Financial Diet(ing)

Post lockdown weight loss has been the top of the agenda item for a lot of people who blame their exceptional weight gain on the forced stay at home orders that the government issued in March 2020. Gyms, walking, cycling & swimming, everyone seems to catch hold of their favorite activity which will help them shed the extra pounds. But, do you know the biggest factor that decides the speed with which you will shed weight? No, it’s not the amount of exercise that one may do but the amount of diet or calorie intake that the person intakes. The incremental impact on every calorie surrendered is more than the incremental effect of an increase in exercise time. So, if you are pushing yourself too much on that treadmill but eating the same quantity then there is a possibility that you remain stuck at your current weight levels.

Today, we are not going to talk about food and exercise. We will talk about something more important, something that may change your life financially. Here we are talking about reducing calories in the form of expenses from your financial diet.

The word diet simply means the kind of food that one has. And financial diet means the expenses that one engages in given the income on one’s plate. With financial dieting, we mean to convey the fact that one can reduce their expenses in order to live a financially healthy and independent life. Often people spend a lot of time and effort in order to increase their income, which is a non-control zone. It is like that extra hour of exercise that one may put. Initially, the results may be great but with every successive hour, the outcomes may start falling. The income of the individual may also rise exponentially to a point before tapering off. It is at this point that the person may need a financial dieting plan in order to have more disposable income. The financial dieting plan that we will discuss today will also have the element of savings and investing attached to it. The cut in expenses should be accompanied by more investments without which the reduction won’t be of much use. Imagine you cutting down on your eating habits but just eating fried food whenever you have that little diet. It may serve the purpose but in reality, it is spoiling your health even more.

Let’s discuss the ideal ingredients of your financial dieting plan:


Expense reduction leading to savings

The most underrated aspect of financial management is the expenses. We constantly keep working hard to increase our income or finding new avenues for enhancing our inflow of money. But hardly have we looked at the outflow tap which often keeps running unchecked. As a result, the savings are less because savings is effectively what is left after deducting expenses from your income. Make expense tracking a daily habit. Just like you take out time to brainstorm to find new leads in your job in the same way brainstorm on the expense tracker and see which expenses can be stopped/altered.

Appetite and ability

Risk-taking ability as well as willingness varies among individuals. Do a thorough check of your risk profile before choosing the product where you would want to invest your money. Know that there is a difference between risk appetite and risk-taking ability. A novice may be enthusiastic about lifting weights on the first day of the gym but is better off by just lifting the empty rod and learning the technique. Picking 100 kg on the first day does show his appetite but ability speaks a different language. Remember, ability comes above appetite. A 65-year-old person with Rs. 20 lakh in life savings couldn’t afford to invest in equities although he may want to.

Combination

Invest in a variety of avenues such as bank FDs, mutual funds, insurance, etc. It protects our downside risk by avoiding concentration. Just as a vegetable salad with just cabbage as the ingredient would taste too bland, similarly for an investor a single product portfolio will look a little outdated. Ensure that you have a colourful financial salad.

Insurance

Not having coverage for your health & life can be really harmful to your finances. It is like going for your morning cycling sojourn without a helmet on your head. Insurance works as a helmet in a person’s life. Be sure that you have adequate life and health insurance by your side.

Professional Services

Having the right information and knowledge is fundamental in any activity. Going to the gym without an instructor may not help you get the desired outcome of exercise as every outcome has a different set of exercises to be followed. Similarly, in taking financial decisions there has to be some guide whom you can rely on. The guide will act as your dietician and instructor. Feel free to discuss your income and expense matrix with your guide and try to follow the financial plan that is prepared as a result of discussions.

In the end, your financial health is as important as your physical health. So keep taking care of your finances and be disciplined in your financial diet. Follow it with full dedication and keep enjoying the fruits of it. For more information on financial investments and insurance, please contact on +8568953926 or mail us on finriseinvestment@gmail.com

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