2022 - How to Stop Worrying

Firstly, i would like to bring to your notice that this blog is a series of simple steps to overcome worry. If you can give this a try as you have no other option than worrying and you gained some confidence and benefits in due course, that would worth my time of writing this blog. Across the globe, past 20 months were stressful to many people. This might be because of not good business gains as expected or it can be the expenses which grew higher than income due to pandemic. This eventually increased the worry among most people. Few have even been standing at the edge of worries not knowing how to proceed further in 2022.

There would be no use or benefit in just worrying. In order to make some wise decision or to have some clear thinking, one should stop worrying. How to come out of the worrying situation ?. Why not try the below simple 3 steps worked out by Willis H. Carrier (the engineer who launched the air conditioning industry)

• Ask yourself, "What is the worst that can possibly happen"
• Prepare to accept it if you have to
• Then calmly proceed to improve on the worst

A short story which i read in a book for your reference. Few decades ago, there was an oil dealer in United States. His business is to transport oil from one part of the country to another. He managed many trucks and had many drivers to operate the truck. One day a guy approached him saying he was a government official and he had the evidence of his drivers delivering less quantity of oil to the customers and they are reselling the remaining to their own set of customers. This is illegal as per law and the company is responsible for these activities. 

By saying so, he demanded $5,000 for not taking this to District Attorney. The oil dealer was very worried and he was so tensed for 3 days without sleep and food. Lately, he thought of trying the concept by Willis H. Carrier. He analyzed what is the worst will happen if this is taken to District Attorney. He will lose his business and reputation on distributing the oil and will have no customers to deal with. He accepted the fact. Then he thought what will he do for income. He analyzed that he need to look for a job and he is sure that he can get one easily for his experience with any of the oil dealers. 

Now, the oil dealer was quiet calm after understanding the fact and he started to think. Suddenly he thought of approaching a lawyer and seek for a suggestion, which he never thought of when he was worrying. So, he took this up to the lawyer next day and the lawyer asked him to take this matter directly to District Attorney. The oil dealer made up his mind fully and took this concern to the district attorney bravely. For his surprise, the attorney told him this was blackmail happening around this place very commonly these days and the police is in search of those black mailers and not to worry about the situation.

Now, the oil dealer was very happy and understood that worrying was useless and taking a decision by making our mind calm in a stressful situation is very important. In 2022, let us make our mind not to worry on things unnecessarily, instead attain calmness and proceed bravely to succeed. Above process will work for any kind of worrying situations. It is important to understand, Is that really worth for worrying on the issue?. In that case, what will be the worst of worst thing would happen for the issue. Then we need to accept the fact. After calming our mind by accepting the fact, we need to start thinking on a solution. This will lead us to a better situation.

The same can be applicable in handling finances. Handling money well will give happiness. A single mistake will take us to worry unnecessarily. So let's be very careful in financial world with all precautions. Let us stop worrying by following the above steps and gain abundance wealth by taking necessary action with patience and continuous learning. I wish the reader of this blog to gain abundance wealth and great health in 2022 and in coming years.

Have a Great Day

B G Nareshkumar

The Toothbrush

When we woke up in the morning, we start our day by finishing our morning routines. One of the most important and foremost thing we would search for is the toothpaste and toothbrush to clean our mouth. This gives pleasant feeling for us and also to people around us. Similarly, we follow the same process before going to bed. When everyone is looking for these products around the globe as soon as they wake up, then think about the market share and demand for these products. 

There were 2 big companies which are expert in manufacturing toothbrush and toothpaste. They manufactured many different kinds of toothbrushes for adults. They also hold equal amount of market share for their products. When a company A launch any new product, company B will follow and launch an alternate product to compete. However that was an healthy competition. Company A wants to launch first and they always go in a hurry and they need to hit the market first. However the company B will make a decision after considering all the aspects of demands and profit in the market. 

