Learn how to save money to do what you love [PODCAST

Learn how to save money to do what you love [PODCAST – 49 min]

Posted on December 23, 2019December 24, 2019 by Jagoinvestor

Do you want to know how to save money to do what you love in life?

I recently did a 49 min audio podcast with Sanjay Khandelwal of The Break School. The podcast is mainly aimed at those who want to do something on their own by quitting their jobs, but they get stopped because of a lack of money & planning or fear of starting out. The podcast will also help those who want to know some of the best principles of savings and investing. Please listen to the podcast below

Here are iTunes link along with google podcast link

Here are the 11 things we discussed in the podcast?

Why did you start Jago Investor ( 02 min, 48 Sec)
Two biggest challenges in last 10 years in building Jago Investor ( 05 min, 43 Sec)
What have been your 3 biggest learning as a personal finance coach? ( 06 min, 54 Sec)
Have you come across people who wanted to quit their job and be freelancers or be on their own? What do you think holds them back?
Is it just money or something more? ( 10 min, 47 Sec)
What kind of habits makes people spend more and save less? ( 15 min, 11 Sec)
Do e-wallets increase our propensity to spend ( 21 min, 49 Sec)?
How can personal finance help? And how does it not help? ( 26 min, 11 Sec)
Can you share 3 to 4 financial concepts that layperson must be aware of? (30 min, 30 Sec)
How much money does one really need? (35 min, 33 Sec)Are there any misconceptions/Illusion that people have with respect to money? ( 39 min, 38 Sec)
Can you suggest a basic Financial Plan for someone who wants to quit her job in two years and start a blog? What are the things that the person must look at? ( 41 min, 05 Sec)

Please share what you think about the podcast after listening to it?

My 24 min talk on Radio 94.3 FM – “Upgrading your family vacation”

Posted on July 25, 2018November 18, 2019 by Jagoinvestor

Last month, I was invited by 94.3 FM Radio one in Pune to talk on the topic “Upgrading your Family Vacation” as part of an investor education initiative by UTI called “Swatantra”

Below you can listen to the whole episode in a single audio file (24 min).

I had a great time with MJ Tarun, where he asked me a few questions related to Vacations and How to plan for it and I gave my answers to each question.

The whole episode was recorded and in total there were 10-11 questions that were broadcasted for 5 days in a week (2 questions each day).

jagoinvestor with radio one

In case you want to read those questions

For those of you, who want to read the answers given by me and not listen to them, we have re-written them in text format along with each question.

Question #1 – Do you see any similarity in Planning vacations and managing finances?

Yes, there are similarities. But to all the people who are hearing this talk, they will first think that managing finances and planning for vacations how they are the same things? But if you see both of them at a deeper level, you will realize that both of them need strong planning to get the best output.

Just like a person messes up their financial life by not planning for it, in the same way, if you do not plan your vacations, they will either not get the best experience or pay too much for output.

Just like there are good practices for living a good financial life, in the same way, there are some good practices to follow you are planning your vacations.

Question #2 – What are some important things we should do before leaving for a vacation?

I suggest a few things

Suggestion #1 – One of the things, I personally do and will recommend everyone is that whenever you are going for the vacation, it’s a good idea to always call the hotel and confirm the booking incase you have booked it from 3rd party websites like Makemytrip or Yatra. There have been cases where due to some miscommunication, people have been denied check-ins by hotels.

Suggestion #2 – The second thing is you should ideally buy a travel insurance if you are going for a longer trip (especially when you are going out of country).

Suggestion #3 – One more recommendation is to always check if the places you want to see are open on you day you will be in town or not. Many places are closed on some particular day and I have seen many tourists frustrated by the fact that they did not check the details.

Suggestion #4 – Another good idea to to check what all payments are going to happen from your account like your EMI’s, your SIP’s or any of your investments, and make sure that the money is available in your bank account, because a lot of times it happens that you don’t have balance in your account, you are not there, the bank is calling you and you know that is something you should take care of. That’s very important.

Suggestion #5 – You should also make sure you have some extra balance in your bank account like always have 20-30k extra amount because you don’t know when you will need some extra money on your vacation.

Suggestion #6 – And finally just make sure you have the Xerox copies of all you documents like passport, your hotel bookings proof, ID proofs with you and one copy at home also, so that if you lose them you can call someone back at home and use them.

Question #3 – Some financial tips for those, who are planning for a low budget vacation

It’s a very interesting topic. When we plan for a low budget trip we want to minimize our expenses wherever we can. However, my take on this is to not minimize the core attraction of the trip. Let me explain

Generally, we have 4 important expenses

Travel
Food
Stay
Experiences

On any trip, there is one thing which is the best thing about that trip. Some places, you get amazing food, while some places offer awesome experiences, some places give you a nice stay experience.

Whatever the best thing about your destination, you should spend on that and mercilessly reduce or cut down on other things, this is a good way to reduce your expenses and at the same time get the best out of your vacation when you are low on the budget.

Let me give you an example,

If I am going on a Goa trip with my male friends, then I will not spend much on stay and experiences, because I know I will mostly be hanging out on the beach with my friends, enjoying local food and relaxing. So I will not restrict my expenses on food but cut down on everything else. I will stay on cheap beach shacks but enjoy the food at great places.
If I am going with my family mainly to relax and spend quality time, then I will spend a lot on quality stay which has good facilities but would cut down on other things if I am low on budget.

And a few other things which you can do is go in the offseason if it is possible and try to book your tickets in advance, that is one way that you can save on the travel part. And obviously, you can search for some online deals there are many websites which give you very good deals. So these are a few more things that you can do.

Question #4 – Why do we even need to save for trips? We can use a credit card for that and it’s easily available these days.

That’s a Good point!. It’s a very important thing to understand for the younger generation who start their financial journey with credit cards these days.

One should understand that, If you are using a credit card or any type of credit to fund your vacation for once in a while (like once in 10 times) then it is fine. But what we have seen is now a day’s people are just living on credit without planning on how to pay back.

When you use credit, you consume first and pay later in the future.

So you don’t feel the pain of paying and this makes you spend more. This makes the expenses look small or you get a false impression that there is not much impact on your financial life due to that one transaction. People get into the pressure of spending because they see their friends and others enjoying and partying and if they do not have money in a bank account, it feels like they still have to pay capacity because of the credit card in their pocket.

There are various researches that have shown that this is how people get into a debt trap. This is how people start their financial life and then later after 5-10 years they get into a deep mess. people don’t realize this.

If you see most of the people who are deep into debt whose financial life is bad, If you track down their financial histories this is how they have started spending.

So don’t make it a habit. If you are using a credit card or loan, you also tend to overshoot your budget because swiping a card does not feel like paying. You don’t see money going out of your bank account like you feel when you pay by cash.

So yes, I would not recommend credit card in general, but if it is once in a while it is fine. Also, if you use too much of credit card or too much of credit, your CIBIL score also gets impacted and that is the very important thing nowadays for getting loans.

My comment does not apply to those who are super disciplined to make the credit card dues payment every month on time.

Question #5 – If I need my partners to help in saving for a trip, what are your thoughts about it?

