‘Financial Management‘ is something that we all have struggled to conquer at some point of time or other. Both at the personal and professional front having a healthy financial state always does the trick. The opposite happens when they go all messed up, your concentration is hit, and your focus at more productive things takes a beating.
Being a finance graduate and spent considerable time in the banking domain, the “Art of Managing Finance” is something I have been taught and advised to customers during my stint as a banker some years ago. Investments, Equity, Gold, SIP you name it; I have advised it all to ones who sought some enlightenment, with my own investment returns as convincing examples.
BUT the skies are not always bright! screwing up financial planning is something we all can relate with. Lately, I did address the opposite facet of the coin, dealing with financial constraints which made me realize that ‘The Art of managing Spending is more Important than the Art of Investing’.
So, what did my financial constraint teach me that no other financial literature can’t?
- The Grass on the other side is Not always Green: When in a cash hunch, the best option saught was loans, Personal Loans to be precise. Post checking the interest rates, I realized that though they lure through attractive advertisement, they don’t come cheap! Ranging from 16- to as exorbitant as 21%, personal loans need a brave heart to sign those loan documents.
- Investments dry up faster than they can be built: So true, the monthly struggle to keep the SIP growing, and the RD’s financed is tough, keeping the external lures (call it shopping, eating out etc. etc.) away. When the time comes, these investments are the first to work as a cushion against the financial troubles and off they go!
- The unconventional sources of Finance are the Best: Trust me when I say so! But to practice this all what is needed is excellent repayment history. Burrowing from friends and family is interest-free (though not always), is built on trust and commands high respect for repayment dates. But again, trusting the conventional sources works in the long term.
How did I manage?
Bad times teach you to make wiser decisions, true that! Here is what I did to wade off the uncharted waters-
1. Have a Financial Cushion– Salary may delay, but EMIs/ Rental/ Bills will not. Have funds secured in for expenses.
2. Keep those Credit Cards at bay– However good they may sound, with luring offers they are a trap!
3. Be true paying off EMIs– If you don’t honour this your credit score gets a bad hit!
4. Save– Even if it’s a merge amount, it helps in emergencies!
5. Fund expenses on Investment appreciation- This is something no one will teach! I got this tip from a friend who goes on trips en-cashing her investment’s returns. Wise isn’t it?
6. Save all the documents- In emergencies, when you are applying for loans, you must have all the documents handy, income slips, PF statements, rental documents. Best is to keep a folder for reference.
Financial mess is something we all have dealt, or are dealing. Prudent thinking always comes at a premium. It’s always better to be prepared than let stress take up all the peace!
Happy Managing!
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