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10 Reasons Why Your Friends Are Richer Than You - ABSLMF Blog

10 Reasons Your Friends Are Richer Than You

Feb 26, 2018
4 mins | Views 347

Do you ever look at your friends buying new phones and wish that you could get one too? Or did you have to refuse a late night movie premier with your friends recently because you were low on cash? You’re not the only one. We’ve all been in that spot where you feel like everybody around you is richer and financially smarter than you. Well, maybe they are. But worry not; you too can catch up by following these 10 simple steps.

  • • Follow financial news

    Thought you’d get rich watching Silicon Valley or Suits? Think again. Apart from keeping you updated with the latest in the financial world, following financial news also enables you to make smart choices with your money. Finance channels tell you how different companies and stocks are working and you can take advantage of that to make smart investment choices as well as purchases. In addition, you can learn about important policy reforms which can help you save more money, especially when it comes to saving tax.

  • • Tracking your expenses

    Not remembering how much you spend, especially with credit cards, is a major reason why you run out of money by the end of the month. Using apps such as BillGuard or Mvelops can help with budgeting by keeping track of the money coming in and being spent. You can also use these apps to help ensure you don’t exceed your limit for spending, based on your savings goals. A good rule to follow is to set aside 30% of your income every month.

  • • Give yourself a monthly allowance

    Back in college, you managed with half the money you earn now, because your parents refused to keep refilling your pockets! It’s time you brought back the trend of monthly allowances to your life. Give yourself a limited amount and try to get through the month with just that. Benjamin Franklin, the guy on a $100 note, once said “Beware of little expenses. A small leak will sink a great ship”, so avoid spending your money unnecessarily. You don’t need to change your phone every time a new model is released, or go shopping every time you see ‘Sale’. You might like to believe that these are insignificant amounts. But when put together, they can significantly deplete your savings.

  • • Understand your CTC

    The smartest way to save more money, is to spend less. And what better way to do that than save on tax? Understanding your salary division can be of great help when it’s time to file taxes. The Government provides tax exemption and returns on certain expenses, and you can claim these if you know your salary breakup.

  • • Going beyond saving

    People don’t get rich by keeping their money idle. You need to invest so your money can work as hard as you do. A good place to start is Mutual Funds, because they’re easy to invest in. More importantly, you don’t have to be an expert yourself as they are managed by professional fund managers. Mutual funds invest in both, equity as well as debt funds, which has the potential to makes them high yielding while also being relatively safe depending on the nature of instruments.

  • • Investing smart

    Who said you need to invest a large sum to make it a larger sum? The rich know that investing small and making it large is even smarter! Systematic Investment Plans are a type of Mutual Funds that let you invest in monthly instalments of as little as Rs. 500! Not only does it save you from the hassle of arranging a large amount of money, it also allows you to benefit from the rise and falls in the stock market with Rupee Cost Averaging. With SIP, you can buy more when the market is down and sell when it’s up.

  • • Prioritise

    Prioritising is not only a good financial habit, but a good habit in general. While spending less on frivolities is one thing, you need to plan for unavoidable expenses, such as house rent, electric and mobile bills, insurance premium; etc. So put away the money required for the important things before buying that cute dress or the latest FIFA game.

  • • Maintaining a contingency fund

    One of the best kept secrets of small financial planning is the importance of an emergency fund. Beyond your savings and investments, you also need to keep aside a sum of money that you don’t touch unless it’s a matter of life and death- literally. Only in case of medical emergencies or other equally urgent requirements should you touch this fund, which should ideally be around 6 months of your monthly income.

  • • Regular maintenance

    Did you know that if you invest a little time and money in regular oil changes for your vehicle, you can save a lot more on fuel, repair and frequent need for servicing? Moreover, it also extends your vehicle’s life. Similarly, by keeping other expensive appliances such as your TV, refrigerator, etc. clean and well maintained, you can avoid a hefty bill and unwanted stress.

  • • Insurance

    Rich people know that planning for things going wrong is the smartest way to make sure it doesn’t. Nobody likes to think about medical problems or any disaster in their future but it would be foolish to think that something like that can never happen to you. The first step in this direction should be getting a good health insurance plan. In urban India about 75% of the out-of-pocket expenditure is on medical care. Having an extensive cover for your vehicle can save you repair and replacement costs too.

So, follow these simple steps and go enjoy your life with friends without compromising too much.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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