We have mostly grown up in families where there was a single breadwinner (Father). But things are slowly changing. Now men and women both are earning equally and they both have their own bank balances and assets.

If one partner feels that the money for the trip should be spent from both accounts (husband and wife), then both the partners should share the expenses.

And if you are not married and you are going with your Girlfriend or Boyfriend, then obviously it depends on your equation with your partner, how comfortable you are and what you think about financial matters. And it depends on how much money do you need for going to that particular place. If it is a lot of money then I think both of you should contribute, it will be great.

Question #6 – What are the mistakes that we can avoid while making our investments?

If you see the goal of vacation it is generally a short-term goal in most of the cases.

It is not like a retirement goal or kids education which will come after many many years. So one of the most important things here is the liquidity of the money, whenever you need the money, money should be available.

So you should save your vacation money mostly in a debt fund or recurring deposit which is simple and gives you some basic return, but do not invest in products which are highly volatile or have a lock-in of few years, otherwise if you break that investment there will be a penalty.

Question #7 – If we think to go for a good, lavish vacation which investments do you think are ideal?

So, if this lavish vacation you are planning to go for is going to happen in the next few months or maybe after a year, you don’t have much time actually.

You need a lot of money for that. Either you have it already, you need to accumulate it every month. There is no conversation of getting good returns on that investment because you have no time.

So let’s say if you want Rs.1 Lac after a year, the best option for you is to save Rs.10K or Rs.8-9K every month and you should do it ideally in a debt mutual fund.

You can go for a debt mutual fund which is a great alternative to FD, tax-efficient and you will get a little bit more return than your FD. Or if you are not comfortable you can go with normal FD also, that is also fine.

I want to make another comment here.

Nowadays, vacations have become a very integral part of life and people are going on vacations every year or alternate years. One should have a dedicated fund only for the goal of “vacations”. I suggest that one can start a SIP only for this particular goal and use the money for vacations.

Question #8 – Can we invest a fixed amount every month and make it a habit for vacation?

Yes, you can invest a fixed amount every month in mutual funds, It’s called “SIP” or Systematic investment plan. Everyone must have seen the advertisement these days on TV.

The best part of SIP is that on a fixed date of a particular amount gets debited from your bank account and the best part is that it happens automatically. You don’t see that money and hence you don’t spend that money.

The biggest problem now a day is that because the money is available in your bank account all the time, you can see it and you can access it and naturally, it will find its way for some expenses in your life. So a good idea is to make sure that it gets deducted automatically and you don’t access it. So this is a very good way of saving for your future.

Question #9 – What are the things that we should keep in mind before investing in Mutual funds?

I will talk about three things mainly. First thing is that you should not come into mutual funds with the mindset of getting rich quick. Most people see mutual funds as a stock market and want to just double their money with least effort.

The mutual fund industry is 20-25 years old, already very matured and you should come in mutual funds with the mindset of wealth creation.

The other thing is whenever you are choosing your product or whenever you are choosing a fund you should choose it as per your goal and as per your risk appetite. You can’t just pick a random mutual fund and invest in that. It’s not like Fixed deposits, where every FD will work great.

If you can’t take a risk then don’t invest in a fund which is very very volatile and risky. And if you want high return then don’t invest in a fund which is going to be a very stable return product. So choose it as per your risk appetite.

Finally, I would say that if you can’t do a lot of analysis, and you feel that all this is not your cup of tea, then hire an advisor, pay the fees and take his help in selecting the fund. Don’t think that you can do it all by yourself.

Not hiring an adviser sometimes can cost you more. Bur at the same time, there are some investors who are smart enough and can do these things themselves, but I would say that hardly 1% of Indians are like that. People get overconfident in financial matters and mess up their own financial life.

Question #10 – Is travel insurance a good investment?

First of all, insurance is not the same as an investment. An insurance policy is only to protect from uncertain situations.

Whenever you are going on a vacation there are a lot of things which can go wrong.

You can miss your flight
Your luggage may get lost
Some accidents can happen
You may get sick while traveling

All these have financial implications and if you have good travel insurance, then it will cover all these things and they will pay for all these expenses.

So if you want to transfer this risk to a 3rd party, you can go for travel insurance by paying a small premium for it. Whereas, if you are ready to face all these problems and risks you can choose not to take travel insurance. It’s all about choice I would say.

I personally feel that when you are going on a long vacation, especially out of India, then a good travel insurance policy is a must.

Hope you enjoyed the audio show

Do you have any comments on the talk? Do let us know in the comments section.

A software guy left his job to be self employed – His complete story

Posted on November 20, 2018November 18, 2019 by Jagoinvestor

One of our readers, Anjan had shared his experience of leaving his salaried job last year to become self-employed. He wrote a detailed experience of his journey on one of the posts so I am reproducing his message in the form of the article here. (note that this was shared last year, but I am posting it now)

Over to Anjan experience sharing below…

I want to start off by saying that I was really inspired by that one article of yours (I am talking about Manish Article) where you wrote your experience about how you quit your job at Yahoo and finally decided to follow your dream against all odds and opposition.

Quit job in India - Real life experience

I left my software job at 27

Ever since the day I read that, I knew I had to get started on my dream and drew up an action plan to free myself from this IT job which I considered as nothing more than slavery from Day 1.

So last month, I successfully quit my job at the age of 27.

How my frugal nature helped me

I was always very frugal by nature even from back in my college days when I used to do odd online jobs that didn’t pay much but I ensured I saved every penny I possibly could. I built up sizeable savings which netted me a few thousands of rupees as interest every month.

I guess that habit carried over to my professional life when I got a job. I started saving almost 95-98% of my monthly income and managed my expenses as much as possible from the interest income.

My salary was a meager 35k, so it wasn’t easy but where there is a will, there is a way.

I was fed up of boring work and Politics

So after working 5 years during which I cursed my company and boss every single day, I finally had enough of the BS and dropped the resignation notice on them out of the blue. I got the topmost rating in 4 out of 5 years of my stay there.

So they were surprised by my decision especially at a time when media is reporting massive job cuts in IT due to US Visa issues and automation.

office politics

Having to do 12 hours of boring donkey work everyday, having to work on weekends/holidays thanks to impossibly tight deadlines without any extra pay, having to beg for 5 days leave to go on a vacation once a year, having to tolerate their politics and favoritism which denied me opportunities I deserved was killing my soul from within and I was dying a little with every passing day.

Even on holidays/vacations, there was an expectation to be available on phone for support.

I started acquiring new skills and planned my exit

I just knew life couldn’t go like this forever. So I made plans to become self-employed late last year. I started acquiring new skillsets through sleepless nights and sheer hard work to switch over to freelancing with the aim to open a small business a few years later.

Once I felt ready and confident, I quit.

After being self-employed for just over a month, it feels amazing. It’s hard work without a doubt and there have been many sleepless nights to deliver projects on time but the sense of freedom is just indescribable.

There is truly something to be said for working for yourself. The best thing is my salary is not fixed anymore. The harder I work, the more I earn, so there is an incentive to work hard and increase income.

Why I planned it NOW and not in the future?

