The Money Wellness Studio

  • Back in our time…

    According to our parent’s generation, investments generally seem to mean Gold, Fixed Deposit, Post office related deposits, Provident Funds and for some crazy reason Life insurance policies.

    Now I don’t really care for Life insurance policies as an ‘investment’, they are and should always be a safety net that you’re essentially buying.

    The remaining things mentioned here do have some merit and should’t be discarded without examining how they can be useful to us.

    At the same time, they should in no way be the only things we are investing in, because the returns here – while guaranteed are still LOW and most of them don’t even beat inflation. So you could be losing money or just keeping the value of your money static. And that really doesn’t help much.

    Here are times when choosing a traditional investment (such as a Fixed Deposit) is actually useful to us –

    1. Letting your emergency fund grow in silence. Instead of leaving the emergency fund that you have built up, sit in a savings account (earning 2-4% interest), put that thing in a fixed deposit.
      Work it while it’s patiently waiting for its turn to be used. Yes an emergency fund needs to be readily available to you, but at the same time, this is almost three to six months of your salary. Its quite a huge amount to be sitting and doing nothing. An FD or a fixed deposit can still be withdrawn within a day by paying a small fee. Advantage of doing this? Well, you’re not seeing the money on a daily basis, so you’re not tempted to use it on random buys that you think you NEED. Its strictly for what is deemed as an emergency ONLY. Read more about emergency funds and how to build them over here.
    2. Short term once-in-a-while plans – ‘I want to buy the next iPhone!’ ‘I’m sick of sitting at home and working all day, I need a vacation!’. These are expenses that are not regular but are kinda big and will need to be planned. (or should ideally be planned and not hosted by your credit card). No one is stopping you from buying the phone of your dreams or treating yourself with a well deserved vacation. But you don’t want the added stress of figuring out how to pay for it when the time comes for you to buy it. ‘But I don’t know that I want the thing until I actually want it. And as soon as I want it, I NEED to HAVE it!, I cannot sit around saving for it!’. Gotcha. So don’t save FOR it. Just Save. Build a sink fund for the small joys in your life. You may not know what it’s for, but when you want to buy something, you already have seed money for it. Do this through transferring a certain amount (see you need to figure this out, this isn’t an investment but an expense that’s coming your way, so be mindful and careful about how much you put here) from your account into a recurring deposit. Set the deposit for six months and forget about it.
    3. Guaranteed tax free income – Hey hey hey! Public Provident Fund here! I’ve spoken about this extensively as well. But this is a Long Long Long term investment that kinda sorta breaks even with inflation. The point is that the returns here are tax free and are guaranteed by the government. I highly suggest you invest in this right away, it helps to have a corpus slowly being built for your retirement. Literally anyone can open a Public Provident Fund. All you need to do is contact your bank and ask them to open one for you. I say MAX this out. Its a great hedge against the market as well, and it gives you the mental space to play with other risky investment vehicles.
    4. Ze Gold Rush. Every time the market dips, Golden Goldy here soars
      And that’s one the main reasons Gold needs to be in the mix when it comes to your portfolio. Its the quintessential Indian family style investment. There are many ways to buy gold and many forms of gold. One thing I would suggest (but I haven’t yet tried this, so take it with a pinch of salt) is investing in gold through the Sovereign Gold Bonds. It matches the price of gold and you also get a guaranteed interest of 2.5%. While two percent isn’t a lot, it’s above and beyond the change in gold rate itself, which is kind of cool.
      There are also Gold ETFs that you can buy, one ETF here is equivalent to one gram of gold and it tracks the price of physical gold. I actually have Gold ETFs and it’s really easy to buy. It’s mostly stable. But adding an Equity ETF (Like NIFTY 50) into this mix might make it a more balanced portfolio for you to have However,
      I am wary of buying gold jewellery as an investment. This is because of all the making charges that go into actually creating that piece. I also wouldn’t suggest gemstones [hint hint – don’t buy diamonds as an investment, they’re only FOREVER because you’re stuck with them] as an investment. They’re pretty for sure, but they’re NOT an investment. You don’t really know their resale value and it might become incredibly difficult to find a buyer for it. If you want to buy physical gold, understand that you need to store it and that’s a separate headache all together. Lockers in banks charge you for it as well, so consider that with your cost of buying physical gold. I suppose gold biscuits and coins are a better investment than gold jewellery since the making charges for them is quite low in comparison.

