Simple math that makes most sense

edu_math

The back story

My 2-year-old almost every day stops over at the ‘Turtle Aunty Home’. After play time, he asks to make a pit stop on a floor below ours where this aunty has a pet turtle. He loves to watch the reptile respond to sounds, eat its given food and take its head out when it wants.

Yesterday, we reached her door. Even before we could ring the bell, ‘Turtle Aunty’ opened it to let a few children out of her home. Kids with heavy back packs and very solemn countenance made way into the lift. Aunty welcomed us in and while my son enjoyed his turtle time, the two of us got chatting. I learnt that it was a math tuition class called almost as an emergency since the next day was exam day. The class will assemble again next day to analyze the questions in the paper. I was impressed with her dedication. More chatting ensued as aunty went on to talk about her love for math.

The story of passion

She said she had always topped math exams in her school and made sure her daughters continued the winning streak. There were trophies of various sizes decorating her living room. As a child, she enjoyed the tag of a ‘bright student’ by family and friends. After her marriage too, her in-laws were won over in no time as they got to know about her fluency with the subject.

I heard her tale of passion and in my awe, asked her how she calculates her finances like budgeting and investing. Who else than a math whiz could excel in it. Suddenly, Aunty drew a blank. For a second, I thought I asked a wrong question. After a moment, she said that money management is done by her husband. He allocates monthly expenses to her which is the only part she manages.

Sigh! The tale of passion was now a tale of disbelief. “Never mind”, I thought and asked her for a glass of water. Such a capable lady deserves to do much more. And I couldn’t let the opportunity pass, to tell her that. Yes, it was time to introduce her to the real math – the 50-30-20 math.

The Real Math

We all broadly know what we want money to do for us. We just have to spell it out in what is called as short-term and long-term goals. These goals have to be achieved with some bit of planning. You have to do budgeting smartly to your monthly income post taxes.

50% of Your income – Essentials

To begin abiding by this rule, set aside no more than half of your income for the absolute necessities in your life. In general, these expenses would include housing, food, transportation costs and utility bills.

30% of your income – Discretionary

This is the category that can bring the difference. It’s the part you spend on your lifestyle and therefore the more you keep this in check, the better you can channel towards goal achievements and future.

20% of your income – Savings

This part should be non-negotiable. You have to allocate this amount to savings & investments after taking care of your loans and other debts. This is the part that makes your net worth / corpus / portfolio and will take care of goals.
While documenting my experience yesterday, I found this very simple representation of the rule.

rule-50-30-20

Aunty grasped everything in no time and had a few doubts to ask. I was extremely happy she took keen interest. Little man however, had his fill of the turtle and asked to be taken home. Aunty and I promised each other to continue our discussion later.

Now its me who can’t wait to make a pit stop at the ‘Turtle Aunty Home’.

You’ve got the Power!

With a copy of Roald Dahl, I sit pondering when will the time come to introduce my toddler son to it? In no time, my thoughts meandered…

I attended an amazing interactive session last week for moms. It was about how to become moneywise. In an open chat, moms asked their money doubts – what are different investment avenues, what is more rewarding between bonds and stocks, how not to fall prey to mis-selling, what is more rewarding between bonds & stocks, how much do they need to secure children’s future so on and so forth. The questions kept darting at our lovely speaker Srishti as she gave balanced responses to them.

For me, what stood out was Srishti’s opening talk about how momeys should not be afraid to invest themselves. As a case in point, she narrated how her friend acted on her advice and decided to make some prudent investments. She at first egged on her husband to do it. The busy husband agreed, although could not prioritize investing over a hundred other things. Finally, one afternoon the friend ventured and made her maiden investment online. I heard this and gushed with cheer in my head, almost imagining a victory speech by the friend.

Bet it wouldn’t have been easy for her. Humongous clouds of doubt, questions about the choice of investment, fear of losing the money, inexperience, chances of husband’s disagreement to worries about submitting personal documents – the friend would have battled multiple aspersions. What she did was commendable and a learning for all of us – All of us have the power to accomplish if we have the will (of investing :))

 

Yes we really do!

My second point is ‘Be the Change’. Since we carry so much power, we should use it to be the change. Often future planning and money matters take a backseat with so much going on per day basis. We, as a family put aside money without assessing requirements or following any system.

Momeys can take a step and influence the entire family. We manage the budgets of our homes without even flinching. So, if we consciously try to make financial planning and investing a routine, we will definitely meet with success. Our resolve to invest will be a huge help to husbands who have to bear the burden of saving / investing adequately for present & future and extended future – retirement.