Age is an important factor. I have reached an age where I knew my parents would start badgering me for marriage within the next couple of years. So I knew it’s now or never. I had to act and I knew I had to stick to my plan no matter what may come or else it will be too late.

The fact that I love to travel was perhaps my biggest motivation to become self-employed as employers would never give you more than 5 days’ leave even if you beg. I am the kind of guy who loves to go on month-long tours.

My next plan?

Thanks to my frugal nature, I saved up enough money during my employment to last many years even if I stop working today. I plan to increase my savings to an amount that would last a lifetime by the time I reach 30.

So a few years of sheer hard work is ahead of me but for now, I am enjoying my new found freedom even though I am working super hard.

Conclusion

Congratulations to Anjan for this new journey in life and best of luck to him. I hope reading his experience would be helpful for those who need some motivation to leave their jobs to break the monotony and explore their full potential.

Let us know if you have any more ideas or points to share?

17 secret tips to book cheap flight tickets in India – Save 20% or more

Posted on February 17, 2017November 19, 2019 by Jagoinvestor

Today I am going to share 17 amazing tips you can use to book cheap flight tickets in India. Many of the tips I will be sharing would be already known to many people, but some tips might be new or unexplored by many.

While you might not get very big discounts using these tips, still you will be able to benefit some margin.

Make sure you read all the tips mentioned below, as some people might feel that they already know most of them so it makes no sense to look at all. I myself got to know 2-3 new things while writing this article.

#1 – Use the special debit and credit card offers

I personally never give a lot of thought to this tip earlier. I mostly used the coupons and codes mentioned on the social media or coupon sites, but there are various special offers designed especially for the debit card and credit cardholders only.

For example, if you have Kotak bank card, you should search for “Kotak offers flight tickets” on Google and you will surely get some page on the Kotak website or flight booking websites which will give you some special codes for getting additional discount.

When I went to that page on Yatra, it shows me various offers.

If you look at the offers above, you can see that ICICI bank offer for yatra website is there with code YTICICI17, but it’s only applicable for the flight before 31st Mar and the airfare should be minimum Rs 3,500.

So I found a flight from Kolkata to Ahmedabad for 15th March and applied the coupon code and it showed me Rs 500 instant discount (It was a real discount, not cashback)

So whatever is your bank name, just search for “bank name + flight discounts code” and you will surely get some offer page.

You may also want to explore the special credit cards which are launched in association with the airlines (like The Jet Airways American Express card) which earns you JPMiles or frequent flyer miles.

#2 – Use the wallet cash to get a further discount

I think goibibo started this and became hugely successful due to this factor. It’s one of the most trusted ways to get further discounts on flights/hotels and other bookings.

All the websites like MakeMyTrip, Goibibo, yatra have this concept of virtual wallets and you get some cash backs in this wallet which can be partially used while making the payments.

Goibibo calls it as goCash, Yatra has eCash and Makemytrip simply calls it as Wallet money. I have been an extensive user of Goibibo and no matter how great other websites offers were, after applying goCash, I always got the best price at Goibibo.

However now I get some great offers at MakeMyTrip compared to Goibibo (maybe because they are now merged).

This virtual cashback can also be used for booking hotels and you keep getting this virtual cash with most of your booking. You can also get Rs 3,000 worth of goCash by downloading goibibo App from this link

My teammate Kunal uses ixigo app, and the best part about it is that they offer the cashback directly into citrus account which can also be taken back in your bank account, so it’s a real cashback in that sense.

#3 – Book within 30-90 days in advance

Expedia did a very interesting study and found out that on an average the lowest flight tickets sold was 57 days in advance. They studied various domestic flights prices and saw the trend and found out that booking a flight very early is not always the best option. There is enough time left to fill the seats so airlines are not desperate to grab more and more customers at cheap prices.

As per their study, the prices were moderate in the start, and kept on declining and somewhere around 50-60 days before the departure date, the prices started rising and then shot up during the last 2-3 weeks.

They found out that the average ticket price was $496, while the cheapest one was at $401 and that was sold around 57 days in advance.

Now, this is not a study based in India and things are different here. Also, we know that this is just the average of 100’s of data, the conclusion here is that you should neither buy the airlines tickets very early like 5-6 months (not applicable for international flights) nor too late. Ideally, if you buy it in the window of 30-90 days in advance, you should always great a very good deal.

However, this is not true for festival times and some destinations which see a rush in some particular season. Here a small infographic on this topic.

#4 – Take flights at odd hours

If you are ok travelling very late at night, then you can get a low price on flights. But this might not work when you are travelling with family or when you need to reach your destination at a particular time (like for some meeting or a seminar etc)

However, people travelling solo who do not have a fixed time to reach can explore this option.

I travel from Pune to Ahmedabad many times a year and I like to take late-night flights as they are comfortable for me and I also don’t have to face traffic 🙂 and mostly they are very cheap. Check the snapshot below

I think the simple reason for this might be that many people do not want to reach their destinations by 1 or 2 in night and hence avoid flights at night, which means there is less demand for flights at night.

But you will not get a cheap flight if you are booking it at the last minute.

#5 – Try flexible dates

If you do not have rigid plans, you can surely look at dates which are either 1 or 2 days earlier or later than your planned date. Often, you will find out that many times you might get a cheaper option on a different date very close to your planned date.

A quick way to find this out is to the first search for your flight for the date you have planned for, and then when you try to edit the date, it will show you the calendar with the prices for various dates.

Above you can see how the flight ticket for Pune to Delhi for 10th Mar shows the price as Rs 4930, but the price just 3 days before that and 2 days later is Rs 2402, which is almost 50% less.

According to many international studies on airlines prices, it’s concluded that the cheapest dates to fly are Tuesday and Wednesday, as they are weekdays and the traffic is less. So keep that in mind while travelling.

#6 – Use mobile apps for booking

If you are still using the web browser for booking fights, you are missing some awesome offers provided by various websites. From time to time websites offers some discount codes (not cash back) which will reduce your fights prices by around 5-10% at least.

I recently booked a flight from Pune to Dehradun on MakeMyTrip mobile app and used a coupon code FLTAGAIN which reduced the flight price by Rs 800. This coupon was only valid for mobile app and only for those who got the offer on email.

It surely compensated for all the convenience charges and the travel insurance charges. Here is the snapshot of the offer taken from my mobile

Here are the benefits you generally get when you book your flights from mobile apps

You generally get more reward points (cashback points)
You get exclusive discount/cashback offers
Airlines mobile apps also provide good discount on meals booking

#7 – Make payments by Wallets

Do you know that you can get some additional cashback when you pay from wallets like Mobikwik, paytm, freecharge, payumoney?

Yes, that’s true.

Below is an example of free charge offering 10% cashback on the base fare of jet airways flights. If you book the flight on the app or website of jet airways and make the payment using the free charge wallet, you will get the cashback provided all the terms and conditions are met.

Almost all kind of wallet companies have a dedicated page for these kinds of offers and it will share various deals for hotel booking, bus booking, flights etc..

Like Mobikwik has a dedicated offers page, and I can see that it shows a deal where you get Rs 200 cashback if you book a flight on MakeMyTrip. This is above and over the other discounts and cashback.