    So there you have it, don’t shoo away the ideas that the older generation gives you because you think crypto is the next best thing. Give the above a try, and build a strong foundation for your money.

  • My dalliance with crypto

    First let me start with – L.O.L.

    This was my biggest fail as an investor. I had no idea what I was doing and jumped on the bandwagon at the height of the crypto madness. So I basically bought super-duper high. I only have myself to blame for investing in a market I did not understand at all. I had major FOMO and sunk in around a 100,000 into this. I lost about 40% of what I put in, locked in those losses and exited the market, thanking my stars that I didn’t lose more.

    I would probably not doing it again without gaining a lot more knowledge about it. Since it’s such a volatile market, I doubt if the hold-and-chill strategy would work for this.

    You see, I’m an extremely lazy investor, anything that requires too much work, I simply know I cannot sustain. And by the looks of it, crypto needs a lot more research than the usual stocks and bonds. Plus its a highly unregulated market. Most of the crypto investors don’t actually know what they are ‘investing’ in, if you can call this investing even.

    There are a lot of different resources if you are interested in this. I would suggest to read and understand more about what you’re putting your money in before putting it. Its not exactly vetted by experts, neither is it being held accountable for its ups and downs. No one (Ok I mean me), knows why it fluctuates so much or what its inherent worth is?

    What is its value, really? I don’t really know. What is being backed by? It might be the future, but we are still ‘buying’ the currency with our hard earned money. Let’s think a little more before we take the plunge, or maybe you should read more of what I write because I’m always experimenting in these things, so let me take the risk for you. You can come here and LOL about this.

    I’m not shelving crypto right away, but I do encourage that we read up about this a LOT more before we spend money on it. There are so many different resources for this. Let me list a couple which I have gone through and found useful 🙂

    1. My go to page for all my basic investment questions: Investopedia – Decentralized Finance
    2. This audiobook by Professor Campbell Harvey from Fuqua School of business is great! I took his coursera course which I found useful – DeFi and the Future of Finance – Audio book
    3. And if you really want to deep dive, check out this specialisation in Fintech from Wharton – https://www.coursera.org/specializations/wharton-fintech
    4. Here’s a great one on the problems with NFT and Crypto in general – Folding Ideas – Line Goes Up – The Problem With NFTs

  • ‘We’re all in the same boat’

    I scream, as we row without any paddles.

    I spoke about accountability partners in a different post, but there is something comforting about having friends or peers who are just as clueless as you are and are going through similar things you’re going through.

    It might seem like the blind leading the blind, but there is something powerful in this collaboration. I say, rely on this friend who’s in the same boat as you, because no one else can understand your situation better than them. They know your struggles because they’re also going through the same thing. There is a joy in discovering the pitfalls and taking risks together because you have each other’s backs. We do this all the time, and I think its time to do it with finances as well.

    Talk to each other and help keep each other afloat. Help them stay on track with their money habits and improving those habits while they help you do the same. You always run the risk of getting comfortable and doing nothing. But at least you are trying something.

    My friend was planning a wedding a while back, and we both were quite unhealthy to say the least. We also had no idea how to get better. But. We decided that we would try and get better at it together. We planned to do yoga everyday and change the little things in our diet together. Granted, we spent most of the time binging Netflix and eating ice-cream, and essentially putting on more weight, but we had a great time doing it together. Yeah okay, this isnt the success story you were hoping to hear, but I will never forget the time we tried to do something together. Years later, we formed a walking group (yes its an aunty type thing …I’m in my 30’s now back off! haha) and got into the habit of going for a walk every day without fail for about six months.

    That lead to me being more focused on health and prioritizing it for the first time in a long time. I started thinking about what I like about fitness. I loath fitness by the way, but this prompted me to think about it in a more positive way. And I took up swimming. Now I swim every day. Not as a compulsion, but because I like doing it.

