Often friends and family members asked me one simple question – How do you understand your finance and know what to do with your money? Where do I start , its all very complicated, Does not it require enormous time and effort to understand and implement ideas? Do you know any shortcuts to improve my net worth?
They meant money, but net worth is more than that. It is self improvement and understanding of life goals. Though the questions are simple and naive, but there was no simple answers I could give. I researched and discussed with multiple people who were bank managers, Finance professors, MBA grads and also some finance gurus. Though most of the answers led me to either buy their courses, or shake my head in dis-belief on how far from reality their answers were, I was not discouraged. As one thing that is common among all these answers which I derived-
Gaining knowledge is the most durable way to improve your finance.
W. Buffet
This time I am going to talk about improving your net worth in FAQ style.
Q-1 Where should I start ?
Ans- If you have to choose 1 thing to do to improve your knowledge about finance. reading books is the most widely used technique. Why ? because someone else already did all the research for you for years and you can get it grasped in 2 hours or so. Here are the best 5 books recommended by billionaires to Harvard professors.
Q-2 Are there any free resources where I can learn more ?
Ans- Yes. There are plenty. In this media driven age, sometimes we forget about the basic of learning. Taking time as 30 mins per day to develop yourself is not a bad bargain to improve your knowledge. There are courses available in Udemy, Coursera etc which will give you access to millions of resources. Invest in yourself today and rip the benefit for ever.
Q3- What is the most important things to consider?
Understanding Risks – There are risks on everything you do, but understanding them and minimizing them would help you improve your life. Even if you are in a stable job and earning enough money, without understanding the risks its hard to accept the reality when it hits. Its one thing to hoping for the best, but takes entirely different mindset to prepare for the worst. Same in finance world, you have to understand the risks and then take appropriate ways or methods to mitigate them. As a rule of thumb always have your 6-12 months of spending put aside in a high saving bank. Don’t touch it and don’t think about it. You will sleep better at night if you know if (when) shit is going to hit the fan you still have something to wrap you around.
Q4- How would I know how much to earn or save?
Define Goals – As homo sapiens we are goal driven. When there is a need for you to define goal, DO NOT look others and compare yourself. The risk of defining an unrealistic goal is more than losing money, sleep or mental peace. I am not trying to discourage you to dream bigger. Just letting you know it has to be your dream. Sometimes defining goals and trying to live someone else’s dream are intersect. However be true to yourself, and define the goals that mean something for you and your loved ones.
Q5- What would be the key to success ?
Maintain Consistency – If I have to ask you to imprint just one thing, it is this one. Consistency is the key to improve your overall status. If you are just starting your journey, you have already taken your first step. Stay on. Keep on investing with a good strategy, look at your wealth at a regular interval, make tweaks, keep a tab on your spending and don’t get discouraged if you don’t see dramatic wins. As long as you are not making irresponsible huge losses you will be fine.
