A young man’s journey to becoming financially wise
Sitting in an upmarket cafe in South Delhi, Ravi Kishore looks like a man who has his life sorted. He is 28-years-old, works with an MNC, drives a nice car, and recently got married to Namrata, a teacher.
“Don’t let my easy demeanor fool you into believing I always knew what I was going to do,” says Ravi.
“There was a time not so long ago when I couldn’t manage to pay my phone bills. I used to give missed calls to Namrata so she would call me back,” he laughs shaking his head in disbelief.
Five years ago, Ravi hit the jackpot. He was recruited on campus by a leading IT company as a software engineer on a monthly salary of Rs.30000. Like any middle-class child who grew up on a monthly stipend, the dream of getting the first paycheck became a reason to celebrate.
Most sensible people stop with gifts to family or the big dinner at a fancy restaurant after getting their first salary but Ravi’s celebration continued for a whole year. He bought a new cell phone, a laptop, and a bike. Not to mention the dinners & parties he had and by the end of year one, he was living from one paycheck to another.
However, Ravi’s spending phase didn’t last forever. Realizing his spending patterns were out of control brought about a change in his attitude and his habits. Namrata, who until now had silently been listening to our conversation, said Ravi’s dad’s impending retirement, and the pressure from family to get married, led to Ravi shedding his carefree lifestyle.
Ravi started with small changes. He created a budget that enabled him to see exactly how much money he spends each month, compared the amount he earns. Since he was getting married, he took a home loan to buy an apartment.
On the suggestion of his financial planner, he also bought a life insurance policy. The policy would give him a cover of Rs.50 lakhs, and act as loan protection in case of an unfortunate event.
Like any young, married couple, Ravi and Namrata both love to eat out, catch a movie and take short trips on the weekend. They’ve managed to do this without compromising on their savings. Unlike many young married couples who often go overboard and splurge, they’re now being very cautious as they have two incomes.
Since both Ravi and Namrata love to travel, they started keeping aside a small portion of their salary to fund their travel. This ensured that they do not have to compromise on their annual travel plan.
They save almost 25 percent of their combined income in various investment schemes. Namrata says they’re satisfied with how they have managed their money. So much so that the couple has even invested the gift money from their wedding. It is now a part of their emergency fund, which they can use when they need.
With proper management of finances, Ravi and Namrata could manage their income in an efficient way. A disciplined approach towards investments helped them streamline their money thereby assuring a secured and protected future for both of them.