When life gives you lemons…..


Between August to October of this year, I was in the weeds with a barrage of problems:

  1. My boyfriend was diagnosed with a health issue and was in hospital for over a month. He is fine now but it was stressful.
  2. I had planned a house renovation and some new furniture in August – the same time my boyfriend was admitted. I was juggling home renovation and flying between two cities in the same month causing physical and mental exhaustion.
  3. My start-up was heavily bootstrapped in August and September as we were unable to raise next round of funding. So founders asked us all to take a 50% cut. Thankfully we were able to get the investors in October, but I went two months with only half my salary.
  4. My housing society is going into repair and maintenance work in January and in October the society committee passed a resolution of making each homeowner pay Rs 100k over a period of next 6 months.

Unexpected problems kept pouring. Life happened. It was rough. And my emergency fund rescued me. Yes, my emergency fund have hemorrhaged to death but I shudder thinking of what would have happened if I had no back-up money stashed away. I cared least about how much I spent in travel or how was I going to survive two months with half my salary.

Psychologically I was down and demotivated. I could not look after my health. I did lose my sleep worrying about my boyfriend’s health. My eating was erratic. It was a phase where even a smallest inconvenience ticked me off. When we are going through a bad phase, we tend to magnify our problems and compare them with others – I imagined how everyone was enjoying their work while I was taking half the salary. I saw people planning grand Diwali festivities, while I was anticipating cash crunch. And the cycle continued – I was feeling stressed, I compared my life with others, overthought everything that I did and then felt more stress.

Last Sunday was the first time in over 3 months which felt like a normal weekend. I sat down and analyzed my finances and my spending pattern. I did not have any frivolous expenses (I had no time for it really), but now I clearly have a task at hand – to replenish my Emergency Fund as fast as I can.

Having a goal is need of the hour to feel like I have some control on my life. It has to be a stretch goal – something that will force me to sit up and take a hard look at life and make changes. I want to be strong for my boyfriend who is himself going through frustration of having a physical setback. I am slowly getting back into my routine and gaining my health back, hoping it encourages my boyfriend to get back on track.

So this is my goal: To save 500k cash in next 13 months – Nov 2017 to Nov 2018 in a savings account.  I will write down my detailed month-on-month plan and my process in the next post and maybe add a progress bar too.

Till then keeping fingers crossed and hoping no more unexpected problems.

Image credit


My core financial mantras

pexels-photo-442574I have a long list of topics to cover in this blog – how I pick a stock, what lifestyle changes I made to become financial savvy, what are my main productivity hacks etc. But over the last few blog posts and with this one I am aiming to establish my financial philosophy – what shaped me as a person and what shaped my idea of money and what mantras I live by. So please bear with me and my philosophical rant for this one more post. We will soon move on to more practical stuff.

I have a colleague of mine in my current organization that I deeply admire. I was doing my monthly field visit when I met her over a cup of coffee last week. We got talking about our work, I asked her if she is emotionally happy with her role and work and soon we got talking about our past experiences. Her story was inspiring. Born in a conservative Muslim family, she was one of the 2 daughters. A bright student in her school days, when she was in 9th grade her father was diagnosed with kidney failure. With two daughters still in school and she being the eldest, she was married off at the age of 15 to her distant cousin 10 years her senior. An innocent kid of 15 years she left school, got married and moved to a different city with a new life she was not equipped to handle. Her husband ran a few business and failed at each one of them. In next 5-6 years she gave birth to 2 children – a daughter (now aged 8) and a son (now aged 3). Fed up of failed marriage when she was pregnant with her son, she moved back to Mumbai to her parents. With no college education or any sort of skills and a new-born, she started doing odd jobs – a sales girl, a bar tender, a party hostess etc. In next few years, she learnt sales, saved money and rented a home and got a legal divorce from her husband. Her daughter is still with her husband in a different city and she lives with her son here in Mumbai. She doesn’t have skills or tools or education to know how to save for her children and manage her money. So I shared my philosophies and some tips and tricks with her. This is what I shared:

  1. Never disclose your income or savings to anyone: One’s income is a private affair and I always discourage people and especially women to discuss it with anyone. Let family and friends speculate as much as they want – once you disclose your income or saving it invites unnecessary expectations. As a women, it is even more important to have financial safety net and therefore I am also against merging finances with partners.
  2. Never borrow or lend money to family members: Long distant cousins asking you to invest in their business? Say no. Uncles and aunts emotionally manipulating you to help them or their kids? Ask them what you can do besides financial aid. Siblings going through financial rough patch? Help them with groceries or whatever they need. But never lend money. There will always be a story in each family where a sibling/cousin/uncle/auntie cheated their own family members. Seriously it’s a scam no one ever talks about. We tend to trust our family blindly more than anything else and therefore its easier to be conned by the same people. Never indulge family members with money. But agree to help them in other ways – help them find a job if they lost one. Or buy a month of groceries if they are facing a financial crunch. Pay for their child’s education for a month. Or support them in paying medical bills if its a health issue. But never ever open up or agree to lend money. Similarly never borrow money – once we borrow from our family, we open ourselves to the judgement and interference in our lives by our family. It leads to bad emotions at some point. Safe to borrow money from banks even if you have to pay more. Family and money should never merge.
  3. Never take financial or investment advice from family members or friends: An aunt/uncle starting to work as an insurance agent? Say you already have an insurance. A friend who seem to have had a recent financial jackpot suggesting you some tips? Listen and then ignore. The thing with investments and savings is that each one has a unique story. If you take advice from your family member and then fail, there will be bad blood. If you succeed, the member who helped you end up feeling that you owe them. Better to stick with professionals and your own research.
  4. Always aim to save. And save more: Every penny counts. Even in the tightest of the situations, we can squeeze to save money. Saving is a cornerstone habit of a good life. A life that is self-sufficient and respectful. Who wouldn’t want such a life?
  5. Learn the art and science of personal finance: Not all of us have interest or aptitude to learn about finances and honestly its a boring topic. Yet not knowing or learning about it has direct dire consequences on your quality of life. Think of it as eating a bitter medicine for a good health – we don’t savour it but we still eat it. One need not be an expert but one should definitely know the basics such as budgeting, investing, taxes etc.
  6. Always up your ante: Learn new skills, study your field, build network. Basically build an autonomous brand of yourself. You may have a job, a career today. It may not be case tomorrow. You still need to live right? So why not build a brand of yourself. Have a hobby, a side hustle, a network of good people who aim for a good life. Have credibility in the market – meaning have a reputation of being a man/woman of your word. Be on time. Be polite. Learn something new. Seek a mentor. Be a mentor yourself. Always keep upping your game – at work or at life. Nobody pays you for nothing. So be a person who always has something to offer more than what is expected of you.

That is all.

Pariah. And a Prequel


Circa June 2002: A humid wet day in June which was to be the first day of my last year in school. Everyone had stiff and crisp uniforms. Hip new backpacks. And new books and notebooks. And stationary. Beautiful brand new stationary. Everyone was eager and wide-eyed. We were “The Seniors”. Nobody was above us when it came to the pecking order of a school life. And we were in our most crucial year of school – The Board Exams (exams conducted by State Govt, after which students who pass graduate to two years of junior college by choosing a specialization in either Science, Commerce, Arts). We were expected to be serious and studious. Teachers filed in the classroom one after another to tell us about the bright future that lay ahead of us. And how we should work hard to come out with flying colours. And how we should be focused on having a career. And above all, how we should not let our parents efforts in vain. And of course amidst all this sermons, it was taken for granted that you will not choose a field of Arts. Science (first preference) or Commerce (in case you fail to get admission in Science) was what considered as a sure thing.

Circa June 2003: I passed my board exams with first class. My result was good enough to get me an admission into a local college in Science stream. My mother would give me a daily allowance to go buy admission forms of all three streams (Science, Commerce and Arts) to apply to colleges of my choice. I would come back applying for only Arts. While my mother restrained from displaying her frustration and disappointment to me, family and friend were less kind. “What will you do studying Arts?” they would ask without a hint of politeness. “Look at the subjects in Arts stream this XYZ college has to offer! Psychology? English Literature? Political Science? What will you do studying these things?” “Try applying for Science, you may not like it now, but it will grow on you! And with science you can end up working in any field, Arts has no career”. I vehemently ended up choosing Arts in junior college. June of 2005 I completed my junior college and was ready to move to a degree college. At the time I was also 2 months away from turning 18.