#8 – Book two single flights from different providers

If you want to go a little extra mile and are ready to spend your “valuable” time then you can also explore booking two single flights instead of a return flight or connecting flight and maximize the cashback and discounts.

So if you are planning to go from point A -> point B and also returning back, then instead of booking A-> B return flight form a single website, you can book A->B flight from one website (and use their cashback and discounts) and book B->A from another website (use their cashback and discount offers)

While this may not give you a better deal all the times, it’s a good idea to explore especially when you are booking tickets for a higher value or international flights.

Here is an example

Imagine if a website is giving a 10% discount on tickets above Rs 5,000, with a maximum cashback of Rs 500. So if you book your return flight and total charges would be Rs 10,000, but you will get the maximum discount of Rs 500 only.

Instead of that you can book a one-way flight from one website and get Rs 500 discount and the same way you can get Rs 500 discount for other flight on another website.

The only problem in this is that you will have to enter all your details two times instead of one and the same for making payments

#9 – Book directly from the airline’s website

If you are not getting any cashbacks or discounts on the intermediary websites like paytm, makemytrip, ixigo, Expedia, goibibo etc, then it’s a good idea to check the flight rates directly on the website of the airlines. Airlines pay some commission to the middleman websites and often the prices at the airlines are a little cheaper (not much, but a little).

So first you should filter and search for the appropriate flight best suited for your requirement and then note down the flight number and timing of the flight and then head over to the airline’s website and directly book the flight from there because you might end up saving few bucks there.

Why does this happen?

Because you will save on the convenience fees as the airline’s fees are lesser than what is charged by the intermediary websites.

To check this points, I searched for one way fare from Kolkata to Ahmedabad on 3rd Mar 2017 (around 3 pm) and I found out assuming no cashback and discounts are available, would the total amount payable (just before you make the payment) is lowest at the airline’s website?

I did flight comparison on Yatra.com, Makemytrip, Paytm and Indigo website and found out that the cheapest was indeed at the indigo website

#10 – Use incognito mode while “researching”

Most of the airlines now keep changing their flight ticket prices dynamically as per the demand and supply. This is called dynamic pricing.

So when you search for a particular flight on a particular day, and then keep researching about it for next 20-30 min, the airlines and the intermediary websites understand that there is a demand for a particular flight and if you spend too much time just researching, they know that your chances of buying a flight ticket are high now

And suddenly you will find that when you go to book the ticket, the prices go up dynamically ! . There are technical things like web cookies which track and remember what you are searching for, so as a precaution it helps if you use incognito mode while browsing.

Also, note that this might be more applicable when you are using the mobile apps for booking because the websites know who exactly is doing it (you register your email/phone in-app)

#11 – Use Student & Senior Citizen Discount if applicable

Some airlines allow students and senior citizens some basic discount on the base fare, it’s a small discount like 8-10%, but still saves you some money. If you are travelling with your children or parents, you might want to check if you can get some further discounts.

However, these discounts are applicable only on the airline’s websites. For example, Spicejet has an 8% discount on base fare for students. Here is a snapshot

Do read the terms and conditions for this student and senior citizen discount offers as they might not be applicable on some dates or routes.

#12 – Use hand-baggage-only fare tickets

If you are travelling solo and don’t have much luggage, choose the hand-baggage only option while choosing the flight. Airlines expenses increase if the flight is heavy and hence they give incentive to you if you carry less stuff

#13 – Check out for coupons and offers

Something which everyone can do is search for offers while booking for the flights. Almost all the times there are various websites which offer different types of discount or cashback for booking flights.

Sometimes you will find offers for booking both way flights, or for international flights and sometimes it’s based on the total ticket price (like “applicable only if tickets prices are above Rs 8,000”)

It never hurts to spend a few minutes to look at the offer pages of websites like Makemytrip, goibibo, Yatra, Cleartrip and other websites.

You can also try to search for flights coupons on various coupon websites. Make coupons website offer their own cashback to you additionally as they get some commission from the aggregator websites.

#14 – Put the alerts for price decline

Google Flights give you an option to track the prices of a particular flight and will email you from time to time when the prices change. So if you have a lot of time left and can wait for the booking, better wait and track the prices.

Just make sure that you should be clear when you will book the flights, else it might happen that you just keep prices to fall down and never book it and then pay a lot towards the end).

#15 – Subscribe to the Airfare Newsletter

Various airlines and intermediary sites keep sending various offers from time to time, you can subscribe to their newsletters if you don’t mind constant emails on offers. I will surely help someone who travels a lot.

#16 – Book now, Pay Later

Some websites like goibibo and Yatra have introduced options to book the flight without paying the money (it’s like blocking the seats). You can block it and pay it later after a few days.

So if you are not sure about your schedule or plans, just block the seats and pay when your plans are confirmed OR if you are not getting cheaper flights later:).

The cancellation and rescheduling charges are very high anyways.

#17 – Don’t be loyal to one website itself

If you are loyal to one website (intermediary) or an airline, then you might be missing some good offers from other websites. I know some people feel it’s not worthwhile to spend a lot of time trying to save few bucks, in which case it’s ok to be loyal, but otherwise, you can quickly surf 3-4 options and then choose the best option.

However … Here are the precautions

While I have talked about various things you can do to book the cheap flight tickets in India, there are a few points I want to make.

If you feel you are getting a good deal already, just try a bit to improve it and book it. Don’t get paranoid trying to bring the price down. While it’s great to get some discounts, you should check for yourself if it’s really worth your time.
If you like to eat every time you are on the plane (like me), it makes sense to prebook the meal, What you can get at Rs 300 in-flight without booking is available for Rs 250 or Rs 200 if you pre-book it. So if you are already clear that you will be eating, why not save that money.
If you are looking for cheap international flights, some of these points might not be applicable, but still, you should try most of these as it would be great to save money because of high prices for international flights to US and European countries.
Make sure you consider the full cost going from point A -> B. If you choose a cheaper ticket which has a 6 hours overlay in a city in between, please understand that you will also spend on food, lounge or some entertainment etc. It should not happen that to save Rs 200, you have spent Rs 500 in between. People don’t consider these points while searching for the cheap tickets
Also, consider your time worthwhile finding low-cost tickets. If your time is highly valuable and you can spend 2 hours in something valuable like writing a book, or solving some important thing worth something, then don’t waste your energy and time waiting for the connecting flight just because you are saving few hundred rupees

In the end, you want some more information on this topic, you can look at this infographic which will give you some more understanding about how airlines work and where they spend etc.

Let me know if I missed some points or some trick?

Buying your first car? Here is the data of 451 buyers for you to decide!

Posted on January 19, 2017November 19, 2019 by Jagoinvestor

No, I am not sharing my personal opinion here in this article.

I am actually telling you about 451 people who have shared their personal data with us in a survey we conducted some time back and we are presenting you the data in this article. That data will help you know how others think and what are their numbers and that way you take a decision for yourself.

buying car india

You mainly have to decide following 3 things when you buy your first car

Should I buy a brand new car or a 2nd hand car?
How much should I spend on my first car?
How much loan should I take?