There came a demand of toothbrush for kids. Now, these 2 companies understood that they will gain the maximum market share and will lead the market if they can provide the necessary and quality product. As usual the company A, in a hurry, thought adults have a big hand and they need long and thick toothbrush. Kids have smaller hands compared to adults, hence they need smaller and thin toothbrush. They made the design and launched in the market. Initially, there was no competition and the product was bought by many people.

Company B went to the market and started analyzing more than 1000 kids. They had an extensive field research on how kids hold the toothbrush and how they used it. They got all the feedback on what they want. After the research, company B understood even kids need the longer toothbrush but with some grooves. This is because instead of holding the toothbrush with fingers like adults, they clung to the toothbrush. So, instead of making the small toothbrush like company A, they made a bigger one with some cartoons on the toothbrush to attract them. The product was an super dooper hit and they almost became like an monopoly company in making toothbrushes.

I don't want to mention the name of the companies. I am not in favor of any company or not the marketing person for any company. The whole point is the power of patience and having a detailed research before doing any action. It is not important to jump in hurry to get the market share. If the product fails, the bounce back will also be faster. Hence, taking time and entering the market at the right time and holding with patience and learning continuously will always give success. This also give the required knowledge to retain the success levels achieved. 

I wish every reader of this blog get the required knowledge and gain continuous knowledge before investing in financial market. Second chance is very rare and lets not hope for that when we can make the first chance more advantageous with patience and continuous learning.

Have a Great Day

B G Nareshkumar

Thirukkural - Income, Expense & Wealth Generation

There are great words written about income, expenses, wealth generation and administration in Thirukkural by Mr. Thiruvalluvar. Though many guess about the age of Thirukkural, i would like to bring to everyone's notice that Thirukkural was estimated to be written about 2300 years ago. There are 1330 kural's or couplets in total. These are categorized into 133 chapters. Each chapters contains 10 couplets. I would like to bring 2 couplet's (kural's) to your notice which represents the income, expenses, wealth generation and administration.

Now, let's see 478th couplet (kural),

Aakaaru Alavitti Thaayinung Ketillai

Pokaaru Akalaak Katai

This means, no matter how much is the income (it can even be very small), if the expense is within the income or if the expense is very less then there is no issue and we are on the right track. As we have discussed in many of our blog's, it is foremost important to concentrate on the expenses in wealth generation. This was told 2300 years ago and this holds very good for all situations even now.

Now, let's see 512th couplet (kural),

Vaari Perukki Valampatuthu Utravai

Aaraaivaan Seyka Vinai

The meaning of this kural is, the person is considered as great administrator or a great planner who has the capability of enlarging the income generating options, increase the resources and most importantly who has the capability to identify the interruptions or unexpected issues and eliminating those.

These days people are restricting or self satisfying or staying well in their comfort zone if they get a stable standard one income every month. Though this is the first step to run any family successfully, a person should definitely find multiple options of generating income. This can also be considered as a backup plan. This can also be a passive income. This can also be an investing option such as mutual funds or stock equities or bonds or real estates.

Then a person need to increase the resources needed to generate multiple incomes. If a person needs to employ someone or need to buy any hardware or software to run any business, that needs to be done simultaneously. Then the last and important step is to build the capability of identifying the issues which occur unexpectedly and learn the skill to eliminate those. These are the important skills to be developed for being a great administrator which was told 2300 years ago by great Thiruvalluvar in Thirukkural.

I wish we gain more knowledge and enhance our skills and capabilities to be a great administrator and become wealthy by following the above kurals. 

Have a Great Day

B G Nareshkumar

The Expensive Training

Let's begin this blog with a small story of an experienced person who is given the highest position of the development team. Imagine you are that person and reporting to the top level executive of the company. Now, by accident the project went exactly in the opposite direction of what is to be delivered and everything looks meaningless and made a loss of $1,00,000 to the company. You are going to meet the boss thinking you are going to be fired for the damaged caused to the company.