    I still occasionally go on walks, but my main thing is to swim. You might discover something similar in your financial journey while you partner up with your friend in need 🙂

    It might take some time, but it will be a non-judgemental and comforting experience out of which something long-lasting might come out.

    Try these on for size –

    • If you both have a debilitating spending problem, watch out for each other.
    • Share your plans with each other and ask them – how are you planning to fund that? (in a nice way). Say your friend is wants to go on a vacation, give them suggestions for places nearby that are budget friendly. Help them brainstorm ideas for frugal vacations. And, if you have the bandwidth, go with them!
    • Do not hide your spending from one another. The whole point of this partnership is lost if you do. This is YOUR safe space. You may take some time to open up about it, but do it anyway.
    • Slowly start reminding each other on the FIRST of every month, to save an agreed upon sum in a separate bank account. Do this while on the phone with one another if possible?
    • Be open with each other and share your income with each other.
    • Share your knowledge base. If both of you know little to begin with, start doing some research together. Invite people who have invested and know a little about this into the conversation.
    • Learn to say NO to your friend. They ask your opinion about buying a new thing, and you know their situation. Tell them NO. They shouldn’t be doing it. Obviously I don’t mean for you to do this all the time, but there are times where you will have to say no, and try to enforce it. You will recognize when this happens. Take action 🙂
    • Try new things together!
      • If you’ve never invested in mutual funds for example, make a day out of it together. Go to their place, fire up the laptop, sit together and invest a say 500 in an index mutual fund for the day. After the day you’ve had, go out for chaat and chill.
      • Create a goal-based fund! If you or your friend have a short-term goal in mind, like buying a car, or buying a phone, plan for it together and create a goal-based fund through your bank account (a recurring deposit or a fixed deposit)
      • Buy a stock. Figure out a stock that you want to buy and invest in it! (Not a lot, this is just for experimentation and figuring out what kind of investor you are)
    • Keep the cadence nice and breezy. Go with the flow. There might be days where you don’t really feel like doing the thing. Your friend might remind you to save on the 1st of the month, but you may not have done it yet. Tell your friend that you didn’t and ask for their help.

  • Lonely island of ‘Overwhelm’

    I don’t know about all people, but I have personally had many many failed budgets and have many times failed to create a budget as well. It starts with looking at our spending habits. Unfortunately creating a budget and managing our spending habits are circular lines of reasoning. In order to budget optimally, you need to know how you spend and in order to spend, you need to have a rough budget in mind.

    Sometimes I think about all the expenses I have had in the month and immediately get overwhelmed about the amount of nonsensical spends I have splurged on.

    Sometimes I think ‘Okay, need to get this in order right now.’, and I actually get on it. What happens here is that I sort and categorize my spending into so many different sections that I’m again lost in the lonely island of ‘Overwhelm’.

    There are moments, far and few, when I finally have the guts to look at my spending and take the time to understand the mess I have created.

    After many tries, excel sheets, late nights and early mornings – from being notoriously frugal to spending money like I have millions stashed away, I believe I have figured out the art behind budgeting.

    We need to do a little more in the beginning and then do almost nothing after that.

    What’s a little more?

    I have spoken about this earlier, you need to know where your money is going. You actually already know this. But you haven’t taken a big picture look nor have you looked into the details. You’ll have to do both.

    What’s the big picture?

    • Where are you spending the most?
      • Are they recurring, unavoidable expenses?
      • Are they random things that you buy because you’re a little bit of a shopaholic?
      • Are you spending regularly on things that you cannot control or predict? Is there a range for this? How can we be more accommodating of this particular expenditure in a way that doesn’t make you live paycheck-to-paycheck.
      • How much are you spending through your credit card compared to your debit account?
      • What do your recurring expenses look like in comparison to your one off expenses?
    • What are your savings like?
    • How much are you investing?
    • How much do you make every month? (for people with irregular incomes)
    • What’s the next big thing you are looking to buy or invest in? How do we change our habits in order to realise this goal?

    What are the little things?

