Well things need not be in that order and you can have all the THREE together. Sounds incredible! The simple explanations are:

Roadmap

1. Secure your basic needs, food, clothing and shelter, taking into account your own financial status (real and not based on aspirations)

2.  Understand that a ‘truly rich’ person has expenses lesser than income. Someone earning Rupees 1,00,000 monthly, with an expense of Rupees 1,10,000 would be poorer than a person earning, Rupees 25,000 and having an expense of Rupees 20,000 in the same period.

3.  Prepare a budget, with some saving planned and FOLLOW IT.

4.  Understand the difference between Assets and Liabilities clearly. Very simply speaking, an investment bringing in revenue is an Asset and the one requiring an outflow of funds (expense) is a Liability.
(Source for points 2,4 is the book Rich Dad Poor Dad)

5.  Understand simple rules of income and wealth tax planning so that maximum rebates legally allowed can be availed. Save for the above on regular monthly basis and do not wait for the year end (blues)

6.  Save regularly in safe instruments like P.P.F, Life Insurance, Medical  Insurance (very important to cover unforeseen medical expenses besides tax saving), ULIP s through the systematic investment route.

7.  Plan for the retirement and children’s education through appropriate insurance policies taken at an early age.

8.  Understand your own risk and age profile-simple rule is that you can take higher risk when you are younger.

9.  Follow Warren Buffet’s advise for stock market investments ‘when others are greedy, be cautious and when others are cautious, be greedy’. You need to be VERY CAREFUL and never follow a herd mentality.

10. Buy Cheap (economically) to be Rich. Buffet is known to tire the sellers through persistent negotiations and good knowledge till he gets a deal at the rock bottom price. You too can do the same.

11.Listen to all advice, but have a healthy skepticism for the ‘Financial Solution Providers’. Nothing wrong with them, but they have their own agendas as well, besides your interest. (Personal or Corporate)

12. Understand the power of Compounding and start saving as soon as you start earning.

13. Always aim to ‘Get More Bang Out of Your Buck’ and be on the lookout for stretching the buying power of your money. As the saying goes ‘ Marwari businessmen get Five Quarters worth of value out of every Rupee’ as against the normal Four Quarters worth.

14. Do not be shy to learn, the above trait is not hereditary, it can be learnt / acquired.

15. Pay Cash and do not subscribe to a lifestyle based on loans (E.M.I). DO NOT MOTGAGE YOUR FUTURE FOR TODAY.

16. Use Credit Cards where essential, e.g. travel and hotel bookings and not for lifestyle purchases. This will lead to excessive and impulse buying, creating undue pressure.

17. To get  thrill from your acquisitions, work, save and plan for them so that you can look forward to acquiring them one by one. Very affluent societies take many material possessions as granted and hence  are either in the race for more or bigger liabilities (note difference between assets and liabilities) or become disillusioned and start looking for ‘meaning of life’ through other means.

Economic independence should be your aim and you can achieve it by not only increasing your earning power, but by controlling your expenses, providing for the future and being debt free.

CONCLUSION

This roadmap, if followed will help protect and enhance your wealth, keep you Relaxed as you would not be in the race to ‘Keep Up With The Joneses’ and would not be worried about the next call from the bank (EMI).

Enjoy what you have acquired and be at Peace! Amen.

Arun Vedhera

Here are a few tips you may like to follow:

1. Look for positives and learn lessons for the future. Shed a feeling of gloom and move on with head held high. Look at what you have, a good family, food on the table and life in a young democratic Country which is being applauded all over the world for having escaped relatively easily.

2.  Follow solid middle-class values, cautious, conservative and careful. Be humble and well grounded.

3.  Secure your present, provide for the future on an on-going basis and only then be adventurous.

4. Do not mortgage your future for instant pleasure through acquisitions today.

5. Income is variable ( job  permanence, business stability and growth etc. ) but Debt (loans, E. M Is  ) is permanent and the meter runs 24X7.

Two Prominent Investment Bankers of the Country have recently quoted their fathers, advising them never to take personal loans and to be risk averse with personal savings. Both claim to have followed this dictum and are happy.

6.Remember that there is no free lunch or free holiday in  life  . More seemingly enticing a proposition is to make quick or easy money, greater the danger and risk to loose your shirt ( due  to  high risk investments people have also lost their peace of mind, even life )

7.Money is important, never undermine it’s importance. Use it as one of the means and never as an end in itself. Enhance your horizons to increase your earning and wealth creation capacity, but on a sustainable model.

8.Beyond a limit, law of marginal diminishing utility kicks in and the bigger cars, larger  houses , luxury items, size of the business etc. all fail to give the thrill you expected them to provide .Then starts the race for more, which cannot be won, so why fall into that trap.

9. The trick is to stay hungry for success, be competitive, stay focused, stretch your targets (still achievable, though with lots of hard work and effort) but do not get carried away to indulge in big punts and gambles, which seemingly will propel you to a different league.

10.Except very few examples of people who have achieved wealth through huge gambles and betting on very long odds, law of averages does not  favour this model, i.e for every such success, there are countless failures .For staying lucky, be prudent.

11. Economic freedom should be the aim, but it cannot be achieved through borrowed capital. ( for conveniences and high leveraged debt for business)

12. Most of the things and events  which bring continuous happiness are free or inexpensive. The happiness achieved through physical proximity of the family, smile on the face of  the dear ones, creative success of the wife, best performance award to the son for the Quarter’s best sales results in his job have no substitute. Recognize and enjoy these on a regular basis.

13.Prepare a balance-sheet of your life and evaluate all your assets, starting from the kind of  parents , (affection, moral and spiritual values given by them) spouse, children, relatives (much maligned, but we do not hesitate to land up at their door-step un-announced with bag and baggage, so give them some credit), friends, education, money, assets etc.

This will give a holistic assessment of emotional  , spiritual  and physical assets which surely will far outstrip the liabilities.

14.Value what you have and then look at what you aspire to have. Aspirations and Dreams are good and make life worth living, but we must filter the actionables.

15.Spend enough time in soul searching to figure out what do you want in life what are you passionate about, do your own S.W.O.T analysis (Strengths Weaknesses Opportunities and Threats)  and Go for your Calling-patiently, persistently, without major short-cuts (they cut short the life) and chances of success will increase beyond expectations.

CONCLUSION

Life is interesting, take charge, enjoy the process and the journey  ,have faith, surely look at the emotional and spiritual aspects ,be prudent ( and upfront about it-Warren Buffet is known to be prudent and thrifty ) and Celebrate God’s Grace  every day for a Happy, Joyous and Free life. ( ….. to be concluded)

- Arun Vedhera