When you meet your boss, you are apologizing for the mistake happened and feeling guilty and ready to resign for the cause. Imagine, your boss says, why to fire you. I have invested $1,00,000 in your training. Go and give your best in coming days. How will you feel and how will you perform in coming days ?. I am sure, any responsible person who gets that second chance or an option to correct their mistakes will learn continuously over and over to avoid even a small mistake in future.

Whenever we are about to do any job, imagine you are given a second chance after spoiling / screwing it completely. This mentality will make us to achieve bigger things. This is the higher level of maturity any person can get in their professional and financial life. In Personal life, not many will get a better second chance. What all a person will be cautious about when provided this second opportunity ? This depends on the type of job a person does. So, think on your area of expertise.

Many projects fail because they fail to expect the problem. Expecting the problem in advance and taking necessary precaution is most essential part of any job. In other words, this can also be called as having the proper Plan B in place. Sometimes projects get failed because of the people attitude that they know well how to do it. They are not ready for the unexpected problems. Even the experienced pilot follow all the necessary protocol before driving the aircraft. He / she will never be given the privilege of skipping any process while flying the aircraft because he / she is experienced for years. 

I entirely accept the phrase, "Failure is the stepping stone of success". Most successful people have undergone atleast few failures and years of hard work before tasting success. But the concern is how many get that second chance, third chance, fourth chance or even the fifth chance to continue. When you entirely screwed up and you got another chance to continue, then you are given the ultimate privilege by god to carry on this time with experience. 

So, every time when a person gets a chance to continue his work after a failure, he / she does it extremely well with full effort. Hence consider any first chance as the second or third chance to avoid any mistakes. In simple words, before doing any job, imagine you have lost $1,00,000 in doing that job wrong. Now, you have that amount with you and how better that job can be done ? This simple calculation not only allows you to avoid disaster, this will allow a person to plan and think well in advance before taking any job. This also keeps a person in a continuous learning phase with high amount of patience and persistence, which is the first step to success. 

Let's compare this in the financial world. Finance does not give a second chance. If you spend something, it is spend, it is gone. That's it. To get that amount back, you need to earn (Second Chance). This earning might involve your time or knowledge or it can even be some passive income but once spend is spend (once lost is lost). It can't be gained or reverted back. So, before spending something, it is very wise enough to think if this expense is really necessary. If this expense is saved and invested for future, how much would be the returns. No matter how small the amount is. Even it can be as small as Rs.50. 

Now, let's exchange that $1,00,000 with Rs.50. If you spend or lose that Rs.50, even that should be considered as you have lost $1,00,000. Because today's Rs.50 has the capacity to give you $1,00,000 tomorrow. So, the point is even if we lose Rs.50 by doing a job wrong, it is same as losing $1,00,000 by doing a job wrong. Only the value changes here. Whatever the experience / training an loss of $1,00,000 can give is also be obtained by losing Rs.50 but we need to build the mentality / maturity to accept the fact and work accordingly.

I hope and believe that this blog would have bought some insight on saving and investing. Also this would have bought the importance of continuous learning, persistence and patience to save even the small amount of Rs.50 or even less than that. 

Have a Great Day

B G Nareshkumar

Invest 10% on Expense

There is a simple way to generate abundance wealth in long term. Having said that it is a simple way, it is not easy. Most people would have started this well but on the due course, they would have left this continuation and failed in achieving that great success. The reason can be many like laziness, not serious about or lack of patience. Only when these kind of bad habits are taken out, there can be clear evidence of abundance wealth. It is a long journey of around 20 to 30 years. There can be many distractions or uncomfortness in following this simple process in this long life span. This can be achieved through self-discipline and determination with patience.