    • How often are your one-off expenses occurring?
    • What is your thought process before you buy something useful to you?
    • Have you bought or spent on things that you regret? What are they?
    • What was your state of mind when you bought these things?
    • Do you feel shame or anxiety around your spending?
    • Do you feel a sense of overwhelm when you think about your credit card or loans?
    • Do you feel upset going through your expenditure?
    • How can you be more mindful about your spending?
    • What would you like to buy that will bring you joy but you have postponed?

    Do the above exercise and see how you feel. I will repeat this over and over again, the key is to be mindful about your money. Don’t be scared of finance, don’t be avoidant with it. Take small steps and peel the onion behind your fears and your habits.

    slowly remove the scary mask of budgeting and money to see what hides behind it. I assure you, the more aware you are the better it is for you.

    Whats the nothing part?

    Well, now that we have introspected about our spending. We need to come up with a budget that is easy to follow, and sustainable. Much like a diet, this needs to be your personal finance diet that you should be happy to follow. Not something you die over or hate yourself for.

    A general rule for budgeting that has worked for me is to focus on wealth-building instead of insanely splitting the money into many different categories and tracking spending that way. This is, again more art than science.

    So first thing you might want to do is – figure out how much you can save/invest. Cut that amount out of your salary account as soon as the money hits the bank. Remaining amount is for you to figure out. Be mindful here and give yourself some buffer in the beginning of your journey.

    You might have lofty goals of saving over 50% of your income, but through the introspection exercise you’ve done, you probably realise you can only save 20%. That’s okay. Save the 20% and see how much is left over from your salary at the end of the month. Move the left over to your savings account. Now you have exceeded your goal 🙂

    Even if you don’t achieve your savings goal in the first try, do not get discouraged, this is a marathon not a sprint.

  • The Grim Palace

    There are so many avenues to research this on. I simply googled term insurance plans, which of course led to a barrage of different advertisements, but after scrolling through them, I went to Policy Bazaar (no this isn’t a paid ad here, I actually went to policy bazaar).

    There are many things to consider here, lets go through them one by one:

    1. How much cover do I choose?
      • The usual rule is that it should be around 15 to 20 times your annual salary.
      • It should cover any debt you have. This is so that your spouse/family isn’t burdened with your debt. I know it’s really grim, but think about this when you’re planning. Especially if your spouse isn’t working or is incapacitated or disabled in some way, you don’t want to add to their troubles.
      • Ensure that if you have plans for your children (future children), they are also considered in your term insurance plan.
    2. Claim Settlement
      • Go for an insurance cover that has more than around 97% claim settlement
      • What does that mean – buy insurance that has a high rate of settling insurance claims, meaning big brands that you can immediately recognize.
    3. Premium returned or no?
      • You need to decide if you want any sort of return on this “Investment”. My advice is to not treat this like an investment at all. The only return here is a safety net.
      • So some term insurance plans offer a premium returned, which is just the prinicipal amount that you have put in and is returned to you at the time of maturity.
      • Plans with ‘Premium returned’ are more expensive than the term insurance plans that don’t have any such guarantee.
    4. Up till when do you want the insurance to cover you?
      • Very important. Some insurance plans only provide cover till a certain age (usually 65).
      • I would suggest to go for plans that last a little longer, with the advancement in medicine, our generation is going to last a lot longer than the previous generation.
      • A longer cover will cost you more, and it will be a different plan all together sometimes, so think about this before you jump in.
      • You could go for a cover till you’re 65 for now and then get another term insurance plan down the road which will cover you for longer. People have multiple term insurance plans against their name, so you could think about doing the same. At the end of the day, its important to get a term insurance plan as soon as possible (and as young as possible) because the monthly premium will be lower and you’re at least covered till you’re 60-65.
    5. What type of payment plan should I go with?
      • So there are again many ways to pay your premiums.
      • One could be a monthly premium, then there’s quarterly, yearly and full amount at one go.
      • I suggest to go with the monthly/quarterly plan. Think about this, the money you pay today is worth more than the money you pay tomorrow. Thanks to inflation. So if you’re paying the same amount for months to come, it’s effectively costing you less and less as time passes by. Instead of locking in the FULL amount at once, which costs you more, you could split it out to a monthly/quarterly payment which saves you money.
    6. Nominees
      • The most important part of your term insurance plan. All this is for them.
      • Most term insurance plans allow you to modify/add nominees even after you have bought the plan.Say you’re not married, the nominees are probably your parents/siblings.Don’t forget to update the nominees after you’re married or have children. This is vital.

