Despite having knowledge and experience in the financial services industry, and even after having started early, a few years ago I found myself behaving irresponsibly when it came to managing my own finances.
As life caught up with me, in my late 20s – as a working new mom, managing a young child, and the long work hours – left me feeling too drained to focus on my physical or financial health. And just like that – I didn’t realize when all my savings started stagnating and the income, squandered into ways to pamper myself or my new born. The voices in my head during this phase were something like this :
“You deserve this! Atleast This!”
“Enjoy life today! Who knows about tomorrow”
“What do you earn for, if not to indulge a bit?”
“It’s too hard to find someone reliable to get started with my investments again.”
4 years later, in my early 30s, after having worked for over 7 years, this is what my financial reality looked like –
- Negligible Mutual Fund investments (had used my savings for my business)
- 2 Unit Linked Insurance plans with a cover of less than 5L
- Employer provided Medical Insurance of 4.5L
- Roughly 2 Months’ of expenses saved up as FDs
- Saving about 15% of monthly income
- Luckily, Debt-Free ☺
For someone who felt like she knew about investments, this was the moment when I learnt my first meaningful personal finance lesson: Success in Personal Finance is 80% Discipline & 20% Knowledge Knowing is no good if it stops us from taking action.
One fine day, I finally broke the inertia and decided to take charge. After consulting a highly recommended advisor, after a gap of half a decade, I finally had a long discussion with him about my goals, my current portfolio, my risk –return expectation. Based on his recommendations, after a brief round of questions, right there in my office, during my lunch hour, I signed that form and handed over the cheque (there is nothing quite like signing a cheque on BIG occasions, is there?)
Lesson No. 2 was right there – Take the first step – don’t overthink, don’t worry about making mistakes – learn & keep moving
After passively investing for a year or so, I decided to find myself a community of like-minded investors. The idea here was two-pronged – first, I wanted to keep the momentum of investing; second, I wanted to upskill and update myself. Within a month, I enrolled myself in a course with a women investor community where I met several other determined, knowledgeable, inspirational women. In addition, I also started connecting with old colleagues and network of friends, who further brought back the much-needed vigour and pace in my financial discipline.
My lesson number 3 started me right in my face here: Reach Out, Create a support structure and Upskill – it could be your close friend who is in the investment industry, it could be your alumni network of investors, or it could just be a meetup group in your vicinity.
The last thing which I did was to read, reflect and rethink. In the journey of being deliberate about taking charge, few of the many revelations about myself were:
- Like to do my own reading about investment products
- Don’t trust advisors easily – prefer to take my own decisions which can delay action
- No focus on my spending pattern, only on earning pattern
- Debt makes me anxious, because it feels binding
- Want to be financially independent at any cost (no dependency on partner or parents) at all ages
The above made me take certain actions like blocking time on my calendar to consciously assign time to my investment study, to create my spending log & play with all types of analysis on every last Sunday of the month.
Which brings me to the last lesson : Automate, and Prioritise – just like we do for all things meaningful, be it our health, our social life, our family time.
Now after 3 years of having re-started my journey, here is my current financial situation:
- 6 months’ of expenses as Emergency Fund in my Auto Sweep account
- Term Insurance cover with critical illness & disability rider
- Medical Insurance cover of my own (apart from employer provided) of 10L
- Added some debt products like PPF, NPS to my portfolio
- Cumulative portfolio of Mutual Funds & Stocks (self-managed) is now 4X of what it was back in 2016
- Saving 40% of monthly income
- Single Excel File with consolidated view of all my investments (including insurance) including nominee details
- Still no debt ☺
While it’s a long, long journey to achieve the networth required for Financial Independence, it does not feel unachievable.
I hope to never go back to my ‘closed eyes’ state – and even if I do, now I know the trick to get back on track!
The cool thing about building financial discipline is that it spills over into other areas of your life. Anytime you work on being disciplined in one area, such as money, you tend to apply those principles to other areas as well, creating a more disciplined life overall.