The point to achieve this is investing 10% of what we spend everyday or every month. Let's say we go to a movie and spend Rs.1,000. In this case, we need to definitely invest Rs.100 in any form of good returns giving instrument. This can be in gold, mutual fund, bond purchase, real estate or what so ever. It is individuals ability to identify the better returns giving instrument and invest on those. In other words, when a person follow the budget tracker or spending tracker, at the end of the month take the total expense made. Straight away calculate the 10% on that expense and invest for next month. So, 10% of last month's expense is this month's investment.

This can be broken into 2 categories:

• 
  Let's say i spend Rs.30,000 this month then my investment for next month is Rs.3,000. Does this sound so complicated ?. This total expenditure should include or a total of entertainment expenses, travel expenses / holiday, medical expenses, food expenses and everything which goes out of your pocket as a monthly expense we do. There is another side of this coin, if you could think over. When you have the commitment of investing 10% of your expenses, there is a possibility you would even try to reduce your unwanted expenses. This is even better and good for wealth generation

• 
  When we have EMI or any credit card bills to pay for the month, the above rule should be altered. One should invest 15% on the EMI and credit card bills every month. Let's say a person pays Rs.25,000 on EMI and Rs.10,000 on Credit card. The total amount of Rs. 35,000 should be considered for this 15% investment. So, this investment will come to Rs. 5,250. This is infact to reduce the EMI and Credit card usage in long term, which is considered as the barriers for wealth generation. One who understands this earlier in life will achieve the abundance wealth earlier as possible

Considering the above 2 situation, If we spend Rs.30,000 on monthly expenses and Rs.35,000 on EMI and Credit cards. we should be ready to invest Rs.8,250 every month. In due course this will become a habit and we will eventually try to reduce the expenses as much as possible and will try to avoid EMIs and credit cards. People might think, this will also reduce the investing amount every month. When a person builds the habit of investing every month, it will eventually make him / her to invest more month on month basis instead of reducing it. This is the power of consistent investing. The whole point on this exercise is to reduce the expenses and increase the investing behavior.

Can you imagine how much a person would be investing in a year by spending on above. This would be Rs.8,250 * 12 = Rs.99,000. Now, you can calculate the compounded returns of this amount over the period of next 20 to 30 years for your retirement. It is never late. Start low and slow. Compounding is the 8th wonder of this world and compounding with consistent investment is the 9th wonder of this world. But make sure you follow the consistency with patience to enjoy abundance wealth.

I believe this blog will give a better understanding on how to invest consistently every month on your expenses to gain abundance wealth in long term.

Have a Great Day

B G Nareshkumar

Attitude

Above talent and knowledge, there are certain things which matter the most to achieve success. The first of those few things is nothing but attitude. As we have two sides for a coin, we have two sides for an attitude. Positive and Negative. Positive attitude is the only thing which can help succeed and most importantly keep up with the success which is achieved. Few cause for negative attitude are Carelessness, Ignorance, Fatalism, Laziness and Overconfidence.

Learner or Rejecter. A Learner from every action or from every person they meet will have a positive attitude. In other words, continuous learning itself will give a positive attitude. A rejecter or a person who ignores to learn or who ignores to adopt to a change is a negative attitude. A busy person never has time to be unhappy. It is not necessary to be unhappy in this small life span. Even if the situation push us to be unhappy, there are ways to be happy. That can be achieved only through positive attitude.

There is a great misunderstanding that saying "No" is a bad attitude. Definitely, saying "No" is not a bad attitude. Saying Yes and pushing us to a situation where we are forcing ourself will lead to a Negative attitude. Great minds and wealthy successful people in this world are very good at saying No. They infact say No to 99% of things.

In financial world people use Net Worth to calculate the wealth of a person. In other words, successful people (wealthy) discuss and talk about new ideas and in terms of Net worth not on what they earn. Similarly, that directly depends on the Internal Net Worth of a person. This Internal Net Worth depends on many factors and the most important of those is the Positive Attitude. When a person has this high Internal Net worth on Positive Attitude, he / she will definitely achieve the higher Net Worth outside.

I am not saying a Positive Attitude can make you successful.