        As a GENERAL RULE – Remember to update Nominees on all your assets/ investments/ insurance plans etc. It’s a huge headache and cause for stress and anxiety if this isn’t done and you’re not around.
    7. Am I too old?
      • Hmmm. This is the one area where I think yes, its possible.
      • Sometimes if you’re over a certain age (50 or above), it might be prudent to invest that money instead of seeking a term insurance cover.
      • The premium will be high and the cover might not be much. You’ll have to do your research and decide if it is worth it.
    8. Am I too young?
      • Nope. Get on it. Younger the better.
      • Also great if you’ve just started earning, that way the you get a good cover.

  • To Own or not to Own?

    ‘I want to live in my own house, my family has always rented and I really want to own property that I can call my own.’

    ‘No I don’t want to do that. I don’t believe in owning a home, we can put that money to good use by investing in it and the returns are far higher anyway. Plus renting gives us the flexibility to move around.’

    ‘But that rent amount is giving us nothing, we can at least use the toward an EMI and at the end of the journey, we will own a home. I really want to have my own place which I can call home, I’m not comfortable with renting forever.’

    It might be scary to have the above conversation after marriage because, your finances could be combined. How do you approach something like this when you both are on the extremes?

    On one hand, one partner is thinking like your one-in-a-million rational investor. On the other hand you have one partner who is driven by emotions and sentiment. Rarely do we think about money rationally, there is always some point in our lives when our own psychology comes into picture and all the logic goes out the window.

    What to do during such a time? Be strict with ourselves. Stay cold and calculated when you approach money? Nope, not always possible. Most of big money decisions come from the heart and are not always logical.

    What we can do is try to reach a middle ground. Marriage and all relationships in general should be about getting the best of both worlds, not the most PERFECT answer but the one that suits you both optimally.

    Perhaps instead of saying ‘No’ to your partner directly about not buying a home, you can talk about the plans you have for your money. Talk about the advantages of renting Vs Buying. Share some of the fears that you have around owning a property. It’s possible you are averse to debt, it’s possible that you fear taking on such a huge loan for an immovable asset which is difficult to sell.

    For the partner that is looking to buy – Instead of talking only about how you feel, talk about the advantages of having a property as an investment and how you don’t have to worry about Rent and also the fear of being suddenly being evicted based on the whims of your landlord. Talk about the fact that it gives you a sense of grounding and a structure in your life. Tell your partner about how you might be feeling unsettled in a rented house and you’ll feel like your fundamental needs are met once you own a home.

    There is no set template to have such conversations, but they do need to come from a place of understanding your partner’s needs, wants, and circumstances. Be open to having your ideas vetoed and don’t stick to your ideas too rigidly, you’re probably missing out on a collaborative idea that might enhance your life greatly.

  • An attempt to simplify

    In one of my earlier posts I mentioned index funds. Here, I am going to dive a little deeper into what they are.

    Ok! So there are two platforms through which shares of any company are traded in India. One is the National Stock Exchange, and the other is the Bombay Stock exchange… also affectionately known as NSE and BSE. Think of this as a directory wherein all the companies which are traded publicly (as in you and I can buy a part of the company) are listed.

    Phew. Okay. Come let’s enjoy a full-fat, full-cream mocha latte 😀

    Now, any share that you buy or sell will have to go through one of these exchanges. The exchange here also does a cool thing. Not only does it list all the companies, it also has its own graph like thing to make you all the more confused.

    What does this graph-y thing do?

    One important graph or lets call it index is the NIFTY, it stands for National Stock Exchange Fifty. I’m sure you’ve heard of this already. There have been plenty of headlines and random conversations that this would have come up, especially scary things like ‘BLOODBATH on Dalal street as NIFTY crashes by ten-thousand-million points.’

