Managing finance has become very essential in everyone’s life. If you are not managing your finance properly then you might face difficulty in the short as well as in the long term.
One of the main reasons can be because you are not planning your finances in a way which meets your short term needs and achieves your long term goals.
But what do the billionaires of today say?
Tip: Keep a track of your income
“It is important to remember, there are no overnight successes. You will need to be dedicated, single-minded, and there is no substitute to hard work.” – Mukesh Ambani
Mukesh Dhirubhai Ambani is the chairman and managing director of Reliance Industries Limited, a Fortune Global 500 company.
He is India’s richest person and the only Indian to be on the Forbes list of the world’s most powerful people.
According to millionaires, the first step towards becoming rich is keeping a track of your earnings. This means keeping a check on your primary source of income which can be either your job or your business.
Also, one thing that should be kept in mind is that you need to work hard and prove your value to the organization you are working for. This is how an individual can ask for a raise without sounding intimidating for doing so.
Tip: Make Your Money Work For You
In a marathon, if you run too fast, you get exhausted. If you run too slow, you never make it- Uday Kotak
Uday Kotak is the executive vice chairman and managing director of Kotak Mahindra Bank. He started Kotak Mahindra Bank in 2003 and today, it is one of India’s top four banks in the private sector. He is Asia’s richest banker and a billionaire.
Investing your money in avenues which help money fetch more money is the best way to make wealth. Some of the investment alternatives are as follows:
They represent ownership in a company to the extent of the number of shares held by the investor. By owning such shares you can have consequent income as the shares gains dividend.
It is a pool of savings from a number of investors, who share a common financial objective.
Mutual fund schemes are usually managed by fund managers of different Asset Management Companies (AMC). The benefit of a mutual fund is that your portfolio is diversified in different asset classes, thereby, the risk also gets diversified.
Tip: Review Your Finances From Time to Time
Look out for your wealth. It costs. – Anand Mahindra
Anand Gopal Mahindra is the Chairman of Mahindra Group which has its operations across 20 industries. Mr Mahindra is an Indian billionaire and was declared the Entrepreneur of the Year for 2013 by Forbes (India).
It is important to review your financials from time to time because it helps in identifying your current financial position and also helps in determining how much more money is required to reach “your number” (the amount that you have in mind which determines financial independence for you).
Post that you will need to review your cash flow statement which gives the information about your income, and expenditure and gives you an idea about your overall assets and liabilities.
By saving and investing, your net worth will rise over time and thereby give you an opportunity to generate wealth by the principle of compounding.
Tip: Keep A Check On Your Expenses
Be paranoid of success — never take it for granted. Realize success can be temporary and transient. – Rakesh Jhunjhunwala
Rakesh Jhunjhunwala was an Indian billionaire investor and trader. He began investing in 1985 and today he is one of the biggest names in the Indian stock market.
He was a Chartered Accountant and managed his own portfolio at his privately owned stock trading firm, Rare Enterprises. He was often referred to as India’s Warren Buffet.
According to Jhunjhunwala, the spending rule should always be:
Income – Savings = Expenses
And not the other way round. You need to keep a check on where your money is being spent. Certain expenses are inevitable like household expenses. Make sure to minimize them as much as possible so that you can have more money in your pocket for investment.
Tip: Make Emergency Fund A Priority
“If you want to walk fast, walk alone. But if you want to walk far, walk together” – Ratan Tata
Mr Ratan Tata is a businessman, investor, philanthropist and ex-chairman of Tata Sons. He has received Padma Bhushan and Padma Vibhushan, which are two of the highest civilian awards in our country.
This fund will help you in times of uncertainty, be it a health emergency or unemployment. At the time of a health emergency, you might not know the exact amount that is required for meeting hospital expenses so it’s better to create an emergency fund or get health insurance to service the expenses.
In the case of temporary unemployment, certain expenses cannot be avoided like household expenses, EMIs, educational fees for children, etc. so it is better to create a corpus to keep you going.
Tip: Think Big
“If people are not laughing at your goals, your goals are too small.” – Azim Premji
Azim Premji is an Indian business magnate, investor and philanthropist. He is also the president of Wipro Limited. He is unofficially known as the czar of the Indian computer industry.
He was responsible for guiding Wipro through four decades of diversification and growth to eventually become a global leader in the software industry. In 2010, he was elected one of the 20 most powerful men in the world by Asia week.
According to billionaires, the biggest mistake one can make is not thinking of a bigger goal. Dreaming big and aiming for higher goals is your sure shot way of achieving the financial goal.
If you want to earn 1 million as your financial goal then aim for 10 million and work to achieve that goal.
As an investor, you have so many options to invest, as per your risk appetite and liquidity. In order to grow your wealth, it becomes essential to keep investing money.
Keep a check on these personal finance tips, and your expenses and align them with your financial goals. This will help you in achieving your goal sooner!
Disclaimer: The views expressed in this post are that of the author and not those of Groww