I am saying a Positive Attitude will make you successful.
                                                          - Norman Vincent Peale

Concentrating on What's wrong and Who's wrong is more important. Negative attitude person will mostly / always concentrate on Who's wrong. They infact try to find out someone to pass on the blame and will never try to find out a solution for any problem. Similarly, when a person has the attitude of finding What's wrong will develop a new habit of inventing new ideas and products. This positive attitude on analyzing what's wrong will make a person very successful. 

Talking politely to ourself during bad times will lead to positive thinking and attitude. It is good for own self. It is always better to be calm during tough times. Attaining the highest degree of calmness is not easy but that leads to happiness in life. When the calmness is practiced, it will eliminate the negative attitude and that takes us to success in due course.

Positive attitude is the important factor to attain success in life including the financial world. Always have positive approach in investing and have patience to gain abundance. Never have the negative attitude of day trading or aiming for getting more returns than market can give consistently and lose money.

Have a Great Day

B G Nareshkumar

Discount - It's time to Buy, Not to Sell

Buying at discounts is an art. Everyone wants to buy quality and value products / businesses at discounts but people will hesitate when it is actually available at discount. Sometime at real world we will buy products at discount and feel the happiness. When comes to the financial world, people will ignore this concept. 

Let's take this with an example of buying an ice cream from a shop. If i go to an ice cream parlor and ask for an ice cream which is at the price of Rs.100 / piece, i pay the entire amount and get the ice cream. However i don't bargain here. Let's say, i ask for the discount and the shop keeper agrees to give me at a discount of 10% (which is at Rs.90). I will be more delighted and probably i will buy 1 more to reserve for future and eat it. 

In a special case, if the shop keeper agrees to give me the ice cream at a discount of 25% (which is at Rs.75). I might sometime get into a doubt, if that is an expired item but if i find that is not a expired item. I will definitely buy few more at that price, store it for future and even will buy for someone else (probably). This is the exact thing which should happen in the financial world and in investing but many of us don't do this.

When the stock price reduce or correct by around 10% we probably accumulate some quantity but when the same stock correct by around 25% to 35%, we don't accumulate, instead we will sell off all the stock available with us with the fear of losing all the money. This should be same like buying an ice cream. In the case of ice cream, we don't get any returns in future but by buying a quality stock with value, it will give great returns.

There are many quality stocks available at great discounts now. But many of our investors are hesitating to buy those at this price. Investors mentality is always like, if i would have bought this in 2000, now i would be a millionaire. None of them who talk this way will ever buy for future and they are generally losers. A true investors will buy / accumulate quality stocks in their portfolio at discounts. They will actually celebrate when the price of a stock falls. When it is keep on falling, they will buy consistently (Only quality stocks with great demand for its products in future). 

It is also very important to understand that not all stocks available at discounts can be bought. As i mentioned in the example. When the Ice cream shop owner sells at very great discount, i will check for the products expiry and quality first. Then buy more if it is suitable to buy. Similarly, when the stock price is falling and when it is available at great discount, it is very important to check its products value and demand criteria before accumulating. Infact there are many parameters to consider before doing this activity. But the underlining point is, it is time to buy and not the time to sell.

Having a diversified portfolio and accumulating more quality stocks at discount will give great returns in future. I am not a SEBI registered advisor and this blog is not an investment / trading advice. This is only for an informational / educational purpose. Please consider your financial advisor before investing.