    So NIFTY basically tracks the top 50 companies in India. They have some insane calculation called ‘free-float market capitalization methodology’, but essentially, think of it as an indicator of the health of these top 50 companies. It’s a dynamic list and the graph changes every day.

    Similar to this one is the SENSEX 30 index, which tracks the top thirty companies listed on the Bombay Stock Exchange.

    All right all right all right.

    Now we know what an index is… kind of.

    What in the world is an index fund?

    We needed to go through this step by step process in order to get here people. There are many different types of index funds, but the most important one that you need to know about is the index fund that tracks either the NIFTY or the SENSEX.

    So imagine there is a person who looks at the NIFTY and all the listed companies in it, and has a brainwave. ‘Lets create a fund that contains exactly all the companies listed on the NIFTY in exactly the same proportion, essentially mimicking the graph.’ And that’s how an index fund is created.

    So when you buy an index fund, you are essentially buying a bucket of different top companies that are doing extremely well in your country.

    Cool cool, I’m sold on this. How do I invest in this? I need to do this NOWWW.

    So if you’ve read the bit I wrote about mutual funds, you already know that there are actively managed funds by these fund-houses who pick stocks and securities and bundle them as a mutual fund. Now since the index fund is a no-brainer, there is no need for it to be ‘actively managed’, it just follows the NIFTY/SENSEX index. So, that means you’re paying a lot less for the management of this fund.

    There are several fund-houses that you can look up and buy the index fund from. Check out Groww.com or Kite by Zerodha from where you can buy these exciting (haha) investments.

    Also, groww or Zerodha isn’t paying me to write this, I actually use these, which is why I am recommending them to you. The interface is easy to use and you don’t feel like a lost child trying to navigate a busy market.

    Can I make this less jargon-y? Did you all last till here? Let me know! 🙂

  • Young and merry

    If you are in your twenties, then woohoo. Cheers! You are being backed by TIME.

    The most important thing right now is to develop a discipline around investing. Since you are just starting out in your career, I’m thinking there’s not a lot of income right away, but it also means you probably (most likely) don’t have a lot of responsibilities or liabilities either.

    So what can you do to ensure that you get started on your investment journey?

    One thing I know that holds people back (irrespective of age) is the fact that there are venturing into the unknown. I can understand the fear, and I have suggested in a previous blog that you find an accountability partner. But if that’s something you are not comfortable with, then maybe you can change your perspective a little. Start by reading a little more (hint hint, like my website or if you’re more of a visual learner, then my Instagram… or just reach out to me!) about this and understanding compounding.

    A lot of people say this and I believe it as well, invest in yourself. For sure. But be mindful about the difference and the similarities between an investment and an expense. You could think that you’re investing in yourself by taking a course on Coursera, and simply buy the course and forget about it. This gets you nothing. You may even listen to one or two classes but after a while, you just get bored and stop attending the classes all together. Hey. I’ve been there, I’m basically describing myself.

    On the other hand, I went on a vacation to meet my sister, and what I thought was an expense, turned out to be an investment. I learned so much about myself in that trip, and tried a whole bunch of new things like cliff jumping, river rafting, whale watching – things I never thought I would do. But the experiences added so much colour to my vacation. It gave me the time to think about the important things in my life and really come up with strategies to grow and improve. It was quite unexpected in the beginning, but the moment I realised I was on this path, I spared no expense.

    The key is to realise this early, and admit and accept that this is an investment and that was an expense. There is absolutely NO POINT in lying yourself about either. Don’t tell yourself that splurging one night was an investment when it wasn’t. No one else is keeping count, only you are. And you are doing this to get to know yourself better. There is also nothing wrong with spending a little more one night, but we need to be AWARE of it.

    So yeah, invest in yourself for sure. But know the difference.

    Apart from gaining the experiences you need in order to grow and become better, the main objective of this post is to get you started on investing in the market.

    The reason I brought up the ‘invest in yourself’ segue was because it is often used as an excuse to not invest in the market. They are not tied together. You can better yourself and invest in the market at the same time.

