Want To Plan Your Life? Stop Telling Yourself These Money Lies

We all know that we must start investing money, but very often procrastinate about it. If you are in your late twenties, it is high time to take stock of your financial life and start investing NOW. We delude ourselves with excuses when it comes to managing our finances. Well, it’s time to stop that.

It seems all fun and games when you are a child and when you are older, life feels more like a chore. Responsibility is often a dirty word that you try your best to avoid and if you are still in your twenties, there is a general perception that there is enough time later to take up the so-called responsibilities.

Pawan Chawla is 29 and is working in a telecom company after finishing his MBA. As the regional head of his sales teams, he takes his work and partying seriously. Although he earns a good amount, he does not have many investments apart from the statutory ones made by the company on his behalf, such as the PPF and some shares he had bought on the recommendation of his friend.

Like many of us in their twenties, Pawan is deluding himself with lies. Here are some money lies that we must stop telling ourselves before we turn 30.

1. I don’t need health insurance
Everyone needs health insurance. There is no age criterion for ill health or misfortune. Hospital bills can be exorbitant and can set you back financially. Meanwhile, the annual premium of a health insurance policy of Rs 3 lakh will be less than Rs 4,000 for a 29-year-old. So do not delay health insurance any longer.

2. I can save for my retirement later
Sure you can! However, a few years down the line your expenses will be higher as you are likely to have a family and dependents. It is very likely that you would be paying off EMIs on a home loan. Therefore, by starting your savings earlier, you are taking advantage of the power of compounding, which helps your money grow at a much faster pace when invested over a longer period. For instance, if you invest Rs 1 lakh today and it earns an interest of 12% per annum, it will be nearly Rs 30 lakh (without adding another rupee from your side) after 30 years. But the same Rs 1 lakh will be merely Rs10 lakh after 20 years. Go to any calculator on the Internet and understand the magic of computing.

3. I don’t have time for investments
We all lead busy lives and unless we are financial consultants, we have time-consuming careers that have nothing to do with managing investments. What we forget is both our money and our future are at stake here. And we need to take some time out from our hectic lives to monitor things. A financial advisor can help you take good decisions about money and investments. You will also find a number of financial software that will help you manage your investments.

4. Missing a few payments is no big deal
Missing a credit card bill or an EMI payment means a negative marking down of your CIBIL credit score. It also means when you want to avail a home loan or a personal loan in the future, the bank will check your credit report and may either refuse your loan application or charge you a very high rate of interest. A poor payment record will affect your credit score and the ability to get loans for a great length of time.

5. I will start saving after I get married/have kids
Waiting for a milestone in life to start saving is like trying to catch the train after it has left the platform. Start small but start now. Increase the amount you put away in investments whenever you can. Most importantly, do remember that you need to invest and not just put your money in a low interest saving account if you want your money to grow.

About the author: Rajiv Raj is the director and co-founder of www.creditvidya.com.