451 people shared their data about their car ownership

We asked few questions in our car survey like their first car value (when they bought it), their per month income when they bought it, If it was a brand new car or a 2nd hand one, what was the % of loan they took, and some more questions regarding what they feel about the car.

I will share all that data in this article.

Point #1 – Should I buy a brand new car or a 2nd hand car?

Most of the people who buy their first car, generally go for a brand new car, however, some people also prefer to buy a 2nd hand car to start with and then upgrade it later to a new car in the future.

In my own case, I bought the 2nd hand car because I wanted to make sure that I am aware that I make a rough use for all my belongings and its better to first buy a 2nd hand car. Also, I had my budget constraints.

80% of buyers prefer buying a new car

Around 80% of the survey takers, shared that their first car was a brand new car, whereas 20% bought a 2nd hand car as their first car. The average cost for a brand new car was close to 6.78 lacs and in the case of 2nd hand car, it was close to 3.05 lacs.

Pros buying New Car

The special feeling of ownership with pride
The latest technology, with current features
Peace of mind, as you know there are no issues with car

Cons of Buying New Car

Much Expensive compared to a used car
Much higher depreciation (Try to sell it in 6 months and see the price you get)
Takes away a good part of your wealth
More pressure on your cash flow if taken on Loan

Pros buying used Car

Cheaper and Most of the times can be bought without a loan
Low Insurance premium
Lower depreciation
Better resale value (buy for 3 lacs and sell again in 2-3 yrs)

Cons of buying used Car

Old Technology and features
Difficult to trace the history and find the legality
High maintenance costs
Inferior feeling in front of peers who own better cars)

For those who are interested in new vs used car debate can check this detailed article on Team-BHP

For how many years are you planning to own the car?

If you are planning to own a car for just 1-3 yrs, it’s better to go for a used car. However, if you have a view of 5-6 yrs or more, then better go for a new car.

Also if you are tight on your budget and still want to buy a car, you can explore the used cars and after a few years you can upgrade to a better car. However, if have the capacity of buying a new car, you should go for one.

Below is a short video which shows you what all to check if you are planning to buy a used car

Point #2 – How much should I spend on my first car?

Now comes the next important point, which is how much should I spend on the car you are buying. A person earning Rs 10 lacs a year can buy a car costing Rs 5 lacs also and 20 lacs also if they want. However what is the right amount to spend on your car purchase?

This will depend on many factors like

Do you want to take a loan or not?
If you want to take a loan, how much EMI do you want to pay each month?
Is “Car” mere a machine that moves you from point A to point B, or is it much more for you?
What is the role of the car in your life?
How passionate you are about driving, fancy cars etc

How many times of your income should your car cost?

A good way to look at the potential car value you should buy is the X times of your monthly income. If a person thinks that he should not spend more 6 times his monthly income on the car and if he earns Rs 80,000 per month, then he should buy a car worth not more than 4.8 lacs.

If he feels it should be 10X, then not more than 8 lacs should be spent on the car. However the problem is no one really thinks this way when it comes to decision making, so let’s see what were the actual numbers for various groups!

As per our survey data, those who bought a brand new car, for them this ratio was 9.7 on average (their car value was 9.7 times their monthly income)

And for those who bought a 2nd hand car, it was 6.4

Ratio of car value vs monthly income

Your Salary and what you feel “car” is?

What will be your car value will surely be

We also calculated the same ratio for those whose monthly salary was above 1 lac and below 1 lacs.

Ratio of car price and salary based on salary

If you see the whole data above , you will figure out that if you are buying a brand new car, or if your salary is above 1 lacs per month or if for you a car is much more than a machine which takes you from point A – B, then you ideal money to be spent on your car is anywhere from 9-12 times your current monthly income, else if none of the above is true, then you can go with 5-7 times of your monthly income.

It’s just a benchmark and a rough direction based on what hundreds of people do.

Point #3 – How much loan should I take?

Do you know that as per our survey 75% of the people who bought a 2nd hand car, did not take any loan?

Only 1 out of 4 people took a loan which was on average half the value of the car (to be exact, it was 52%).

However, when it came to those who bought a new car, 69% of them took a car loan and their average loan was 2/3rd value of the car price (rest 1/3 was down payment)

The amount of loan you take will depend on the price of the car, your capacity to pay the downpayment, your views about debt in life. I personally think a person should have the capacity to pay for full car value and only in extreme cases one should go for a car loan as its a depreciating asset anyways.

Burdening yourself with more EMI does not fit my philosophy that too for a car. This is truer if you still don’t own a home or if you have not yet started investments for your long term wealth creation.

Below is a detailed information salary-wise and also thinking wise.

car loan for first car

You will find two kinds of car buyers. One who feels that car is nothing more than a utility which does a job of taking you from point A -> point B. They are not that passionate about cars in general and view the car as just another possession.

Where as on the other hand, there are people who feel CAR is an important part of life. There are various life moments that are linked to your car. Your exotic vacations, long drives and many events in life will not be possible (most of the times an expensive one).

Who is right or wrong?

None of the groups are wrong or right, its a view and everyone has the freedom to express what they feel about cars.

Coming back to car loan, I feel you should first try to avoid the car loan totally if possible for you, and if not, then you should take less than 50% loan only.

Otherwise, a big chunk of your monthly salary will go into paying your car EMI and your wealth creation might take a hit due to that.

Let us know what you feel about this topic in below comments section.

16 incredible money saving tips for online shopping

Posted on July 27, 2015July 23, 2019 by Jagoinvestor

I am sure you must have shopped online very recently. In last 5 yrs, the whole dynamics of shopping has changed, We have more online for most of the things ranging from electronics, clothes, groceries and even movies ticket booking :).

We are fascinated with the discounts and offers we get online. However I am sure even if you know a lot of tips of saving money online, still you might not be exploring its full potential.

tricks for saving money when online shopping in India

Hence, I am going to list down various points and how you can save more money. Detailed description of these points is after this table.

[su_table responsive=”yes” alternate=”no”]

Tip #1

Install Buyhatke extension

Tip #2

Go a bit extra mile in search for Coupons

Tip #3

Get cashback with specific credit cards and debit cards

Tip #4

Wait for the special days like Diwali and New year

Tip #5

Use Comparison Websites to find the best offer

Tip #6

Set Price Alerts

Tip #7

Leave items in your cart and wait for few days

Tip #8

Use wallet payment methods like paytm, mobikwik and payumoney

Tip #9

Use different emails for Shopping

Tip #10

Get extra cashback using Cashkaro.com

Tip #11

Industries like airlines and hotels give huge discount to there old customers

Tip #12

For used products you can get huge discounts on OLX, Quikr websites

Tip #13

Check prices on website pricebaba.com to know which brand is selling at discounted price or on MRP

Tip #14

To get the best deals keep checking the offer section of all website before you shop

Tip #15

Tip #16

Don’t get into the trap

[/su_table]

1. Install Buyhatke extension

There is this website called Buyhatke.com which offers a chrome extension, which shows you the other website where you can get the best deal while you are looking at some product.

You just need to install it in your chrome as extension. This way, you will be able to see the price offered by some other website.