Have a Great Day

B G Nareshkumar

Budget & Spending Tracker

To manage money properly it is very important to work seriously on your budget. Budget is something which should be understood and accepted with all the key family members. When you work on your expenses without having any budget, it is most likely you go on short of cash by end of the month if you are an average income earner. Even big companies and big countries in this world, do proper budgeting before starting any financial year. It is also made informed to every one in the country and shareholders to be aware in advance

Budgeting is one of the ways to save and invest for future. First day or the starting day of the month should have the mandatory task or time allotted for this budgeting. Once the budget is accepted with the key family members, it is also advisable to re-visit every week to check where we are and if we go over spending at some point or in any particular item, it is necessary to take action immediately. Budgeting should be taken very seriously when we are focusing on the wealth generation. Irrespective of the income we get, budgeting is important. It doesn't matter, if you earn Rs. 10,000 or Rs. 10,000 Crores, budgeting is important

Budget checklist update or the spending tracker updation should be the last and important item in our daily to-do list to monitor the budgets properly and to stay focused. Before going to sleep it is important to visit this page and update expenses and income. Staying very focused on the spending tracker is the simplest way for saving and to keep invested. Having said that, it is the simplest way but not the easiest. We need to have very high level of discipline and focus to have this maintained properly. One should not cheat ourself and ignore updating any small expenses we made on the day. Even a small amount of Rs. 10 being updated on this spending tracker is important

When we start following the habit of budgeting or spending tracker process, we will knowingly or unknowingly will cut down all the unnecessary expenses which we made in the past. This will eventually look like we are saving a huge amount over a period of time and if those are invested properly, it is the wealth generation process

There are many applications available in play store to track and maintain the budget and expenses. We can even download one of the best and easy to use application and start maintaining it. Again, it should be done irrespective of our income to save and invest wisely. We have done this process and we have noticed we are spending unnecessarily in certain space and we trimmed / deleted that in our budget and it took us in an organized path of financial management

The way of budgeting and spending tracker maintenance is not a new process of financial management. It was followed by our ancestors years ago. Now, in this fast world people ignore doing this. This is the main reason for poorly managing finance and travelling opposite of wealth generation. I wish everyone do this budgeting part effectively and follow the spending tracker process to gain abundance wealth.

Have a Great Day

B G Nareshkumar

Expense Back-up

When the emergency fund is in place, what next ?. It is the expense back-up. We should have Rs.50k to Rs.1 lakh as the emergency fund, which is to be used only in case of utmost emergencies like Unexpected car repair, Medical emergency or Unavoidable Home fixes and so on. Then, we should start saving the expense back-up

This expense back-up should be the cash saved which will take care of our 3 to 6 months expenses. This is not the income of 3 to 6 months, it is the actual basic expense needed for 3 to 6 months to run the family and pay bills

Why is this emergency back-up needed ?. To understand this, let's take the reverse calculation. When we don't have the expense back-up in a liquid form, we will most likely get into debt when the unexpected situation arises like job loss. When we get into debt, we will only end up in paying the interest for years or months. When the interest payable is reduced, that is the starting point of the wealth generation process

Think, if you are in a heavy financial crisis and you don't have any income to pay bills and you are getting into debt. In this case, you will end up in getting more debt to pay even the interests the forecoming months. Even if you get the job after getting into debt, it will end up in paying the interests. If we have the expense back up for next 3 to 6 months. The fear is destroyed there and the time to get things fixed will be increased and we can take a wise decision

It is everyone's important need to have the emergency fund and the expense back-up in place as soon as we get into the job. This is the first step of getting into the wealth generation process. There are many bankers working round the clock to push you in debt. The main and important process which can help you fight this is emergency fund and expense back-up

You can ready more on the emergency fund creation in my other blog, link is as below:

https://bgnareshkumar.blogspot.com/2021/12/emergency-fund.html

Have a Great Day

B G Nareshkumar

Eating that Big Elephant / Frog

In this fast moving world, most people forget or wrongly manage their work and time. The most important thing is to finish the toughest work first which gives the majority of results. We should keep in mind that 20% of our work will give the 80% of the results or benefit. So, it is important to concentrate on that 20% of the important work. It is even more better if that 20% of that work is completed fast

Write down the task

To identify the important task and to complete that fast, it is very important to write down all our tasks. When we write down the task we can identify the item by priority. Priority should be given in the order that the first task completed will give the maximum benefit. It is not necessary that the small task which can be done easily to be completed first. Most of the time, the small task which can be completed fast will not add any value to our gains. Those will be just a good to complete tasks

