This Valentine's Day: Build a strong relationship with money

With the mention of Valentine’s Day, the first few things that come to mind are - a couple enjoying a romantic date in an idyllic location, flowers and wine and all things red and love. While it’s a great day to acknowledge our loved ones and celebrate them, the occasion also calls for showing an equally important person some love too- You. Not to confuse self-love with self-centeredness or indulgence, it's important to do things for your greater good that can help you secure yourself in life. And one of the areas that can help you do so is your finances. This Valentine’s Day, pamper yourself and secure yourself and most importantly, build a strong relationship with money! Here’s how you can start.

Here’s where the famous rule of budgeting, the 50-30-20 rule can come to your aid. This simple rule tells you to divide your post-tax salary in such a way that 50 percent goes to needs which are the bare essentials like food, rent, clothing, maintenance etc. 30 percent goes to wants like the occasional movie outing, shopping, travel, hobbies etc and the remaining 20 percent of the money is saved and later invested. Going by this rule, you would be able to discern the right use of your money and bring a certain amount of discipline.

Nowadays, there are so many apps available in the market that you can use for smart budgeting. Conscious spending nowhere means self-deprivation but a mindful act of letting your money flow out. All you need to be is judicious with your purchasing power. Refrain from impulse buying that generally is unrequired and later goes unused. Once you get used to it, you can switch to greater saving and smaller wants. A diligent act now will serve you years of comfort with the saved money.

Financial decisions and goals work wonders for those who are strong-willed. As soon as you master the first resolution, the next important thing to take care of is investing for the future. Your long term goals like retirement need you to plant the seed now. This essentially means you need to stop waiting for the best time to invest. Every time is the right time! With each passing day, you stand to lose a lot in terms of wealth creation opportunities.

Select the right investment avenue for yourself that offers inflation-beating returns and consequently better wealth creation prospects. If you are, say 25 and want to retire by the time you are 45-50, then invest in a diversified equity portfolio now. Investing in equities in the long term via a Systematic Investment Plan (SIP) will leverage the power of compounding and help you accumulate a healthy corpus. Platforms like Groww have made investing a cakewalk, by removing all entry barriers that would have stopped you before. So make use of such facilities and don’t wait for the right moment. SIP allows and empowers to start small in your choicest mutual funds. For instance, if you are not sure about other funds, you can start with tax-saving Equity Linked Savings Scheme (ELSS) funds. ELSS funds are a great way to help you save taxes as well as help you get initiated into equity investing. Thereafter, as you get your hands on investing and get familiar with investing nitty-gritties, you can start with other equity funds.

Similarly, plan for your short term goals like building an emergency corpus to meet financial contingencies. You can do so by investing in liquid funds that allow you quick redemption coupled with better returns as compared to the savings account. Act now, your future self will definitely applaud you for your timely action and prudence.

Be it a student debt or credit card debt, this year strategise how to combat debt. If left unchecked, debt can become a wealth swallower. Especially, if you have been ignoring your high-interest rate debts like credit cards, it's important to take action before you land into a debt trap. What you should do is make a list of all ongoing debts and loans you have and arrange them according to the interest rate then accrue in descending order. For instance, plan ahead to clear off your credit card debt in one go. Similarly, you can channelise resources to other important debts when you get a salary hike or a yearly bonus so that they are reduced faster. Going forward, avoid indiscriminate use of credit cards. Keep the debt levels in check and it will save you a lot of stress.

The key to making empowered and informed decisions about your money is to become financially literate. The more you educate yourself about the best ways to grow wealth the more equipped and in-control you will be. The first thing to do is to read. Educate yourself about the various investments options there are. Get familiar with investment jargon. Read books of famous investors, listen to money podcasts, stay abreast with the latest happenings in the world of finance and economy, check out the various financial management tools. In short, don’t shy away from learning about effective ways to grow wealth and be fully aware of the risks and rewards associated with investing in certain avenues. This will empower you to make prudent financial decisions.

Invest in yourself to upskill yourself in the field you are into. It may seem counterintuitive, but spending money on yourself can ultimately lead to better job prospects as well as open doors to create alternate sources of income. So the return on investment would be high if we look at the long term wealth creation prospects of upskilling ourselves. So go ahead, do that short term skill enhancement course you have been hesitating to take.

Bring the essence of Valentine to life, spread love but start with yourself. Save before spending, be sure of where you spend and pamper yourself to stay motivated. Self-love is not selfishness, it is taking care of yourself better so that you act independently and can help others as well.