All of us dream. Some of our dreams are serious enough to become goals, and like it or not, many dreams are financial. That is, they require money to implement. Here are three key factors that decide our financial success. That is, how well we can achieve our financial goals. Although each individual is different, there are some similarities.
This post is inspired by a discussion with fee-only SEBI registered investment advisor Swapnil Kendhe. It is step 12 of our free ebook: Re-assemble Step by step money management basics.
The three factors are:
1: Being debt-free for the first few years of earning
2: Understanding the difference between a job and a career
3: An understanding, cooperative and non-interfering life partner (if you choose to have one)
Before we begin, it is crucial to recognise that we cannot control everything that happens to us. Our role/responsibility in all of the above is only partial. Many cannot avoid debt even before they start earning. Most of us settle for a job instead of a career because of family circumstances or because we do not know what to do with ourselves – after school, after college or even now (like me).
How our life partner will turn out is, well, potluck. The point of this post is only to recognise the importance of these factors. Often, not much more can be done about it. However, if you are less than 30, chances are that you have time to turn it around. If you cannot, regret will not help.
1: Being debt-free for the first few years of earning
Building wealth depends primarily on when and how much you start investing. Where you invest is important but secondary.
Most young earners today start their earning careers in debt. Aside from an education loan (which is, in one sense, an investment), these are car loans/personal loans or credit card debt. There is a home loan, too, but it is often a bit down the line, so not too bad.
If you could avoid paying EMIs for the first five years after you start earning and invest only what you can (enjoy your spending), it will make a huge difference to the corpus you create 20 years or 25 years later.
Rs. 12,000 a year invested at 10% return for 20 years gives about 6.9 Lakh. If you had started five years earlier, the corpus would be 1.7 times higher. If you had started ten years earlier, the corpus would be about 2.9 times higher. Time is not just the ultimate currency but also the ultimate wealth builder.
2: Understanding the difference between a job and a career
In the early 90s, when Star TV was in its infancy, I saw a movie scene that changed my perspective on work. A mother tells her young son, who says he will go to a job after college
not a job, son a career
Unfortunately, I am unable to recollect the name of the movie. That scene made me understand the difference between a job – doing as told and a career – a chance to progress from “doing as told” to telling others what to do or at least having considerable freedom of execution. There are, of course, many other definitions for “job vs career”.
Swapnil Kendhe’s point is: If a person spends several years after college focussed on building a career, she can start investing late and catch up comfortably as the salary would be pretty high (but would arrive late). Completely agree.
I started earning at 32 and spent 11 years after school pursuing BSc + MSc + Phd + post-doctoral assignments to land a tenured academic position. Though I started investing only by age 34, I could manage to achieve financial independence over the next 12 years or so. See Fourteen Years of Mutual Fund Investing: My Journey and lessons learned.
The point is that young earners currently employed can still appreciate the importance of a career and develop their skills. In today’s world, I would wager that it is still possible for anyone below about 40 years of age to move from a job to a career. This transition will cost time. However, if productive, the extra money can be put to good use.
As a parent, our job should be to gently help children understand this difference and push them to work hard. It is not easy and not always possible, but try we must (more on this later).
A career can also be defined as “doing something we love”. It can start as a hobby and gradually become an income that lasts a lifetime. See Passive Income Template: Steps to build a lifelong income.
3: An understanding, cooperative and non-interfering life partner
An understanding spouse is a lever and fulcrum combined for moving the world! There is no greater gift for those who wish to share their life. Unfortunately, it is almost always a gift. If we are not lucky, we must deal with what we have and hope for the best.
How to achieve financial success?
1: Avoid debt for at least the first few years of earning
2: Learn something new whether you are in a job or career. Nowadays, making money with new/existing skills is easy. You never know, your skill could become your new passion and career!
3: Discuss your goals, dreams and nightmares with your partner or partner-to-be. Be ready to change and meet her halfway.
Do share this article with your friends using the buttons below.
🔥Enjoy massive year-end discounts on our courses and robo-advisory tool! 🔥
Use our Robo-advisory Excel Tool for a start-to-finish financial plan! ⇐ More than 1000 investors and advisors use this!
- Follow us on Google News.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Join our YouTube Community and explore more than 1000 videos!
- Have a question? Subscribe to our newsletter with this form.
- Hit ‘reply’ to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Explore the site! Search among our 2000+ articles for information and insight!
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation for promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu gets a superpower!” is now available!
Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. – Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low volatility stock screeners.
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.
Your Ultimate Guide to Travel
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)