We should also understand the importance of delegating the less important work to someone who can help us or to someone who has more time. When we start delegating the less important work to someone, we will tend to focus more on the important job and that will give the maximum efficiency and benefits

Eat the elephant / frog sooner

I definitely don't mean of actually eating the elephant. Elephant here is referred to the toughest job in front of us which would give the maximum gain / benefit to us

When we are able to complete that most important job in the first half of the morning, we will have more time to focus on family and friends. This on time give better results and help to have a balanced life. Let's compare the toughest or the more time consuming job to a big frog and we need to eat that frog as the first job in the morning. In that case everything except eating that frog will be more easier. When we commit to eat that frog sooner, we are ready to do any job easily that day. So it is important to eat that big ugly frog as the first thing in the morning. This is nothing but what we think as toughest and time consuming job should be completed first. This would also give the 80% of the total benefit which we might get

It is also advisable to build sub task in the big tasks and start focusing on the sub task. By this was the big task can be completed faster one by one. This is nothing but eating an elephant story which we might have heard of. Elephant / Frog here is referred to the job we come across everyday. How to eat an elephant ? It can be done bite by bite. No one can eat an elephant in an single bite. Similarly, we can complete the bigger task slowly by segregating it into multiple sub tasks. We should never ignore the big tasks as that looks bigger to us. This is the common mistake done by most of us 

Once we built the habit of finishing the toughest job earlier in the morning, we will soon notice that we are getting better in our work and we will reach to a position that we are the expert in the job what we are doing. This will also be notice by the senior management in the office and our work will be appreciated over time. We would have noticed in our office that only the person who completes the toughest job always gets the appreciation not the one who completes the bulk of small and easy work

We should never procrastination our important work. We should procrastinate the less important work. We should know how to manage these to be the best in our work. Whenever we see a big elephant (work) in front of us, it is better to approach it as an opportunity to grow and break that into minor parts and complete that sooner to get better results.

Have a Great Day

B G Nareshkumar

Emergency Fund

Most people are not aware and not concerned about having the emergency fund in place. Emergency fund is a great concept which will stop people from getting into debt. If debt's are avoided there is no need to worry about paying the interest. When the interest payment is reduced or avoided then the savings increases and that might result in investing to the future needs / retirement. The workflow or the finance flow works this way

Emergency fund need not to be a specific number, people think emergency fund should be something very higher amount. It can be as small as Rs. 50,000 to Rs. 1 Lakh. Imagine if we met with an accident or someone is ill at home or any unavoidable situation comes into our life and we are waiting for the monthly salary or business returns to overcome these emergencies 

This will be more painful than everything. If we have this emergency fund in place, we don't need to wait for anything. I'm not limiting this emergency need only for the medical emergencies, there can be anything like car broke down, urgent kid expenses, any urgent requirement on fixing the home or it can be a temporary job loss. Anything of these can come to anyone's life and we need to be ready for these kind of unavoidable and sudden emergencies

Once we have this emergency fund in place, we can use that and again we need to save this emergency fund after the recovery and be prepared for the surprises that life gives us without any notice. One should never use this emergency fund for buying stuffs because they are available on discount. That is not an emergency

As quick as we save this emergency fund, we are 1 step ahead of the wealth generation process. People also think that they can put their emergency fund in equities as they might grow on time. We should remember that, emergency funds should be available in cash or any other format which can be made liquid easily. Keep the emergency fund in equity can reduce its value if the market goes down. That is definitely not an best way to have our emergency fund. It is always better to have this as liquid cash

Once we have this emergency fund in place, we are 1 step ahead in wealth generation process. This means we are most likely getting prepared to be out of debt even incase of emergencies. This will stop the interest payment and will increase our investment process.

Have a Great Day

B G Nareshkumar