Amateur Finance Tips

The following tips are from my own personal experience and may not be suitable for everyone. But still I am sharing this so that people who are in their early years of their careers can benefit.

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1. Don't save what remains after your expenses. But first plan your savings and then plan your expenses according to what is remaining.

2. Three things you MUST have: Health insurance that covers the entire family, life insurance for self and non-earning members (other earning members should take it on their own), cash in form of fixed deposits/savings account (this should be at least 30 to 50% of your annual income)

3. Never lend money for interest. Getting interest on money from banks and other such legal means in not "sin". But lending money for interest may cause innumerable problems. Also don't get enticed by pyramid schemes, wealth accumulation schemes, chit funds etc. They are risky and probability is high that you may lose money.

4. If you want to help a friend or relative in need, you can gift/lend money without interest. But make sure that you are not giving more than 10% (in terms of gift) or 20% (in terms of interest free lending) of your monthly income. You should not worry if the money doesn't come back in case of lending. That is why an upper limit is always advisable.

5. Don't invest too much in one sort of investments. Some people buy too much land, some stack gold coins and others blindly invest on shares. Take a balanced approach.

6. Never buy car/bike on loan. In early years of your job, you should try to cut expenses like this so that you can climb out of your educational loan and other such financial problems easily.

7. Never buy apartments on loan (or even with down payment). Instead wait for sometime, buy a land in your native or some nearby village, after 10 to 15 years of earning, build a good house with minimal or no loan. This will reduce your dependence on market forces and stress of loan pursuing you rest of the life.

8. Don't have any sort of addiction. Addictions apart from having detrimental effect on health also have same effect on your earnings. Spending 10,000 on a weekend booze is not acceptable even for a person who earns 1,00,000 a  month!

9. It is OK to be religious/spiritual. But watch out! God doesn't need your money. Especially in terms of rituals/tithing/donation etc. If you are compelled to help others for love of God, then do it in person yourself. Why give money to others?

10. Never go for EMIs (especially for smartphones, gadgets or for anything other than building a house, education and medical care. If you can't afford anything through down payment, then the time has not yet come for you to own it!

Finally, never try to cheat others in money matters. It may be one or two rupees in that corner shop. Or it may be a minor error in your income tax calculation. Never overlook these. Be watchful and keep your accounts clean. By this, you will also have the habit of checking your incoming account keenly. It will help you to check unnoticed loss of money.

If you have more points, please add them in comments! Thanks for reading!

Online Offers or Outright Scams?

Recently I bought some instant pasta and got some gift coupons with it. It said that there is 500/- off on purchases above 1200/- in a popular online store. As my running shoes were wearing off, I thought I can use it to buy a pair of shoes. I checked the price of some shoe models and compared it with another online store's prices. There was almost 600 to 700/- difference. So, they just give 500/- off while pricing things 600/- more. Is this an offer?

Again, one day everyone around me at office were panicking. They said that some online shops are giving unbelievable discounts. But again, when checked against some other online stores, people realized that it is just a publicity stunt and the so called offer prices are higher than other sites.

Some other companies give you "free" talktime offers with purchase of things like noodles and dishwash bars. But that requires you to "register" yourself with some sites. This is the catch. They get your email id, mobile number etc. And as usual we never read the "terms and conditions" but just click "I Agree". So this information can be misused. I am not saying that all such offers are threat to your privacy but you can not trust all such offers. Nothing in the world comes for free from "businesses". They themselves say that they are not charities!

So am I against all online purchases? Definitely not! I myself purchase lot of things online. But what I am saying is, clever marketing gimmicks and enticing offers should not mislead us to waste our money on something that is not worth. Now let me list out how these online stores are serving us better as well as how they are spoiling us!

The Good Side:

1. They don't need to rent a large showroom, air-condition it, pay hefty electricity and water bills and employ staffs. All they need is a website and a warehouse. That's why they can offer cheaper prices.

2. They offer more choices. For example, they provide option to buy phones and laptops of brands that are seldom available in conventional market.

3. They allow you to shop at your convenience. More payment choices and offers.

4. There are some tax differences between states. As these products are shipped from various locations across India, you can get a cheaper deal in that way too!

The Bad Side:

1. Things like shoes, dress etc can have mismatch against your expectations.

2. Purchasing lesser known brands may look like steal deals. But in some cases, there can be poor after sales service that will make you regret the purchase!

3. Delay in shipments are possible. Also some damaged products may need lengthy follow-ups to get rectified or refunded. Some times that even won't happen.

4. Unlike in case of conventional shopping which happens once in a while, people can constantly waste their time by looking in to online stores. Some tempting offers and targeted ads create an unwanted urges to spend on things that people seldom need.

So, to summarize, online stores are inevitable effect of the IT revolution. There is no point in protesting against it. Resistance is futile! These stores provide us more options and choices. But be careful! Don't purchase anything in a hurry. Compare price in other online stores and conventional shops. (Recently I bought a helmet of same brand/model/size for a much lesser price than in any online store from a conventional shop!) Before buying anything ask yourself if you really need it and will use it for sure and it is worth the money you are going to spend on it. Once again! Beware of online offers. Be extra cautious before buying anything (not only online but also in normal shops).