6 commitments you must keep in your financial life
So now that you are clear about how you should make your financial life
simple and why a simple financial life is powerful. Let’s define 6
commitments that you should have in your financial life. Then you need to
act on these each month or each week, as time permits and the commitment
demands.
Commitment 1: Slow down and create your financial profile so that you
understand yourself
You will be amazed to hear that many people don’t know themselves in the
area of money. They are not sure how much risk they like to take, how
ambitious they are, what kind of job they want to do, when they want to retire
and how much time they want to invest in their financial life. Knowing all
this is important because that will define how you will act!
The first commitment you should have is to slow down a bit and understand
yourself, define all these points and use them as the guiding principles for
your actions in your financial life.
Commitment 2: Remove the clutter from your financial life and take it back
to level 0
Once you are ready with your profile, you will discover yourself and will
become ready to remove the unwanted things from your portfolio and
financial life.
• Check how many bank accounts you have and whether they are all
required. Can you close down some of them?
• Check all your investments – your mutual funds, ULIPs, FDs, RDs, bonds,
stocks and endowment policies.
• Make sure you have a minimum number of products, which can achieve
the results you want in your financial life.
Commitment 3: Automate your financial life and make sure you are
involved in the least amount of things.
The next commitment you can have is to do all the things which make sure
that your involvement in manual tasks (tasks which takes time and energy) is
minimal. Automate your bill payments, start your SIPs and pay your
premiums through the ECS facility or at least make them online.
Define your goals and decide what financial route you will take to achieve
them. Then direct investments automatically towards these at the start of each
month. Set all the alerts and reminders which are important for your financial
life.
Commitment 4: Exercise and prepare yourself to enjoy retirement and your
future life
I am not sure how many people will agree with this one, but your financial
life is there to help you in life. We strongly advise everyone to stay healthy
and in shape, else there is no strong reason for accumulating wealth. Start
taking care of your body, your overall health and eating habits. If you can
only keep one commitment of all the 6, this is the one you should keep!
Commitment 5: Set aside a week or two just for shopping for financial
products
Now once you have finished pruning and removing unwanted things from
your financial life, it’s time to fill in the gap and see what you need to add, so
that you can complete your exercise. The commitment here is not to decide
on things, but to take action and move your financial life from point A to
point B. Define a plan for the next week and implement it!
Commitment 6: Be prepared to do a great job of monitoring your financial
life in future.
The last part is to equip yourself with knowledge and tools which can help
you to monitor your financial life and make sure that you know what’s going
on as fast as possible. You can use some software to do this or it can be as
simple as using an excel sheet, with all the details, which you can update
each month or quarter.
