A Step Further in Financial Planning Archives - CAGRfunds

November 10, 2021November 10, 2021

5 Common Money Mistakes We Make In Our 20s and 30s

As soon as we start earning our salary, we make some radical financial and monetary decisions, which end up being mistakes in the long run. There are quite a few reasons for this, but one that is commonly attributed to problems like these is low financial literacy. Our schools, colleges, and a number of years of formal education may prepare us to face the real world, but more often than not, it leaves us completely clueless about the financial world. This is why we have listed down 5 common money mistakes we make in our 20s and 30s, so you can avoid these!

Frivolous Spending- The indescribable joy of the first salary, the rush when your account shows salary credited, we understand how this can be an invitation to spend it all, and that’s exactly what we do in our 20s. Living beyond our means won’t get us to financial freedom anytime soon, and living paycheck to paycheck is certainly not the way to go. Since we are not taught the basics of money management from a young age, these skills take time to develop in our adulthood and may affect us in the long run, if we are not savvy with our expenses!

Not Having Financial Goals- Like with any destination, it is easy to get lost amidst the confusion if our journey is not mapped. Having a financial goal is really important because if we don’t have a financial plan, our expenses will be unhinged and you will be completely clueless when an emergency hits. We know the future is a long shot, and you might feel that there is time, but every year you don’t categorize your goals, you lose a layer of financial security. Start with short-term goals, like saving an x amount, or opening up a retirement fund, just the thought is a wise investment in your future!

Credit Cards- Oh the ominous credit card! When we are in our early 20s and 30s, maintaining an image (and over the top credit card limit!) is all the rage. This habit is extremely harmful especially in your 20s if you have education loans and other debts pending. Plastic is drastic, this rings true for that credit card lingering in your wallet waiting to add exponential debt with its towering interest rates and deceptive rewards. However, if you are of the very disciplined ones, you might think about owning 1 credit card.

Not Having An Emergency Fund- Usually, having any money saved at all at the end of the month quickly translates to orders from Zomato and that red dress from Zara- although indulgences are good once, in a while, you are completely going bare if you don’t have an emergency fund. The pandemic has taught us bitterly that job security and financial wellness may all well be transient and that fortune favors the prepared. Not having an emergency fund will be crippling if any sort of financial or health emergency arises, you will be on shaky ground!

My Friend Told Me To Invest In..- Beware of this! We understand that friendships are important, but take everything with a grain of salt. We have all been guilty of falling trap of conjecture and investing our money in a risky stock which we would not have otherwise. Falling trap to what others are saying is a common problem, but it can be extremely pricey when it involves literal money! Investing is a great tool for your money to work for you, but make sure that you do your own research and not fall into so-called trends and end up in grave financial danger!

July 8, 2021July 8, 2021

5 Money Questions To Ask Yourself

The pandemic has made us realize how important it is to be prepared to meet a crisis. While we try to make ends meet during this time of uncertainty, we’re constantly left wondering whether we’re financially equipped to fight a situation.

It’s true that the pandemic has made people take their finances seriously. Knowing where you stand in the financial abyss, you need to be ready for what you are going to be facing in the future.

There are several different ways one can check their financial health and be ahead of the crisis. To start with, here are a few questions to ask yourself to see how financially sound you are.

What is your income source and frequency?

The first question you need to ask yourself is about the money you are earning. It may be your salary, a return on investment or any form of profit earned from your business. All of these are considered as your incomes. These incomes will determine how much you can spend. You also need to ask yourself how often your investments are giving returns, and how frequently you are getting a salary. It is important to ask this question in order to determine a pattern of income which can help you use the money wisely.

How much do you spend?

While many people spend their income on their needs and wants, one has to ask how much they can spend on a specific goal. You need to plan how you spend your funds so that you have stability even if a sudden expense occurs. The best way to be safe from such risks is to spend according to a predetermined plan that you have set up for yourself. If you follow the money management rule, it will effectively help you determine your income and make efficient use of it.

How much debt do you have to pay?

The word debt can cause uneasy feelings and create anxiety. Debt management is an important part of being financially and mentally healthy as too much of a loan can put you under a lot of stress. So check how much you owe and plan to reduce its burden as soon as you can. Remember, being debt free is a great stress reliever and will help you grow financially stronger.

Do I have funds for emergencies?

The core aspect of a financial plan is putting cash away for emergencies. Uncertainty will leave you with no choice but to drown in debt. To avoid this, you can start saving money for emergencies. You can start small and be consistent. You could also consider insurance for your family, which is a smaller expense.

Are your risks covered? (Insurance)

Being insured is one of the best ways to be safe from the uncertainty that life brings. Returns may vary for each investment. While being insured is an additional expense from your pocket, it will help you in times of emergencies like pandemics, economic recessions, inflation or any other form of a problem you face with your income stream.

These are the few crucial questions that will help you know where you stand as far as money management is concerned. It’s important to have the right financial plan to get through circumstances stress-free, and with minimum damage to your lifestyle. Do you think you are financially healthy? Leaving you with this food for thought for the time being.

February 10, 2021February 10, 2021

Money Habits of Entrepreneurs

A successful entrepreneur is aware that they need to have a clear purpose, value, and good return on investment for every rupee they spend. Ask any entrepreneur out there about the one skill that is crucial to their success, and the answer you are most likely to get is Financial Management.

Being an entrepreneur means handling the finances of your business as well as your personal finance.

All of us might not be entrepreneurs, but we can learn from successful entrepreneurs’ proven money habits to extend the value of our economic resources. We’ve put together some tried and tested strategies and some entrepreneurs’ money habits that you can adopt to realize your business and financial goals.

Have clarity about your financial goals

Entrepreneurs are clear about their personal finance’s short- and long-term goals and accordingly work towards it. Get a diary and chart out the financial milestones you want to achieve in the next year, five years and ten years. Develop a plan that is clear and realistic to help you achieve those goals. Lastly, do not forget to continually review your plans and goals and adapt as per the situation.

Organize your personal finances

Entrepreneurs love nothing more than to watch their money grow! Set a daily, monthly and yearly budget for yourself. Investment in different funds, pensions and have a retirement plan for yourself.

Adopt a savings mindset

An entrepreneur knows that a healthy financial lifestyle is crucial for growth. The best way to achieve this is by adopting a savings mindset. The first step towards sticking to this habit is putting away the amount you want to save first and then planning your expenses around the remaining amount. Most of us make the mistake of doing this the other way round.

Diversify your revenue streams

Entrepreneurs are always on the lookout for new opportunities and know better than to invest all their money in one place. Diversification means an opportunity for growth. Educate yourself about the different investment options available to you and create a diverse portfolio of financial products. This will help your money grow and will decrease dependence on one stream.

Master the use of credit

If there is a battle that entrepreneurs fight daily, it is not to get swamped by the mountain of interest payments. They know better than to spend more on a card than they can pay off in a single billing cycle.

Start by paying off your high-interest debts first to manage personal and business credit better.

Be frugal

Finances and discipline go hand in hand. Entrepreneurs know they need to be stingy with their money, and they are not ashamed to wear this as a badge of honour. This does not mean that you are living uncomfortably – it just means that you choose to focus on the larger picture rather than give in to instant gratification.

We hope this has helped you understand entrepreneurs’ money habits and how you can adopt them in your lifestyle. It’s not essential to incorporate everything at once, but it’s important to at least start!