Below you can clearly see, when I went to Snapdeal to find the price of its one of the LED tv, the price it showed me was Rs 17,568. However, the buyhatke extension at the top showed me that the same product is available for Rs 15,990 on Flipkart.

I didn’t had to go anywhere to compare the price. The extension automatically searches the best deal and show it to me. You can also compare the prices of the product by clicking on “Compare Prices” tab on the top right.

buyhatke extention online shopping

However note that the extension does not take into consideration all the coupons and cash back. So take the decision after factoring in all those points.

Another amazing feature of this extension is the historical PRICE changes which you can see on the same page a bit below the product description (automatically it comes when you use the extension). You will be able to see how the price has changed over previous few months. You can see the maximum and minimum and judge if the current price might fall further in coming days or it can do up.

buyhatke price history chart

2. Go a bit extra mile in search for Coupons

This is the most basic thing you need to do when you are buying online. Sellers know that coupons are a great way to excite customers and make a faster sale by making buyers feel that this is the best moment to buy. Given the huge competition in the e-commerce space, every other company wants to give you a great deal somehow. Either the web site from where you are buying something may show you the coupon or you can find it on coupon sites.

On an average, I have always found some of the other kind of coupon which reduces the price by at least 5-10% . Some websites can have a variety of coupons depending on various categories (20 category = 20 different type of coupons). Something like “Buy above Rs 1,999 and get 20% discount” applicable on furniture.

coupons online shopping

Then there are websites like Ebay, which have generic coupons like “Buy above 750 and get 7.5% discount”, These coupons are easily available on the majority of the coupon websites.

I know most of the people who buy online do search for coupons, but I don’t think a lot of them go an extra mile to search for the best coupon and settle with the first one which they get. If you are buying an item with a high price, it’s worth the effort to spend extra 5 min to search for the best coupon available. You can keep applying 3-4 coupons and see which is giving you the best deal.

3. Get cashback with specific credit cards and debit cards

At times, you can get a good cashback or discount on paying from a specific bank credit or debit card. Banks tie up with the website, so that maximum payments go through their channel. This can be for marketing purpose or just to increase the sales of a particular credit or debit card.

Like Amazon may be giving a 10% cashback when you purchase by an SBI debit card or Snapdeal providing an additional 5% cashback on HDFC debit card

debit card online shopping

4. Wait for the special days like Diwali and New year

There are extra discounts and offers during Diwali, New year and many other Indian festivals. If you can wait and postpone your shopping, its always recommended to wait for these days, especially Diwali. Its a known fact that people in India buy high ticket items because of the auspicious festival. You might get a much better deal and cash back offers given the cut-throat competition between e-commerce companies in India.

diwali shopping online

Also, there are events like GOSF (great Indian shopping festival) where you can get good deals (not always). Last year, I made the same mistake. I upgraded my TV in the month of Aug and didn’t wait for Diwali and saw the same TV selling at 15-20% extra discount. If you can wait a bit, it’s always better to plan your purchases, especially high ticket purchases.

Another great benefit of waiting for some weeks or month is that you may realize that you actually don’t really need the product and it was a decision in haste to buy the product.

5. Use Comparison Websites to find the best offer

There are various websites like Junglee.com, mysmartprice.com and shopmania.in (and many others) where you can compare the prices of a product on various websites at one single place. You can see their shipping cost, estimated delivery time and also the rating of the seller.

It’s one window from where you can choose the website you want to buy from. At times, there is some mismatch in the main price on the website and the one shown on the comparison website. Below is how it looks like..

compare prices online on junglee

Mysmartprice gives a comprehensive comparison with various details and also the facility to set the price alert at the website level. It also gives section for price history, specification etc in a single page. Here is the snapshot

mysmartprice compare prices online

Scandid and pricebaba are some other good comparison websites you might want to try.

6. Set Price Alerts

At times, you are not in a hurry to buy some product, but you never know when the price of a product was reduced to a level where you become highly interested in purchasing the product. So in that case, you can set a price alert for a particular product and when it touches that price limit, you will be informed about it over an email

For example, if you want to buy a product which costs Rs 5,000 at the moment, but you are very sure that its price will come down to Rs 4700 and that time you would buy it, then you can set the alert and you will be informed about it.

How to set up the price alert?

You can use cheapass.in to set the alert. Just paste the url or the product and your email and your price alert will be set up
The other way is to use this google docs tool created by Amit Agarwal. It will notify you on email on any drop in prices.
You can find the product you want to track on Junglee.com. You will see a “Set price Alert” link just near the product name.

7. Leave items in your cart and wait for few days

This trick might be working only with few websites and not all, but it’s still worth the try. You can first add all your items in the cart and then don’t check out. Just leave the items there in the cart. This is a big issue for e-commerce websites where the customers add the products to the cart, but at the final stage do not make payment and leave.

In technical term, this is called “shopping cart abandonment” and for most of the websites, its one of the biggest pain point, because a huge amount of sales is stuck there in the abandoned cart. As per the business insider report, globally out of every Rs 100 worth of products which is added to cart 71% is abandoned, means more than 2/3rd sales which can potentially happen, do not happen.

So, various companies in order to close that pending sale, will remind you about your cart and ask you to complete the sale. And some of them will often try to lure you with some extra discount with coupons etc. In the best case, you will be able to save a bit more and in the worst case, you won’t save anything extra.

Below is a sample email from pepperfry which was sent to some customer who didn’t complete the sale.

pepperfry email left cart

(image source)

Note that this trick will mostly work for new customers who have recently created their account, because companies are in the race to acquire new customers to show it to their VC on how they are growing. So do not expect this will well know and big websites where you are already buying from many months or years.

8. Use wallet payment methods like paytm, mobikwik and payumoney

On top of your regular discounts which comes from coupons, you can also get additional discounts if you use the e-wallets these days. If not discount, you will surely get some kind of cash back. The best example, I can provide is from bookmyshow website where you get the extra discount when you use movie tickets.

Pro TIP for Bookmyshow: If you want to book X tickets and each ticket cost is as high as Rs 200-250, book 1 ticket X times, that way you get maximum cashback :). Just that you need to make sure you be fast enough to book all tickets you need.

wallet discounts

9. Use different emails for Shopping

Almost all the companies offer some kind of discounts to new users. A lot of them offer coupons codes on email when you register for the first time. You can see this clearly on Foodpanda or Ola Cabs, where you get huge discount being a new user or get a FREE benefit for the first time.

A lot of companies are now offering the bigger discount if you order things using their mobile app, but you can’t use multiple phone number’s unlike emails, so that’s not easy enough. But if you have many people at home with smartphone’s, you can take this benefit too, for some limited time.

10. Get extra cashback using Cashkaro.com

On top of all the discounts you get, you can also get some cashback if you buy things from cashkaro.com links. Its a website where you have to create an account and then use their links to visit the actual website where you want to buy things.

This way, cashkaro website gets the commission from the seller and they share a part with you and it accumulates there. You can take the money in your bank account via NEFT once it crosses a limit. Below is a simple video which shows you how it works.

