Sid Roy.
If you have somehow found this site, or heard about Dollar Mentor from one of your friends, you might want to take a few minutes to read about what we are hoping to accomplish. Assuming you have done that, and you are still here, we wondered what might be the one thing we want to talk about if we were sitting face to face. Why think about your personal finances?
This comes up more often than one would think. If you have been asking this question, you are not alone. This is often the most important hurdle for most people. We thought it would be worthwhile to share some very simple thoughts.
We all have reasons for why we choose to act and for why we don’t on certain issues. Sometimes, it might seem something that is way into the future, something to be dealt with later. Other times, it seems so complicated that we just dread it for fear of what we will find out. Sometimes, the hurdle just seems too big and things seem hopeless. Result? We give up before we start. Perhaps we can help you question some of your beliefs and at least make you reconsider each of the above.
Let us take each of these beliefs in turn. Can anyone put off thinking about personal finances into the future? We all know that the first phase of our life is about getting ready to earn a living. The second phase is about making enough to have a reasonable lifestyle, while keeping enough socked away for the future. And the third phase is about being able to live freely with our own means.
There are only two ways of making enough unless you have a secret Santa. You can work for money or you can make your money work for you. Saving and investing in any manner is just making your money work for you. The longer you can work and the longer you can make your money work for you, the better off you are. You cannot possibly work for ever. Therefore, if there is one thing you need to know about personal finances, it is to make your money work for you as long as possible.
To illustrate, let us say that you that you spend $10 dollars for every gig of mobile data, and you tend to use 5 GB of data. That is roughly $50 a month. Instead, if you decided to save that simple sum of money in an investment that returned an average 5% growth every year, you would end up with around $7,500 in just 10 years Not an amount to sneeze at! Give it another 10 years and you’d have $20,000. In 30 years, that $50 /month turns over $40,000. This is what happens when you let your money work for you.
So, the main thing we want you to remember is – even small amounts can grow if you just give it time and make it a habit. We assure you that it is a lot of fun to see your money grow. Try it with any amount that you can afford, and you will see how satisfying it is to see it grow, slowly but surely. I This thought is not something for the future. It is what everyone needs to think about right now regardless of where they are in life. The longer you wait, the harder it gets.
Now let us talk about the second issue – what if you do not think about it because it is so complicated? We agree. We felt the same way ourselves. However, the realization of our journey is – it does not have to be so complicated. You do not have to be a financial guru to get started. Some wise person said to me once, if you are really unsure, just lean into it. Do not commit to it, just lean into it with the smallest simplest step that you can take that does not need thinking. Pick the smallest amount that you think you could spare, pick the simplest way to make your money work for you. Pick anything and do it for the first time. Even if you are unsure of stocks and bonds, this very first step is the most important leap to get you thinking about personal finance and the options that are available to you.
Finally, what if you are facing an uphill situation right now or are not enthusiastic to really find out? You might feel it is not the time to think about investing and personal finances. However, just like a military general facing a massive opposing army, you must marshal all your resources and make sure you have done your best with them. Every dollar that you spend on something is a dollar that could grow. It’s a missed opportunity for an immense impact, especially in a hard situation. So, thinking about personal finances is thinking about how every dollar is allocated towards growth. Every extra dollar wasted, whether paid towards an unnecessarily high interest loan or for a fancy gadget that you’ll likely forget about in a month, is a dollar not going to help you work your way up. Know the price and power of every dollar!
All of us universally crave one thing – freedom. It is freedom to take our own decisions and take our life in any direction we want. Who does not want to be free? Who wants to be constrained? None that we know. Every unneeded expense that you make, that you are not able to afford comfortably, takes a slice of your freedom away. Instead of being the master of our money, you become its slave. So, what is the price of your freedom? Is it worth spending at least an hour every month to think through your personal finances? While you may not be able to save thousands of dollars right now even after you think about personal finances, do not underestimate the potential of starting small and staying on course. You can always make your trajectory better. Just like a plane, a little change in trajectory can change your destination a lot. So, the path to financial freedom begins with the habit of thinking through your personal finances. What you see, what you know and what you understand can change your trajectory over time. So, if you have read up to this, we sincerely hope that you will spend at least an hour one of these weekends to think about your personal finances and take one small concrete step to improve your trajectory.