Money Matters

Financial Planning and Discipline

Financial Planning and Discipline
Rabbi Jayakaran
Written by Rabbi Jayakaran

Financial management is less about earning your dream salary and more about learning and practising the art and science of personal finances.

In the past three issues we have been exploring basic principles of personal finances and now as a New Year begins it is time to start putting these principles to practice.

Here is a recap of the key principles. Revisit them and make them your own.

  1. Account for your past spending; know your spending style
  2. Prepare a budget and stick to it
  3. Plan your spending; spend within your means
  4. Save regularly and increase the percentage of saving gradually
  5. Give intentionally and increasingly

Know your Spending Style:

Compulsive Spender – Do you plan your spending before earning? You have to take help to enforce financial discipline.

Keep yourself accountable to someone with better financial management capacities and be transparent before them. Take small steps – if you spend 80 percent of your income on perishables, next quarter attempt to reduce it to 70 and increase savings from 10 to 20 percent.

Situational Spender – Do you spend all your salary in no time and go hungry till the next pay check? ‘Spend when you have and starve when you don’t’ seems to be the philosophy. If you are a situational spender, start by buying things you need for the whole month in the first week and put aside savings as soon as your pay check is credited. Above all you need to plan and live by your plan.

Constricted Spender – Do you plan most spending but are never able to make ends meet or save? Either you are trying to live a lifestyle above your income bracket or you need to look for better job prospects that bring in more. Check out what options you have to increase your income or lower your family budget because continuing under such stress will cause major health issues- which is a financial drain too!

Never-spend Spender – Do you save or rather horde and live miserly? This is ‘uncle scrooge’ who only saves and never spends. If you are a ‘never spender’ Beware! You may be alienating your family and friends and not helping yourself too. Money is used to give a good life for now and the future and you cannot carry it with you when you leave this world so be gracious to your spouse and children’s legitimate needs.

Wise Spender – Do you plan, save, spend, in that order, and make choices to live comfortably and give generously to the needy? You can be a good mentor to the others struggling – try to help!

Giving
“We make a living by what we get. We make a life by what we give.” Winston Churchill

Whatever our situation in life we can and should give to those whose need is greater than ours. Not just emotional giving but also regularly and objectively. ‘Giving’ is a critical financial principle like living within your means, planning for the future and following a spending plan.

How much ever we have and earn, if one fails to consciously develop a habit of giving, we cannot succeed in giving. If we wait to have ‘enough’ before we give, we will go the grave still unable to give.

Regular giving does not come naturally. It is a learnt behaviour and it develops from intentional practice. Hence, how much to give, to whom to give, how often to give and how to give are modalities that need to be regularly thought about and decided as part of planning.

Golden Guidelines

  1. Know that all you have is God’s gift to you and you are to steward it well.
  2. Start a budget and follow it.
  3. Save regularly. Early regular savers make bigger money than big savers that started saving late.
  4. Live within your means and avoid debts. Constantly ask yourself, “Do I really NEED this?” before spending.
  5. Involve your spouse and children in managing the finances. Be transparent with your spouse about your financial situation.
  6. Give to those in need regularly. Aim to increase the proportion of giving consistently.
  7. Do not blindly take responsibility of a loan for your friend or relative. If you take it on, be prepared to repay the loan in the event your friend or relative fails to repay.
  8. Explore how you can earn more money legally and creatively by way of using your resources – knowledge, skill or interest.
  9. Do not let making money rob you of your essential time for yourself and your family. Learn to balance what is important in your life.

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