Financial discipline

We have heard a lot about IQ and the recently popular EQ [emotional quotient], but as far as financial quotient? IQ and EQ are in our genes to some extent intertwined and can be improved with practice and training. In urban areas, peer pressure, external influences, "with the Joneses" aspiration and consumerism pushed back the importance of financial discipline. The article is specific even though most of the ideas for Indian investorsuniversal

Those who are born in India in the early seventies until the mid-eighties, you may say, to a point where they see high financial reports from their parents than before liberalization era had a certain line on the outcome and cost have been brought. There was a high propensity to save. Cut to the present -. Every time we visit Big Bazaar or give the toy store in the neighborhood, we are our children "will delight us with relentless demands expensive equipment, this way of life.was unheard of when we were children.

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Chocolates and toys have been earned and not as a right. Is difficult for us, "Kinect" [pun intended] with the aspirations of the current generation of children. For them, chocolate and toys have now been replaced by I-Pad and PS3.

The post-liberalization growth spurt and the technology revolution has changed everything. He gave us a sense of reliability and greater exposure to consumerism. The current "have money to spend" attitude leads tofinancial burden, if practiced without financial discipline. It 's like a dripping water faucet and drain the tank above the head. Financial discipline is extremely important if you want to build wealth.

Two points to remember before you go

a. Wealth is created in order to enjoy its fruits. Taking care of the trees so that flowers can bloom and bear fruit. Do not catch them soon.

b. You are what allow your personality. A drastic change can beunhappy, so the move to make slow but sure and enjoy your wealth. Enjoy in moderation and invest wisely.

Financial discipline is not about setting goals, writing and working in a systematic way. These concepts are what you find in any book management. I would suggest that you become aware of the obstacles that get in the way of practicing financial discipline. Avoid falling into the traps that eat away at your profit. When you get to grips with this thenare on the way to create and protect your assets.

Impulse buying

I'm sure we all have not one, but made many times. Most of the time you end up regretting the purchase or to be thrown out / given the waiter a year later, when suddenly the urge to clean your house of all unwanted things. Advertisers and advertising point of sale use the emotional bait and repetition to ensure that they are ready to buy for a pulse. The seller uses any type ofcall the buy-one-get-one-free, free gifts and what not. Knowledge is power. So be aware of this common mistake that makes us human. Instead, use stock sales after Christmas, and turn the tables on the seller.

Ego Trip

Most High Street brands sold exclusively for this topic. Who does not jet into a high-end goods with a diamond wristwatch and a Montblanc pen together in the bag? "Mere pass, but you 'is no longer fashionable. Advertisers loveand use it to do in order to influence decisions, and companies make the most of this to make more profit. It 'important to be aware and maybe some questions to yourself before you succumb to your ego. If the purchase is to meet just for my ego? I can buy these? This is not just for high-end stuff, but also for your brand of perfume or clothes or mobile phone. Finally, the choice is yours. A high-end department can rapidlySatisfaction, but not forgotten, for most of us is only a "Axe Effect" on our wallets.

Excessive dependence on a type of savings

The ignorance, false perceptions or risk aversion may cause a person to fill a single type of investment. If you are a treasure of insurance products or FDS, or if you just invested in the stock market, then they are not maximizing your income. It 'a good idea to diversify your portfolio. A good strategy would be to give a 15-25%The exposure to equity markets. To increase the equity markets, if it is a sharp decline in markets. Book profits when the stock markets and extreme optimism every time you get to see the advice of investment in shares. Move the gain in high yield fixed income products, or fixed maturity plans of mutual funds. If you prefer real estate land for homes instead of walking.

Excessive dependence on loans / credit cards

The interest is to bear a burden to you. To see moreThe total cost of purchase. If you have money in the bank, it is best used in place of those tempting low EMI, hung in front of you. The same applies to the purchase of a car. Borrow only when absolutely necessary. If you buy a car for Rs 4 lakh loan of 5 years, you end up paying about Rs 5.23 lakh, plus taxes [EMI 8727]. If you had bought the car and invest the savings from EMI in a recurring deposit earns 8.25% to Rs 6.50 lakh are rich! (TheFD RS 4 lakh, Rs should be closed. 5.87 lakhs @ 8%).

Credit card turnover and cash advances on credit cards are at the pinnacle of financial discipline. The final chakravyuham (an ancient Indian military formation of concentric circles around the enemy an escape orbit virtually impossible). If a player does, then you should immediately close the loan to save themselves from financial ruin. For the most discipline, it is best to connect the payment to yourTo avoid wage account, the payment of interest and penalty for our forgetfulness. Do not exceed the limit and pay taxes on time. The interest rate is always called each month and is usually in the range of 32 ~ 40% per annum.

Some elements of budgetary discipline are as follows:

1 Insurance: This is a double-edged sword. For life insurance are available for long-term plans only. You buy life insurance complex is sure to increase the wealth of the insurance company. Always have a valid healthInsurance with a minimum coverage of Rs 3 lakh.

2 It would be a good idea to write your expenses [and your spouse if married. You may be surprised to find the amount of wasteful spending that appears. This will also bring a degree of control over your expenses. Instead of asking where the money goes, you have an idea of ​​what to cut. This exercise has a lot of patience, and day after day. But the return on investment prevailTime.

3 Investing wisely: Do you have a good mix of instruments for saving. Hunt not only good, because they always buy. In the case of immovable property, shares or gold, do not panic and buy from them, which is not in your hands. All options have an investment cycle, and there will be ups and downs. Be patient and vigilant. Compare with demand and think twice before proceeding. A promise of a return of more than 12 ~ 13% is rarely possible, if something suspicious is involvedsomewhere. It 'better to opt for mutual funds or stock markets for this type of return.

4 complex investments: Over the last few years of trading in futures and options, currencies and commodities grown in popularity. The lure of money can be groped, but remember, are complex, with much risk. If you can not understand, not to invest in them.

The above ideas are for the most part that meant trying to create wealth and I hope that add value to those whoare already rich. This is not an exhaustive list, and comments that add more perspective on how best to practice financial discipline could be estimated.

Financial discipline

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