It is extremely challenging to experience freedom in life, when you are running in the "Hey, I have loans-to-repay " mode.
Easy monthly installments (EMI) is an abbreviation that has become a culture now.
However as you cumulatively add up EMIs, in few months or years, the "easy" word starts to fade away. You face the financial truth head on- "Monthly installments" that is eating up a lion's share of your monthly income.
If we’re trying for a stress-free life , then we need to design our finances and find habits that will keep the stress of money to a minimum.
7 points to consider in this regard :
1. How Debt free I am ?
This is often the first necessary step. Do I have loans running into next 10 to 15 years ? If yes, start working towards clearing them in half the time.
You cant miss seeing these in your life, even if you are in a remote village, thanks to private banks and their marketing engine :)
Yes the Ads on Loans are everywhere. Banks will sell to your dreams with smiling, beautiful faces and family pics , on their ads.
It is upto you stay undistracted and stay debt free . And even if you have debts on your plate , it is time to take action to speed up to your exit. I am not against loans -they help people at crucial times and is an important financial instrument, However creating a lifestyle around Loans can create a spider web situation in life.
2. Game of Credit Cards
It has become difficult Not to have at-least one credit card as all digital payment gateways makes it easier to pay through credit cards and app stores want you to subscribe (which again requires credit card).
You may use credit cards for its benefits ( the hook). I am not against it.
However keep a watch on how it is changing your habits ,just for few reward points.
Check - is there a feeling of "being rewarded" when you spent more ?
That is the mind game the credit card companies play with you. They want you to spend more on your wants and they want you to want more :).
If you feel like "you are winning when you spent more " then the card company has won the psychological game.
3.Pay your credit bills as soon as they come in.
Don't wait for month end to clear your bills, Do early exits ,such that even when you miss a payment you do not end up paying heavy interest charges on such credit bills.
4. Audit your subscriptions .
Many digital apps ,product companies like Apple and Amazon want you to subscribe for a reason. 80% of subscribers often do not use the app after 3 months and they forget to cancel the subscription. At the end of the year you would have paid a good amount for an app or a service which you never used.
So as soon as you enroll into a subscription, cancel all Auto -renewals .Most apps makes it difficult for you to find out how to turn it off ,however for the financially prudent it is worth spending 5 minutes as soon as you subscribe to figure it out.
5. Insurance for high probable events , not Life insurance:
Do your research and make sure you’re getting the right policy for your needs. Most people end up taking big life insurance policies which is not the smartest investment. Rather insurance for your medical risks , business risks are more useful in life
Here also you will Insurance companies love to offer you Life Insurances & the insurance packages you actually need are rarely in the advertisements. I repeat -do your research.
6.Review your finances at least weekly.
Have a 20 minutes ritual every week where you simply note down what was your income & expense of the week. Good to do it with your partner. Simple way to start budgeting is to classify your expenses into needs , wants and unavoidable and reflect on what expenses happened in each of these categories for the week.
7. Talk honestly about your wealth habits with close friends and partners. People avoid & fear money discussions, due to many reasons. One, it can reveal our flaws in financial management. Two, they fear that , if other people know how rich or poor you are, they may take advantage of you at some point.
Even couples and family members at some stage hide their income and investments due to such insecurities.
However for long term development of wealthy habits , it’s important that you talk authentically about money on a regular basis in a non-emotional way,
After the weekly budget session (Point 6) ,a simple discussion of money with a friend or partner at least in terms of percentages will make a major difference in your life. Talk and Listen to all inputs. Finally use your discrimination to reflect on what is good and bad for your lifestyle.
It will effortlessly take out your stress level.
After all money was designed by humans to make our life better & not vice-versa, right ? “Debt is the Slavery of the Free”
Krishna Mohan www.wealthyogi.com