His Qualification Got Her Education

Recently I went to my childhood friend Gitika’s home for a long due catch up. Actually, celebrations were in order since her husband Deb had bagged a coveted assignment in Hong Kong for 2 years, upon his graduation from Indian School of Hyderabad, Hyderabad.

449.jpg

(Image Credit: <a href=’https://www.freepik.com/free-photo/hong-kong-traffic-view_1120505.htm’>Designed by Freepik</a>)

I knew it would be a long evening of chatting up – everything from last one year’s sabbatical to plans of working out the next 2 years of Deb’s international stint. I was worried for my friend who would have to take charge on many fronts especially with her preschooler daughter. To my surprise, she seemed smug and confident of pulling it off. I knew there was lots to talk 🙂

The Background

Both Gitika and Deb passed out as Finance majors in MBA. Gitika stuck around with her company as a Senior Analyst pre, during and post pregnancy and is blessed to have flexi hours at work. This gave cushion to Deb to pursue his second masters, despite them being new parents.

Gitika for one, had always been phobic of finance and completely depended on Deb. But after his first month at B-school, Deb was in an intensive environment to make any time for family matters. Completely on her own, Gitika did struggle but slowly realized there was nothing difficult about managing money.

Young happy female holding credit card and using laptop computer. Online shopping concept. Payment Transaction at Computer using Credit Card 

(Image Credit: <a href=”https://www.freepik.com/free-photo/young-happy-female-holding-credit-card-and-using-laptop-computer_2455280.htm”>Designed by Freepik</a>)

How Gitika got a new Avatar?

Managing single income, motherhood and office was getting overwhelming for Gitika once Deb was gone. She tried to put a calendar for all to-dos, but money was still out of bounds for her since it was Deb who always managed it. On a chance, she met a professional investment adviser and that became a turning point for her.

The Action Plan

Over a skype call with Deb, she and the adviser took notes of all their current investments, expenses and their money needs over short and long term.

The adviser told Gitika that the way to approach financial planning is securing an Emergency Fund first, setting your financials Goals, Protection by way of Insurance and finally making Investments.

Since Deb was planning a break for a while, he had kept aside funds to fall back on. He had taken adequate protection plans and Gitika’s office had a great Health plan to cover all three of them. So, the all-important Emergency and Insurance was taken care of.

Gitika had access to Deb’s bank accounts. With the help of adviser, Gitika moved surplus funds from bank account to a liquid fund which also funded Deb’s living expenses through a Systematic Withdrawal Plan.

In addition, Deb exited all his shares that he could not track anymore and invested in an Equity Mutual Fund. The adviser also started SIPs for Gitika in a Balanced Fund and ELSS for tax saving. A special investment for their daughter was done in the form of Sukanya Samriddhi Yojana.

Gitika made sure she met up with her adviser once every quarter and this continued her learning process. Once Gitika got into the groove, she knew that she was doing a better job than Deb too.

My Friend, My Hero

I have to say a bold move by the couple to opt in for studies. But an even bolder move by my friend to overcome her phobia. The inhibitions about money are common. But like every other challenge, all it takes to overcome is a Resolve to #BreakTheMould.

 

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’.