3 min read

What is your ideal personal finance life?

I have been reading personal finance-related blogs for a while now. But due to obvious reasons, it had become very important to have proper habits so that I have a healthy personal finance, and hence I started doing more research on it.

But what is personal finance? I like how Ranjan Varma puts it:

Whenever I tell acquaintances that I have a website on personal finance, the first and last question I get is, “Now, you can tell me where to INVEST”
By the time I finish saying that personal finance is not just investing and there are things like setting financial goals, budgeting,….., I get a feeling that I have lost them. They move on to another topic like the Rakhi Sawant’s latest reality show or something similarly interesting!
Personal Finance can be represented with a simple equation:
Income(t) – Expenses(t) = Savings(t) + Investments(t)
where time t signifies moving money, or purchasing power, backward and forward in time.
So personal finance is not just about Investing but also about maximizing your income, optimizing your expenses and your savings.

When I was looking for information with an Indian context, I was disappointed with websites like PersonalFN which are great sources of information if you already know what you’re doing, but they don’t help you to get started which is the problem in the first place!

I did find their Crorepati calculator interesting. It said that if I invest 50,000 rupees every year with a 15% interest, I’ll be a crorepati in 25 years. I realized then why compounding interest is important!:

Check this scenario out: You start investing at age 25, investing $2,000 each year until age 35. Then you STOP–never touching that money again. Your dumb friend doesn’t start until age 35, but he invests $2,000 a year for 30 years (compared to your 10). Who has more by age 65?
You! Actually, you’ll have over $70,000 more than your friend.

But 25 years seemed a long way off. Then I thought that I was asking the wrong question. The question is how to spend those 25 years well instead!

I found that most personal finance bloggers had reached the conclusion that their Goal is Financial Freedom / Financial Independence. I wanted in too.

But the aim can be different for different people. For example, your question may be When can I retire and live off my investments?

I wish colleges had taught stuff like this because it is an important life skill, especially concepts like Pay Yourself First.

The gist of what I learned are in these links:

Overall Picture


So, how do I start?

Read the Financial Literacy month articles at the Get Rich Slowly blog, especially:

If you think all this is not important, then I’ll mention that Google has a section called Google TipJar where people share money saving tips. If Google is into it, it must be important, right?

I’m personally looking forward to Ranjan Varma’s upcoming workshop where he mentions these topics:

  • What is Personal Finance?
  • Overview of Financial Products.
  • Financial Goals.
  • Magic of Compounding.
  • Rupee Cost Averaging.
  • Playing with Numbers.
  • Conscious Spending Plan.
  • Insurance Cover
  • Mutual Funds/ETF
  • Stocks
  • Real Estate Planning
  • Credit Cards
  • Documentation/Legal Aspects(Wills)/
  • Planning for your Children
  • Retirement Planning
  • Scheduling a Money Day
  • Tax Planning

There are just so many aspects! And it just surprises me that money being such a life-enabler, I neglected it for so long.

What is your ideal personal finance life? How are you achieving it?