We are not alone if we fail managing our personal finance....

We are not alone if we fail managing our personal finances, even the experts or finance gurus are like that

Excerpt from Standford Business Magazine: "The Los Angeles Times recently reported that several Nobel laureates in economics admit to having trouble managing their own money. One might think that a Stanford MBA—and certainly a Nobel Prize-winning economist—would be well versed in all the different strategies likely to build wealth, but most people who are busy raising families and advancing their careers simply don’t have time to fine-tune their own personal investment or finance plans. Add to that the common sentiment that anyone with an MBA should be able to manage his or her own retirement account, and you get a group of people who are afraid to ask for help. “Not everyone who gets an MBA is an investment guru,” Wilson notes. “But with the MBA comes this psychological feeling that you should be able to do it yourself.”"

So don't be too worried if you still haven't started or failing, its Never too late.

Killed in the long term by short term thinking

From what we know of evolution it’s clear that we are alive because of our inherited ability to think quickly and respond to change. The survival of living creatures, for most of the history of our planet, has been a short term game. Only if you can out-run your predators, and catch your prey, do you have the luxury of worrying about tomorrow.

It follows then that we tend to be better at worrying about and solving short term issues than long term issues. Even when we recognize an important long term issue that we need to plan for, say protecting natural resources or saving for retirement, we’re all too easily distracted away from those deep thoughts by immediate things like dinner or meetings (important things no doubt, but the driving needs in these pursuits, at least for this half of the species, are short term in nature). Once distracted, we rarely return to the long term issues we were drawn away from.

This is more so true in personal finance and hence need extra effort from our side to manage our finances, some of the tips that will generally help in doing or managing your finances / expenses are:

1. Keep at least an hour in a week for finance tracking/seeing the bills/checking your accounts and figuring out your expenses. Set a time in week sometime on Sunday morning is the best with family/spouse. One hour is not big time but it will save you lot of bugs in long run and you can do better planning.


2. Use good tools for managing your finances/expenses which you are conversant and comfortable with, (Send us your feedback on trackspends.com whether its helpful or not :) ). This will make your life similar while tracking or managing finances for you.


3. If you have good money hire a CA/Finance cosultants (Please check references) they are expensive but again they can increase your finance and also manage risks better than us since they are experts.


4. Try to plan for things ahead since it will help in overall finances and you can get really good discounts for anything starting from buying trip tickets to buying a TV etc.

So mitigate your short term thinking for finances with some of the pointers above, let me know your comments. And keeping tracking with trackspends.com.

Personal finance tips - Bad advice?

Again? You have got to be kidding personal finance tips yet again, I can see this reaction immediately. So whats the difference? here i want to reverse it and see how to screw your personal finances. Or what are the bad habits in personal finance, in the next set of articles we will see how it helps?

1. Never save anything for tomorrow, whats the use? Someone has said: kal kare so aaj kar aaj kare so ab, kal ka kya bharosha hai. Interpret: Why save for tomorrow ? Whats the use? Why not spend/enjoy everything today and live life to the fullest.

2. Dont invest!! Whats the use of investing and moreover its so boring and difficult -  how to invest? where to invest ? whether there will be any returns blah! blah!. So take it easy and chill out. I am too busy for it.

3. Always use credit card for expenses - Its cool, its fashionable, and shows off i dont really care about money and am rich, which is true right? dude i got platinum card from American express , What have you got golden card oh! so cheap.

4. Never track ur expenses - We should never ever track our expenses, firstly its of no use to us secondly its just waste of time, why do i care whether my expenses goes in dining out or buying movie tickets or buying cloths its all same for me. So lets just ignore it because i am not anyway going to do anything about it.

5. Always keep money any money left in savings account in bank - I am too lazy to do anything so whatever is left over money after the expense (If anything is left) let me just leave it in savings bank with 3-4 % interest.

6. No planning for future / No health/life insurance - Whats that? And why should i do it ? I am as healthy as an ox and will always be like that till I live. So no use wasting time/money on it.

So folks is this what we are ....... or we want to become ......let me know your comments.

Leaving your money in a bank is a bad idea?

Most Indian families have the bulk of their household savings and assets in a bank account. We believe that this is the worst thing that you could do for your money Not only are you not going to get rich like this, but you are actually losing money over the long run. Not to mention, the bank is taking advantage of your money to make money at your expense. Lets tell you more...

First of all, let us acknowledge that depositing money into a bank account is great because of the convenience and security that it offers us. Banks are a great mechanism to transmit money from your account to say your mobile phone company or your electricity provider or paying your children's tuition fees by cheque. You receive your monthly salary and that goes directly into your bank account. And this is where the problem begins.

If you want to know why this is a problem, its because of our inertia. Experience has shown that most Indian families don't do anything with their surplus money apart from leaving it in the bank account which is often because of a lack of financial awareness.

Also bank gives very low rate of interest, at  the least we can do is put our money in funds/FDs and get some more returns.