The Saving Formula & The Importance of Balance
Some thoughts for the new Financial Year
Welcome to the first edition in the new Financial Year 2021-22. Given the way the second COVID-19 wave is taking over the country, it’s looking like the year ahead is going to be a challenging one indeed. Keeping this in mind, there are a few thoughts that I’d like to share with you today.
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The Saving Formula
The good thing is that the Indian culture has always encouraged saving. The last year has revealed the importance of savings like never before. It’s no secret that in the face of job losses or salary cuts, many people have relied on their savings to get by. However, there are a couple of tips that I would like to share to help you boost your attempt to futureproof yourself.
1. Use the right approach - Usually, once the monthly cheque comes in, we meet our expenses, and the balance is treating as the saving. And the fact is that as our income increases, our lifestyle quickly expands to utilise more of it. Therefore, the right way to do this is exactly the opposite – first lock away the savings that you want to target and manage your expenses with the remainder. You could decide on a percentage (10% / 20% / anything that you are comfortable with).
2. Start early – For young professionals starting out, there is the temptation to start building a lifestyle (buy a fancy bike / the latest cellphone, etc.), but that is clearly detrimental. Whenever you think of an expense, think ‘Power of Compounding’ – the longer you are able to let that investment stay, the exponential returns you are likely to get.
Importance of Balance
The corporate world requires deft balance. After all, leadership is said to be a balancing act. Decisions are never really about choosing the right option – they are about choosing the better option. The variables are many and there are a fair number of assumptions also that are to be factored in – what will be the competitor’s move, for example? They way to go about taking decisions is to
Identify the core result that you need
Assemble all the facts that you can
Define clearly the decision that you have to take
List the various alternatives available to you
Evaluate the pros and cons of each of the alternatives
Choose the one that aligns the most to you
Implement the action
So, as you kick in to FY2122, do try and keep both these thoughts in mind.
My best wishes are always with you!