    Firstly, think about a number that you will be okay with letting go every month. What is that number? It can be a small number, don’t worry about how big/small this is. Its only an exercise we are doing right now. Is it 500 bucks? It could even be 100 bucks. Okay cool. So that’s the amount you’re going with.

    Get your overthinking brain to relax a little, you are only starting out, you’re not some teenage mutant ninja who’s raked up millions. It’s okay that it’s small, that means the risk is also little, but the upside will be good, I promise.

    So what is the upside. It’s like this, when you start a routine or you start learning a new thing, you don’t start at an intermediate or advance level. You start where everyone starts. At the very beginning. The only way to go from there is upwards. You will see results, and you will get more interested in investing in yourself as you keep going.

    What does investing in the market look like for someone in their twenties? Start with index funds! Go research about what that is. OR come hang out here more often where I will dive a little deeper into what that is and the different avenues you can explore in order to invest your money.

  • Accounting in a marriage

    I am only going to talk about heterosexual marriages, as I don’t know enough about other types of marriages. I’ll try to invite some same-sex couples to talk about how they tackle their money, but some of the general advice here should hold water for all sorts of marriages.

    As a woman, I strongly recommend that you continue to maintain a separate account after marriage as well. This has not got anything to do with your husband or how much you trust him. But it’s a matter of financial independence for a woman, and it should ALWAYS be a priority.

    Similarly, I also suggest that the guy in the relationship maintain a separate account for his expenditure and his exclusive investments. Otherwise these things get lopsided and you end up having conflicts around money.

    Now I’m not saying that the couple should have separate accounts and thats the end of the road for them. Not at all.

    After some thought, my recommendation is to have three accounts between the two of you. One personal account each and one combined account. The combined account is for everything you plan on doing together.

    The reason is to maintain both separate and combined accounts is to get a certain sense of independence post marriage but also, to capitalise on the financial advantages of being married.

    How to segregate the cash-flow between the personal account and the combined account?

    1. Equal contributions to the bank account irrespective of the salary
    2. Equitable contributions based on how much you make
    3. Month-on-month decision if there is irregular income.

    What are the things the combined account can be used for?

    1. Mortgage
    2. Combined loans
    3. Household expenses:
      1. Rent
      2. Groceries
      3. Bills
      4. Subscriptions
    4. Child-care expenses
    5. Child(ren) related investments
    6. Combined investments
    7. Family vacations
    8. Insurance

    What are the personal accounts used for?

    1. Personal expenses (more like personal luxuries, since most expenses will already be covered through the combined account) – gym, dining out, subscriptions for self, shopping for self.
    2. Emergency funds
    3. Savings
    4. Investments

  • Murica Peeps

    To those who braved the difficult travels and set sail to the New World – How is life people!

    I know it can be daunting to go to a completely new country and start a life there.

    ‘How would you know this? You sit in Bangalore and type up all this, you don’t know my struggle.’

    My sister did it. My cousin did it. My family IS the history of going to the US for higher studies. So I know a teeny bit, because I have lived vicariously through them.

    Ok so obviously I don’t know your day-to-day issues. But I do know that you might have a slightly enormous student loan debt on you, plus you’re sitting there converting dollars to rupees for every transaction and sweating as you await your visa status. All in all, a sexy-ass situation for sure.

    I know that earning in the US comes with a lot strings attached. You might be sending money to your home, or you might have a huge student loan that you need to attack, or you might be living in an expensive city paying an exorbitant rent, or all of the above right? Before your money hits your account, there are already designated places for it to go.

    I have spoken to many folks about this and mostly what I’ve heard is, they are just excellent at saving their money. But they have little to no clue where they need to invest it. Or they are very very resistant to investing their money. I understand, it’s not your home country, you don’t know what to invest in, and you don’t know what the tax implications are, you don’t know when you’ll need the money, or when you’ll leave the country. So many insane possibilities to consider.

