Kay. Thanks. I already have a bank account and a mobile app. Now what?

Awesome! This is India specific – get your Aadhar card connected to your mobile phone! Everything happens through OTP (One time password) these days, so your mobile number needs to be updated and connected to your Aadhar because thats how most investment platforms perform their KYC (Know your Customer). This is a manual process, so you HAVE to go to the Aadhar center personally and get it done. I understand that this is easier said than done, but please do it. It’s a one time effort and opens many many doors.

Now that the above technicality is out of the way, let’s talk about how to make this happen. How do we motivate ourselves to save? to invest? Everything is so daunting AHHH.

People, it’s a feature not a bug.

We need to get around this. There is no need for motivation here, we just need to set up systems in place that will automate the living hell out of your money. You have to set up processes in such a way that your money works just as hard, if not harder than you.

Why should I even bother saving or investing? I’m making enough money, I’m happy. I’m not a capitalist. Yeah, me neither. But we live in a capitalist society and we are bound by its framework.

1. Things are going to get more expensive (Hello Lifestyle Inflation!)
2. You WILL have additional responsibility as you age.
3. There are expenses that are unplanned, or will be too big to cover using just your salary – Loans!! (We take loans all the time, there’s nothing to fear here. But there are certain things that you cannot avoid taking a loan for – education, house, vehicle, setting up a business etc. There are things where loans can be avoided or the situations can be mitigated – personal expenses, medical expenses, emergencies, etc.)

Most important contingency that you need to build is an emergency fund. BORING! Heard this a MILLION times. Okay, have you done it though? If not, why?? Think about this for a second, why does every financial ‘guru’ and their mother go on and on about Emergency fund? Why do they throw this fact around all the time?- ‘An American cannot fund a $1000 emergency expense’?

Imagine getting into debt because of an emergency? You are already under incredible stress. You are also adding lack of funds to it. What will you do? If you’re privileged or lucky, your family and friends may help you out, but it is another ticking time bomb. Or what? You may have to apply for an emergency personal loan? Or a payday loan? Or max out your credit card? Rake up interests there?

All the above sound horrible. What an insanely stressful time this is turned out to be!

Good Lord, get an emergency fund! It’s nothing special. If you’ve gone through my previous post, then you know the different buckets your expenses fall into. Figure out how much you spend in a month start setting aside money for at least 3 months of expenses.

Lets say you spend (this is all arbitrary)-

Rent – 10,000

Groceries – 5,000

Social/eating out – 3,000

Travel cost – 2,000

Total – 20,000

So you need 20,000 times 3 —> 60,000 saved. (Just a minimum. . . if one can, one must do more)

Let’s say you are able to save 5,000 a month. So save that 5,000 for the next 12 months. Automate this. Set it up now.

Too much? Let’s put it down step by step

1. Figure out your recurring expenses per month. Whats the total? Check previous months to see if that total is consistent. Don’t worry about how much it is, the only thing you need to do now, is jot down expenses, get the total amount.
2. You need at the minimum, 3 months of expenses. Depending on what you think you need, choose your multiplier. You need 6 months of expenses in your emergency fund to feel safe? Then go with that, but let’s keep at least 3. What is the final amount you get?
3. Now pause. Check how much you save. If you don’t save anything at all, then plan for it. Write down the least amount you can possibly afford to save. You have to come up with a number, it doesn’t matter how big or small it is. What is this number?
4. All you need to do now is save that amount that we figured out in Step#3, every month – till you reach the ‘final amount’ we figured out in Step#2. Make it the 1st of every month. This amount cannot even see the light of day. Nope, it goes straight out.
5. Set up the Recurring deposit. What in the world is a recurring deposit? Every bank in India has an option for a recurring deposit. It just removes (debits) a certain amount from your account into a separate account (credit) for the number of months specified by you. So basically you’re instructing your bank account to remove ‘X’ amount -which we figured out in Step #3, every month from your spending account for a certain period of time.)
6. How long do I do this recurring deposit (RD)? Divide #2 by #3 – you get the number of months.
7. Set it and FORGET it. It’s not yours anymore, it’s for an emergency ONLY.

I don’t need to do all this, I already have enough saved for an Emergency Fund.

That’s great! Put it in a different bank account so it’s out of sight and out of mind. It cannot be spent on frivolous things.

I save quite a bit every month and I can get it done faster than the terms Recurring deposits in my bank are offering. Phenomenal! Add a calendar alert to send out that money to a separate account on the 1st of every month. Yes you do need to have another account. It needs to be easily available. Check with your bank if there is a way to package this inside your own account.

This is taking wayyyy too long. I’m bored already.

I hear you. But this is a one time thing you need to do. Not going to lie, this is a snooze fest. I would suggest you do everything in your power to make it interesting.

• Get a trusted friend or a family member to help you stay accountable.
• Schedule it! Put it on your calendar and block your time to just do this. Eat the frog!
• Break it down. If it’s too overwhelming, just do step#1 one day, step#2 another day.

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