that is what I truly believe every self-respecting human must do.

Part of what I am today is my background and my upbringing, But the other part has always been a burning desire to be a strong, independent and self-reliant woman. And I believe being financially aware is the first step. I was glad my friend and I had a chat. It brought me down from a mental trip. It made me realize that I deserve to enjoy my earnings and that I should do it more frequently but without being irrational about it. There is after all huge difference between enjoying and disrespecting your hard work.

And as far as rest of the cash-pile is concerned, I did not buy the camera that day. Instead I bought an upgraded washing machine for mom and took the rest of pile and invested more in equity and continued to live comfortably poor ever after!

Money Funnel 2017

Remember my system for how my money flows for 2016? Yes as I predicted in that post I have trashed it and here is new and updated version.

Now that I don’t have any debt and my War Chest looks better, I wanted to do something to keep myself disciplined about sincerely saving/investing every month. Something that will keep me in line but will not exhaust me or drive me nuts. I had ideas all over places about investing and was not really happy with my current system. Then I stumbled upon the idea of money funnel – a sequential order of saving/investing your money and it seemed like a good way to start. So this is my money funnel for 2017:

  1. War Chest (30% of my saving): Though my war chest is way over INR 170k, it still does not feel enough. And now that I work with a start-up rather than a stable organization, it is even more important that I secure myself financially. So I am targeting INR 250k as my new War Chest goal for 2017. The account that holds my War Chest is earning me 4% interest if I keep my balance over 100k, so its not so bad to add to this pile more than anything.
  2. Equity (30% of my saving): I plan to invest 5k per month in slowly building my equity portfolio. Equity investment takes more time, research and patience and therefore I would rather do it steadily and knowingly. I do not like to blindly follow the advise/tips that anyone throws at me – no matter how credible the source may be. So taking baby steps is a good idea. Reading about stocks, buying 5-10 shares every month and building a nice compact portfolio with good balance in mid-cap and large-cap stocks is my overall goal. So after War Chest, equity investment is number 2 on the list.
  3. Mutual Funds (20% of my saving): I have been investing in Mutual Fund SIP for over a year now and my investment have grown to a respectable pile. After war chest, this is where my next wad of cash will go. I will continue investing 7k per month in SIPs and try and add more gradually making it 10k per month. And yes I earn tax exemption on it, so its a win win.
  4. Short/long term goals (10% of my saving): Wedding Fund, Europe Trip Fund, Future Home Fund and Maybe Future Kid Fund – yes I have an exhaustive pile of short term and long term goals and my next pile will go in this one account that is mother of all these goals. It is actually a recurring deposit since I still have not developed a system/investment idea for it. But RD gives me good enough returns so it will have to do for now.
  5. PPF (10% of my saving): Yes I have a typical middle-class Indian mentality at times and so I have a PPF account. I do not invest in it monthly – too long term with minuscule interest rate to excite me but it is also the safest and so whatever is left of my saving I will move it to PPF. And two more words about PPF – tax exemption! Never forget.

So for example if I saved INR 10,000/- every month, this is how my money funnel will operate:

Savings per month 10,000/-
War Chest 3,000/-
Equity 3,000/-
Mutual Funds 2,000/-
Short/Long term goals 1,000/-
PPF 1,000/-

So now my goal every month should be to save as much as I can and the money funnel will take care of all my future needs. Therefore I am going to track my savings rate per month and will post my monthly money funnel on last weekend of every month. Just to keep myself accountable and analyse my savings trend. Who doesn’t love analysis?! Fingers crossed!

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