    Couple of basic things I really hope you are doing –

    • I know you’re saving for sure and have created a little nest egg for yourself. If you haven’t, please create an emergency fund that will keep you afloat for the next three months at least. This should basically be your salary times three. Start saving up for this, it doesn’t have to be in big chunks of cash, save how much ever you think you can. Read below about HYSA to maximize your emergency fund benefits!

      Okay so you have saved enough and more, and now your money is just sitting there. Compounding at .1% per annum. Compare this to inflation, folks you are losing money.
    • ‘I know what a 401K is, but I don’t know how long I’ll be here, so I haven’t invested in it.’ Yes, but do you realise that you are passing up free money? Do not give this up. Find out your company’s 401K policy and see if you have can max it out of your salary. Usually companies will match the amount you put in.

    We are going to get into a bit more detail below. I advice you to take a break from the screen, go pet a cute dog nearby and come back to read more! 🙂

    • There’s also a Roth IRA. Whats the difference between a Roth and a 401k? and when should you select what? Ideally, if you can you should do a mixture of both.

      401k – (its a match!) The money is deducted at source, and invested based on your age and risk appetite. So this isn’t a part of your taxable income. Ooooh. Is my 401K tax free? No it isn’t. When you withdraw from the 401k, it will be treated as a taxable income. So if you are withdrawing it post your retirement, then that will be considered your income and you will be taxed accordingly. (So basically very low tax post retirement). If you withdraw it before that, and say you’re earning in the tax bracket there is, then you will have to pay your then current tax on the 401k. There’s also this amazingly horrible thing called the RMD (Required Minimum Distribution), so this basically means that you’ll have to withdraw a certain amount from your 401k (post retirement) every month/year. This is to avoid the 401k to become some sort of tax haven.

      Roth IRA – This is the retirement amount that is deducted after your salary has been taxed. So since it’s already been taxed, you wouldn’t have to pay tax when on withdrawal. Plus this is something that is managed on your own, so you have more flexibility in terms of how you want to invest it. There is no RMD for Roth IRA. You are not penalized if you don’t withdraw from it.

      So whats the difference between regular investing and Roth IRA? You don’t have to pay short-term or long-term capital gains tax on Roth IRA if and when you withdraw it. This is why there is a cap on how much you can invest in Roth. Plus if you start early, then you also probably belong to a lower tax bracket, so you’re saving there too.

    Okay I’m sure most of you have figured out the above, if not, get on it!!

    What about investing? So I think there are various ways to do this.

    1. There’s an app called acorns that lets you invest spare change! You can save a dollar here and a dollar there and get started with investing.
    2. There are different robo advisors, one of them is WealthFront. You can use this to kind of enter in your goals and your risk appetite, and it will pick the stocks for you. Oooooh, gimme more details!
      Basically instead of hiring an actual human to manage your money, you hand it over to an algorithm. The cost of this is much lower (.5% or so) when compared to portfolio managers. The reason a lot of retail investors prefer roboadvisors is mainly because of how accessible a wealth management system is to the common woman (or man). They also have a low barrier of entry, some of them even have zero minimums. Consider them to be good tools to get into the habit of investing, you can always move out of them if you find that you have developed your own investment strategy over a period of time.
    3. Just investing in Index funds. To be honest, I would just buy a bunch of Vanguard S&P 500 ETFs every month and chill.
      Holllld on. What is an index fund! Fair enough. These are funds that are passively managed, meaning no research really goes into creating these funds. They simply follow the market. For example, an S&P 500 index fund, will contain the same composition of funds as the S&P 500 index itself. So the top 500 companies in the same proportion. Again the barrier for entry here is low, and the key word here is ‘diversification’. You get to invest in 500 top companies, whatever they are at one go.
    4. A friend told me about using a High Yields Savings Account (also passionately abbreviated as HYSA). This provides a higher interest rate (20X to 25X) than most savings account for your emergency funds. The withdrawal process from these accounts are also simpler compared to your usual bank accounts, so go ahead and open this up if you haven’t already 🙂

    That was a LOT. Good job getting through this whole thing.

    Write to me if you have questions! I might not be able to answer all your questions, but I’m interested enough to do a lot of research on them and get back to you!