You can register on CashKaro using this link

5 more tips when buying online (tip number 11-15)

There are some industries like airlines and hotels which shows dynamic pricing to their old customers based on their history and location using your cookies. So if you use Incognito mode in the browser, they will not come to know that you are an old user and treat as a new customer.

At times, you might want to check websites like Olx and quikr because you can get the same product at a very heavy discount, but for a used product. In some cases, it might fit your requirement and you will save a good amount

You might want to try out websites like pricebaba.com which can find out a better deal for you from an offline store. so you can compare prices online and then inquire for prices offline. This would work out for those products, where you are not getting any kind of discount online and its selling near its MRP.

Almost all the websites have their own offers and deals pages, you can keep a watch on those pages too. An example if a offer page from flipkart or the deals page on ebay

You can register on the website called Desidime.com, where real users post great deals and discounts they find here and there. You can also interact, ask questions to other users.

Last and more important tip – Don’t get into the trap (16th)

Now the last and the final point. All the tips which are mentioned above would be helpful and in your interest if you don’t lose control over yourself and be a responsible buying. Only buy things which you really need. These discounts and coupons are just extra benefits.

Don’t let these coupons and discounts become the carrot for you to buy things which you just don’t need. The sad reality is that, even though you feel that coupons are benefitting you, it’s actually helping sellers more.

These coupons and discounts are often funded and sourced by the sellers only to make sure they increase their revenue’s. Yes, in some cases, it will surely benefit the customer’s, but at a higher level these are mainly the marketing tricks of the seller and nothing more than that.

Let me take an example of Foodpanda, If you had to order food from outside, then foodpanda coupons are the added discount you get. But a lot of people are now using foodpanda on those days, when they didn’t had to order from outside, but just used it because there was a discount. Can you see how these deals manipulate your behavior and your way of spending?

Don’t browse for fun

Doing time pass on e-commerce websites is not good for your wallet :). The basic principle of economics is that “Supply creates its own demand” and with the mobile apps retailers are trying to create an ecosystem where you can purchase on just one click. With discounts, they are creating an environment of instant gratification and by giving money back guarantee and replacement guarantee, they are removing the fear for online shopping.

But the at end due to all these factors, people are buying things which they just don’t need at all and creating the big pile of junk at their home. So just make sure you do not browse for fun, because you will surely come up with some reason on why you need that product you just saw.

Let me know what do you think about this article? Also share some more tips which you personally use and you think can be shared with others as well 🙂

What is mean by Instant Gratification? And how does it affects your Financial Life?

Posted on December 30, 2010August 6, 2019 by Jagoinvestor

Do you understand the meaning of Instant gratification and its affect on your financial life ? We will learn that today. How did we become a generation that “wants things now!” no matter what?

Think about this – both, our parents generation and ours, save , invest and spend. What then, is the difference between them and us? It’s mainly that they used to first earn money, save & invest that money and then spend it on things they needed.

They got ‘delayed gratification’; this quality of waiting before they are able to buy. However, we have reversed the equation. We first buy, and then pay for it later; without having a clue if we will be able to earn that money in the future or not!

And that’s is where the problem lies — Once we buy something, the deal is done! Then we have to live with it because we can’t change our minds about it later.

Instant Gratification in Personal Finance

We love ‘the thing!’ & We need ‘the thing!’ . Our life is not complete / not possible without ‘the thing!’ . ‘The thing!’ can be a home (debate on buying ve renting), a car, some household item, the latest gadget or 3 pairs of jeans from the big Sale!

I’m not talking about the planned and carefully thought out spending we do in life, rather I’m referring to the spending which ‘just happens’, the spending that does not add much value to our lives. Even if it adds any value, it’s mostly short-lived and makes us feel happy for just a while.

This ultimately, weakens our financial life, since we do not concentrate on our major and important financial goals, chasing the smaller and futile wants in life. A lot of this phenomena is result of the impulse called “Instant gratification!” which is what, we will look at in this article.

It’s important to realize, that the more we give in to Instant Gratification, the more we sink into the dal-dal of debt & misery. Sooner or later we’re in upto our neck and it gets too late to fix things. The biggest example of this was the recent sub-prime crisis in the US. “BUY NOW! Pay later” was the attitude!

Let me tell you a short story to give you an idea of what I am talking about.

Two small children Anita and Ramesh, lived in a small village with their parents. Their father gave Rs 5 to each of them to eat a watermelon. Both of them visited a farm and asked the farm owner for a large watermelon.

“A big one will cost Rs 20 and a small one would cost Rs 5”, said the farm owner pointing to the watermelons in the field. With the irresistible urge of having the sweet and juicy fruit, Ramesh bought the smaller watermelon and started eating it. Anita however, wanted the big watermelon.

“OK, I too will buy a smaller watermelon”, she told the owner. “But can you please leave my watermelon in the field itself, I will be back in a month and take it at that time!” The little girl knew that her patience would be rewarded. By waiting one month, she could have a big, ripe watermelon for the price of a little green one. She got the bigger fruit, because she controlled her “Instant gratification” and waited patiently!

What is Instant Gratification ?

instant gratification

Instant Gratification is the habit, of always wanting to enjoy now, and not having the patience to wait for future benefits (an experiment). Anything which gives us temporary happiness or excitement, but is not actually a good thing for your life, can be put in this category.

For example…

When you sleep till late in morning and do not take pain of getting up and exercising.
You eat those unlimited sweets in your office cafeteria.
When you eat that burger with EXTRA cheese !

These were some examples to just give you an idea about what Instant Gratification is, – mainly concentrating on the immediate result and not thinking about its outcome in future or how it will affect us later in life.

If you can control yourself and concentrate on “delayed gratification” , your life can change! like anything , But we just are not bothered about it and do not have motivation. Do you know why this is? Let me be straight & blunt! The challenge is that most of us do not have to face life or death situations, or seek food and shelter and defend our territory everyday anymore ! (like these people)

The result, is that we can’t see the impact of our spending in the future. Think about a poor person who struggles daily for food. If he has to spend Rs 100 on something, how will he think? If you offer him a burger, he will instead ask for the same amount in cash, because he knows that the money will help him get food for next 3 days.

He’s not focused on taste in this case.

We however, are privileged, blessed even. If something bad happens once in a while, our next meal or next place to sleep isn’t in danger. Hence some of us have just lost that attitude of looking at things without instant gratification . If you have seen bad times in your life financially, you will know, what I am talking about.

6 Examples of How Instant Gratification affects our Financial Life

Many a time, what we do in our financial life makes our future, dismal and weak, and we have no idea about it. We aren’t even aware!

#1 Not surrendering Endowment/ULIPs

This one is my favorite. “What should I do with my Policy? Should I Surrender it or make it Paid up?” is one of the top most queries I come across. It feels bad, accepting and acknowledging that you’ve made a mistake, and it hurts psychologically when you lose by not continuing the policy. But what is the effect, long-term?

You still continue paying huge premiums and it earns you very, very little.

So you don’t take any decision on your junk policies, ergo you do not have to face a tough situation! It’s Instant gratification in a way! But for your own good though, you should take action and take that loss now because right now it’s a whole lot smaller than if you stick with the policy and try to quit later!

