Do you like coffee? I do!
I consume two cups of coffee daily. Imagine if I consume these 2 cups of coffee at the cafe daily, what would be my daily expense for the coffee?
It would be not less than 100 bucks a day. So that sums up to around Rs. 3000 a month. Fortunately, I don’t have to spend that much on coffee.
There are so many such expenses on a daily basis which we can cut down to save huge money. The point is I am not asking you to stop drinking coffee on a daily basis. But I want you to focus on few key money decisions in your life that can make or break your financial health. If you get those decisions right, you don’t have to count the coffee cups.
Here are those key financial decisions of your life which you MUST get RIGHT in order to have a good life.
Education gives us the knowledge of the world around us and changes it into something better. It helps us to have our own opinion and point of views on the things in life. If you want a happy life and want to enjoy good things that world offers you, you certainly need to get educated. A nice job, good social status, good life partner etc. are the benefits of being educated.
An educated person has a higher chance of getting a good high paying job. The more educated you are, the better career options you have in your life. Better career means better money and social status.
Education is important and necessary if you want to be a self-dependent person. It makes you wiser so that you can make your own decisions in life.
Generally, an education degree is considered as a proof of your knowledge. An educated person has a higher chance of being heard and taken seriously as compared to an uneducated person. Education gives you the confidence to express your views and opinions.
Whatever you do, be it a full-time job or a business, it is your primary source of income that drives your financial health. Everything else comes second to your career.
Get that job right and you get your financial life right. We all study for around 25 years just to ensure that our remaining 75 years(Yes! you will live 100 years – my blessings) will be happier and easy going. It is no secret that educated people earn much higher and are successful in their life.
If you want to get rich, you have to earn more money at the job where you are spending most of your time. It’s just that simple. If you want to be successful and rich you have to invest in yourself. It’s the only way. Saving money doesn’t make you rich. You have to invest it rightly in order to grow your money.
It is ok to have a side income but never compromise on your full-time job which helps you to earn your bread and butter. Give top most priority to your job.
Home is just a home. Don’t make it more that. You just need a place to sleep. You should not spend more than 30% of your take-home salary on home. I have seen people taking heavy home-loan to purchase a big house just to show off their social status.
In any case, the total cost of your home including home loan, maintenance, taxes etc. should not be higher than 30% of your income. This ratio is important because when you spend more than 30% it eats up your savings. It is the biggest purchase you will ever make in your life. It is a big decision as it is going to lock you into a monthly payment for 15 to 20 years.
Remember, your home where you are living is never a good investment. Historically, the value of the house will increase at the pace with inflation. Afterall it is a place you live and you are never going to sell it off.
I bought my first home during the peak of the housing market in the year 2008. I took a home loan which I have paid up recently. It took me 10 years to finish my home loan. Every month there is a big chunk of my salary goes directly to the bank. Last few years I was dragging my home loan as I was getting a tax benefit on my loan. But now the interest amount is so less that there is hardly any benefit I get on the interest amount. So I decided to finish it up.
Your car is probably the second biggest purchase you’ll make and you get the joy of making this purchase several times in your life!
The car is not just comfort, it is a social status for us. While choosing the car, you will decide on various factors like mileage, maintenance, resale value etc. The biggest number is the total cost of purchasing. This includes down payment + accessories + Insurance + taxes.
Different cars have different figures for all the above factors. you need to consider the best suitable figure. There are various analysis available which says using a cab is far cheaper than owning a car if your usage is not so high.
Read an article on this: Should you buy a car in the age of Uber and Ola?
Make sure you understand the total cost of ownership before you buy a car.
Saving is not enough if it is not making money out of it. You need to invest in order to generate ample amount of wealth for your retirement.
If you are in your twenties or thirties, you have enough time to create a corpus for your retirement. Set up the right mix of investment and forget it.
The key here is to save enough for your retirement. Problem with most of the people in India is they don’t save enough for their retirement.
Your retirement is going to be many years in the future so it’s easy to set it and forget it. Secondly you also need to check that you pay minimum amount of commission (fees). Fees are unavoidable but you can narrow down it with choosing the best broker with lowest fees.
There are mutual funds schemes where you can invest directly without paying any commission. There are many tools available to choose from. Pick the one which suits your requirements.
Relationships are hard. Bad relationships are even harder. Wrong partner can cost you not only money but also years of your life. Choose your life partner very wisely. I have seen money is the main reason for quarrel between couples. Make sure you don’t fight with your spouse for money. I mean money should not be the subject between you.
On the contrary, your spouse should help you build wealth for you both. He or she should understand the value of money.
Kids are awesome! They’re also very expensive. How many kids do you have or want? 🙂
I am not trying to scare you, but want to explain that it’s a financial decision too.
Education expense has rise like never before. I am paying a fee for Jr. K.G. For my daughter which is equal to my entire study expenses. Ya I know inflation and all that, but still schools are charging exorbitantly high fees.
So take a conscious decision about how many kids you want in your family.
Bonus: Your Health
Health is wealth. You have to keep yourself healthy in order to enjoy the wealth you have generated.
If your health is not good, you will not be able to enjoy the wealth you have created, also it will burdened you with medical expenses.
Remember, money can solve health problem Upto an extent only. Beyond that it will not help you to save your life.
Ill health will eat up your savings as well. Resulting into lower saving rate. Lower saving rate means lower chances of creating wealth.
Hope this helps!
If you make the right decisions you will not have to count your coffee.