Today we see plethora of investment avenues. We get attractively worded SMSs, whatsapp messages, Emails and telephone calls asking us to invest in shares, mutual funds, lands and what not. Many times we get a feel that the entire universe is conspiring to take out money from your pocket !!!
While there are N number of financial advisors telling you how to make money hardly is there anyone who actually tells you how to save.
Only those who save will be able to invest is the simple mantra.
Most important thing in financial planning to first decide your goals.
Unless the destination is decided one can not plan the journey. Now to plan the journey one must first get together all the resources required to start the journey.
This analogy exactly applies to realising your dreams.
Every young couple must sit together to plan their dreams. This will be done by using simple software like MS Excel to plot your monthly expenses. When I say monthly expenses one has to take average of annual expenses also like vacation, term fees of children, bonus payable to maid servant, Diwali shopping etc. Those who also want to plan capital expenditure should take into account house painting, replacement of car, household equipment like Refrigerator and Washing Machine etc.
One all expenses are tracked like this, please apply the MINU principle to it.
M stands for Minimum or Mandatory Expenses
I stands for Important Expenses
N stands for Nice Expenses
U stands for Unrequired expenses
Mandatory and Important Expenses can be delayed but not avoided. Nice Expenses make you feel nice when you spend but they actually can be reduced or delayed. Unrequired expenses are those which can be completely avoided.
Please decide which expense falls under which category.
This simple exercise done together will decide how much you can actually save from your income.
Use this weekend to plan your dreams.
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