#2 Keep losing Shares and selling your winners

Have you ever bought a share which gave you instant profits? What was your reaction? Most of the people want to sell it off and take that profit right now, otherwise the profits can vanish! But what happens in most of the cases?

The same stock or portfolio gives huge returns in future if it was left untouched and that feeling of instant happiness is so powerful sometimes that so many can’t control it. It also happens, if one does not have proper understanding of how equity works.

Many people who understand also fall for instant gratification though!

In the same way, you might be holding some stocks which is not performing well, but instead of getting rid of it and investing in better stocks, we keep on holding on to the loser in the hope that some day it will go up! (Read 5 mistakes I did in my first stock investment).

It’s another case of instant gratification as you seek temporary comfort. You don’t taking the tough decision of selling the loser, because the moment you sell it, it gives you a feeling of loss, but if you just keep it as it is, it’s a case of “I still have some hope !” Don’t do it!

3# Getting into wrong products for Tax saving

When we talk to lot of our paid clients on why they bought the Endowment/Moneyback policies or even ULIPs, the only reason turns out to be “Tax Saving”. Millions of people, get into the wrong products which they don’t need, & don’t understand, has no power to meet their financial goals in future, just to save tax!

I some times feel how much tax saving one does! If one invests with a premium of Rs 50,000 in a ULIP for instance, and if that person is in the 30% tax bracket, he will save 15,000 in tax. But if that was a ULIP with 50% premium allocation charges (as so often happens), 25,000 is lost the moment you sign the documents!

So you save 15k and lose 25k as charges! And yet,these are the same people who say “20k for a financial planner—too costly!” 🙂

#4 Not Paying a Financial Planner or a counselor

Now you know what stops you from paying for advice? Do you immediately get any instant results from advice which you can see? Does your portfolio return suddenly become higher than earlier? Do you immediately see the results which you wanted in your financial life ? No !

And that’s the reason most of the people are not excited about it . But now you would realize that, if years before you had paid some adviser and taken right advice, you could have saved a lot by not getting into wrong products , you might have got better results or same results with lesser risk than what you have got at without right advice!

The benefits of financial planning are always “delayed” as the planning will show the results years later.

We get a lot of inquiries for our paid services from readers who want more personalized service and paid guidance from us. We talk to them and they are very excited when they hear how their financial lives will get transformed working with us, however when we talk about the fee part, some of them just don’t come back!

Price is not a barrier for them as they are well earning, but the problem lies somewhere else which even they are not aware of, and that’s Instant gratification!. They can’t see the immediate results from it and hence they choose to live with their messed up financial lives instead of getting out of it.

I am sure they will lose 10 times more than what they tried to save in fees by not have proper advice over the next couple of years. What do you think ?

#5 Shopping for things you don’t need

How many times, have you bought things which you don’t need? But you still buy it, because it feels good! For example, you might buy another jazzy mobile phone even though your current phone is working well. You buy a nice new shirt – It was on display, which can be your 24th shirt but you actually don’t need it.

Women know very well what I am talking about here and if you are married, even you know what I am saying 🙂

Most of the instant gratification happens at “Sale”. Resist Sales. Sales tend to our minds into buying more than we need. We start justifying to ourselves, that we really do. If the “Sale” decides what you need in your life, then there is a problem!

6# Spending due to Peer Pressure

Suppose there was no one in this world except you and your family, would your life still be same ? I am sure not! People around us affect our mind and make us feel that we are lagging behind. If they buy House or car , we start feeling the need for it. Peer pressure is one of the top reasons why people spend a lot of money.

You are persuaded to join or pay for an activity that your friends are participating in. Whether you are interested or not, you go with the flow because they tell you to. There are occasions where you have to join them and you should!

But not always, and not in everything.

Develop a “Need Mentality” to save your self from Instant Gratification

Here are 3 solutions which can help you reduce or avoid instant gratification in your financial life.

Do your Financial Planning :

You should do your financial planning and have a full plan on how you will invest your money for your future financial goals. Once your Insurance, child related goals and retirement are planned, you will have to commit the investment for these goals which are more important in life than other things which come along the way .

You will be more responsible and think twice before you spend on other unimportant things.

Slow down :

Don’t be impulsive, whenever you have to spend your money on anything, call some family member and tell them 4-5 reasons why it’s a good investment and is worth buying for, tell them enough reasons why it makes sense to buy it. If you are able to pass this process, then you can buy it else, reconsider.

What happens when you do this, is that you slow down and take a logical approach in deciding if you really want to want something. Let me give you a personal example. I recently did this for myself, when I wanted to buy a high-end Nokia phone.

I started counted the reasons why I should buy it and how it will add value to my life, I was very convinced that it’s an important and a valid expense for me.

Try to pay cash for your purchases :

When we don’t feel bad about paying, we tend to buy unimportant things and credit card is the main culprit here. You buy and you swipe your card, you don’t see the cash going out, so at the end you just make a single payment. It don’t hurt much.

Try paying with cash, and when every time you see those cash notes go out, you become more concerned and more logical in thinking about your expenses.

Instant Gratification in Personal Finance

Other area’s in Life which where Instant Gratification affects us

Some other areas in life which we mess up are Education , Marriage and Career .

Education:

If you have seen “3 idiots” and “Tare Zameen Par”, you will understand better what I want to say here. Lot of people do not carefully plan their education. There are many people who have pursued something which looked easier to complete or seems to be paying well without understanding, if it aligns with their liking or not and thereafter suffer all life.

Marriage :

Marriage is another thing where people mess-up due to instant gratification. There are many couples, who are not happy after few years of marriage, because the whole situation didn’t turn out the way they imagined.

A lot of times people judge their partners within hours or few days of meeting them, where they like them a lot because they are handsome of beautiful , have lot of wealth, things which impress them at first. I am in no way saying that only love marriages are successful because they are NOT !

It’s the same case some times with love marriages too . The only point I am making is that even in marriages , their is this thing called Instant gratification which creates issues for many people.

Career :

Career is directly linked to Education, so if you mess up your education, you’ll certainly botch your career. But even after people do their education correctly, many mess up while choosing their jobs.

When I completed post graduation, many of my friends went for companies while showed the highest CTC, were the best known companies in IT, but they are shedding tears of blood now as they can’t see any growth for themselves after a point or it’s not something they really wanted to do in their jobs.

However some people who controlled their emotions and planned to choose their companies considering the work they will do there are very happy and excelling now. So don’t just see what makes you happy right now, see what will make you happy all life.

Conclusion

The whole point here, is that we don’t think much about long-term aspects of our spending and hence make bad investments and mess up our financial lives. Instead, we should use Instant gratification in our favor. One way we can do it is start SIP’s for your Financial goals now, and take action. Get a financial Planner and pay him to give you best advice and transform your financial life.

As 2010 is about to end now, dont let this year go waste as you learned a lot of stuff this year . Start your new year with some commitments and resolutions for 2011 which you will honor and not just write down !.

Share your comments if you’re a victim of “Instant gratification” at any point in your life? Also share how we can use this Instant gratification in our favor ?

At the end wishing you all Happy New Year .