Circa June 2008: I graduated with Bachelors in Arts with double majors in Psychology and English Literature with first class while holding a part-time job and paying my way to college. My college timings were 7.30 am to 12 noon. I spoke to my college professors in my first week of college explaining I cannot attend lectures beyond 9.30 am (so maximum 3 lectures of 45 mins each) because of financial state but promised them that my grades will not be affected. They agreed but kept close tab on my projects and assignments and development and grades. I would run towards college exit at 9.30 am and reach my office at 10 am. From 10.00 am to 7.00 pm (and sometimes even beyond 7.00 pm) I would bust my ass out at a back office of an equity brokerage firm. I learnt to use computer and internet and understand taxes and customer service and markets and economy in those three years I worked there. My boss – a generous and accommodating man ran the firm with his wife and they would kindly allow me to use their office computer, internet and stationary for my college assignments. The salary I got covered my college fees, books, conveyance and tiny savings. Since I rarely hung around on college campus, I had no other expenses that my peers did. First class in Arts is a hard tag to achieve so my family and friends were shocked to see my results in spite of holding a job. Arts subjects like English Literature and Psychology are not objectively scored – you rarely get 10/10 for a critique of Shakespeare’s work and therefore are hard to get score unlike that in Science or Commerce where an answer is either right or wrong so either 10/10 or 0/10. When I secured a seat for my Masters and quit my job, my boss gave me a cash reward as a token of appreciation. With a small chunk of cash created by saving my salary and cash rewards, I confidently plunged into my Masters and accepted an unpaid internship in India’s biggest telecom company.

Circa June 2010: I graduated with Masters of Arts in Psychology, specialization in Industrial & Organizational Psychology. January of the same year, I also graduated with a one year diploma in Human Resources. 3 days of University, 3 days of internship and diploma classes during Sundays were how my two years were scheduled. Both my degrees were from Mumbai University – a state government-funded university which is highly cheap compared to private universities. Not only did I graduate without any student debt, I managed to pay for both my degrees and unpaid internship on the money I saved. My mother had stopped paying for my education since Sept 2005 when I turned 18 and could legally work. My degrees are the product of my sweat and blood and bold moves.

Circa June 2010: Because I did not go to private college or get a fancy engineering or MBA degree, campus placement was not an experience I had to go through. My college pretty much kept it old-school. Work hard, get an education, get a degree, and be on your own. And to be honest, organizations are not very keen to hire Arts students so they never came to our college. After getting my results in May 2010, I took a week off and enjoyed doing nothing at home. A week later, I uploaded my resume on all job portals. Got a call from a largest Indian Pharma company for a role in HR in first week of June I cracked two rounds of interviews and joined them immediately as a Trainee. Less than a month since receiving my Master’s degree I was at my workstation. I had a degree of my choice, zero student debt, zero financial support from my parent, five years of work-experience (five years more than my peers who never ventured in part-time job during college). I had forged myself a path of my own and succeeded in making my way in the world without any compromises.

Circa June 2017: Its been fourteen years since I chose to stay true to myself and pick a subject of my love. Asian cultural norms focus on pressurizing kids to choose a field of Science or Commerce that is safe and will surely land a job – any job! I too was pressurized into choosing a safer way out. But I stuck my neck out and chose to work hard and figure out a way.  I chose not to be “that Asian kid”and flowed against the current. Whatever I achieved today, no matter how small is my own. My own legacy. This year in September, I will turn 30. Since starting to work in June 2010 I paid half of my share of home loan (the other half was paid by my mom), cleared another personal loan, cleared my credit card debt, locked away my emergency fund and have a considerable financial savings and investments towards my retirement. I donate heavily to a cause of girl education. I am still in touch with my professors and my first boss and my college friends. My past and current bosses vouch for my “will”, my friends and family and comment on my “stubbornness”, my mom speaks about my “resilience” and not a day goes where I am not proud of my struggles and my decisions and these remarks. I have earned them at a cost. I never had a “college-experience” but I have a grip on my life and that is a better experience.

Photo credit


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.

Image credit

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).

Image credit

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.

Image credit

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!

Image credit