A bright way to look at it is that with a thrust on investing we will also lay a very strong foundation for our children – they will not just benefit from our investments but also develop a keen eye for pay-offs.

Tch tch! Back to The best of Roald Dahl 🙂

The Collector’s Edition

Recently we had an oh-so-formal birthday party invite of an year old. Well it was a fun party but a bit formal since it was husband’s boss’. Once the wives were introduced to each other and left to chat up, the gentlemen promptly made way to the bar.

I met a fellow momey who had taken a break from flying to look after her then 2 year old son’s growing needs. Now comes the interesting part – she is now working as a freelance educator for Cuemath. It started with her trying to explore new learning channels for her son, but soon they approached her to become an educator herself.

With ‘screen time’ becoming a major pet-peeve for all parents these days, engaging in alternate education methods made a lot of sense. After I came home and pondered more about it, I started to think, what were the things that kept us occupied in our childhood when screen options were practically zilch.

I recalled how ‘collecting’ was big with us. It was engaging and informative both. Collection of currency, postage stamps, books, doll sets, scrap book memorabilia and what not.

They say coin collecting is part all – art, science and history. You don’t have to aim to become a Numismatist. That may require in-depth academic knowledge of currency. Collection can be done purely as a Hobby. There’s always the advantage of knowing about the country where your collection of coin or paper currency comes from. Matching currencies with countries used to be a regular question in my GK test papers J Knowing coin’s worth in home currency, ease of getting it, can help unearth the value and joy in collecting. There’s a fair bit of history hidden as one takes note of year of making of the coins, symbols inscribed in designs, metals used, thereby telling about the era it represents.

There are ranking systems also used by pro collectors but its definitely advanced and not a pre-requisite to enjoy being a mere collector for hobby. It is also an interesting game between enthusiasts to trade your surplus coins. Trading adds to the collection and it can make you earn when higher value coin is traded for lower value.

There are moments of joys and jealousies as we form a little group of enthusiasts and compare our collections. If a friend managed to get a currency before it would be a big disappointment. But a dime more in our kitty and we would be on seventh heaven J

Those were good ole’ days. Even now I have a bit of interest in collecting coins which I am determined to pass on as a hobby to my lil one. So long as it keeps the screen at bay, it would be worth his while.

Back in the party, once our glasses arrived; the chit chat slowly gave way to some great music and food. I had a heck of a time myself.

Happy New year lovelies!

 

 

 

The power of small

Home economics is no stranger to ‘The power of small’. Yup momeys, I am referring to the small savings we manage every now & then.

We have all had situations where a little fortune out of our savings kept aside bailed us out of unforeseen situations. A medical emergency, unexpected wedding or birthday shopping, unplanned purchases for home or self, numerous ocassions can pop up when small sum plays a big role.

This post is to draw attention to a fast gaining investment feature called SIP – Systematic Investment Plan.

Understanding SIP

SIP or ‘the good EMI’ as it has been fondly called is a sure shot way to make your small savings grow. To give some background, SIP is a feature offered to MF investors. Mutual Fund is a collective pool of money in which various investors put their money for returns. This pool is managed by experts who in turn invest it further to fetch gains for their investors. Now to invest in a mutual, there are 2 ways – lumpsum which you can do one time and second is SIP.

SIP is any fixed amount (starting Rs. 500) that can be invested every month on a set date into a mutual fund scheme of your choice.

Why SIP

Now comes the real part. SIP is increasingly being used by investors because of 2 main reasons:

1. Flexibility to invest small sums over a period of time.

2. Great returns due to the power of compounding.

Compounding Advantage

An investment has to be given time to give worthwhile returns. And when you invest through SIP, you turn little sum into big money. As you invest month on month, your base increases – sum you are investing plus the returns keep getting added. This is how you benefit from compounding. To explain better, suppose you put Rs. 2000 every month in SIP for 10 years. The principal you have put is Rs. 2,40,000. With a modest rate of return of 12.5%, you will have Rs. 4,78,763 at the end of 10 years. You can use this calculator to find out more: https://www.mysiponline.com/sip-calculator.php

This supersedes any Recurring deposit returns you will make over long term. Mutual Funds are seeing unprecedented interest from new investors and SIP is becoming a favourite. But you don’t have to follow anyone for the heck of it. You can do an SIP for the sheer benefit it brings. Just resolve to make small savings into big as a first step and rest will fall in place. Start today!