Thread by @avasthiniranjan

A thread on 7 simple personal finance rules.

1. Don’t bother to track every penny you spend. You'll lose focus on the big picture.
Instead, focus saving big on those big ticket items. Cut down on large, recurring purchases and then later, if necessary, focus on penny items.
1/n

Spend money on things that you really enjoy and not on those you don’t. As Ramit Sethi said best “live a rich life by spending EXTRAVAGANTLY on the things you love, and cut costs mercilessly on the things you don’t”.

2/n

2. Pay off your high interest credit card and personal loans before you start saving. Saving high with debt yet to be paid off gets you on the wrong side of the compounding.

3. Start saving and invest that savings as soon as you start earning. Taking risk becomes comforting

3/n

10 yrs rule:
If you start 10k monthly investment for 1st 10yr and don't invest a penny after that and leave it for next 30 yr it will grow to 3.57 cr at 10%

If you start 10yr late and invest 10k per month for 30 yr it will grow to 2.26cr at 10%

10yrs make a big difference.

4/n

4. You don’t always have to limit yourself. If you feel that expenses have been cut back and ur still not able to save enough, consider ways you can make more money.

Watch less TV and spend less time wasting on web. Replace them with productive activities that can earn you.

5/n

If you follow some passion, see if you can earn something from it. Painting, music, yoga and many such skills can earn you enough these days.

"You can have everything in life you want, if you just help enough other people get what they want" Zig Zigler

6/n

5. Make personal finance simple.
Set up automatic payments on all of your bills, especially your credit card bills.

Automate your investments as well so that every month you don't struggle to save that amount.

7/n

6. Make money work for you. Invest your money and let it earn for you.

High rate of savings without investing that smartly, will not take you anywhere.

Earning 3% to 5% higher than inflation should be the target and that can change your wealth drastically.

8/n

Create buckets and invest first for your retirement bucket as that is the deepest one which you need to fill, followed by other goals.

Even if you don't track any other goals, do track ur retirement bucket for sure, you cannot afford it to be broken.

9/n

7. Seek professional help for managing your finance. Treat this as a specialised area and accept that you aren't expert.

People often realise money mistakes pretty late. Spending 0.5% to 1% of your corpus to manage 99% of your wealth is not a bad deal if ur not an expert.
10/n

Lastly, don’t take stress about your finances. If you just spend one day in a month to look at your expenses, savings and investments you will be better off than 80 percent of the population.

Inspired from the book - Personal Finance in 1000 words.

11/end