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It's Time To Give Your Money An Appraisal

How to assess your money? You know how much you earn and how much you spend (if you don’t then here’s how to do that. We assume you save a good percentage of your earnings; 20% and above is good.

Your appraisals must have been done and some of you got good ones and some maybe not so good.

Whether you got a great appraisal or not, did you give your money and savings a similar appraisal?

Why should you bother giving your money an appraisal?

Apart from the sheer joy of work, the other thing that drives us to the office every day is the salary we receive at the end of the month. And just as your work assessment will have elements of current performance & future potential, your money needs to be looked at with multiple lenses.

Your money is not just meant for your expenses today, but also for all the tomorrows that you will wake up to. The person who wakes will keep changing as an individual, getting older, wiser, smarter, and more responsible.

This change means that what you earn, and save, today needs to change with you.

Assessing your money – what does it mean?

Assessing your money means knowing if what you are earning is going to meet your needs today, in the near future and in the distant future when you won’t be earning. Just as your contribution and worth are much more than your resume, your money is much more than just the numbers that you see on your mobile or laptop screen. Will it expand or restrict the choices you can make six months, 5 years, or 20 years down the line.

Do you love to go on vacations? Then, whether you will be able to afford a Paris vacation 3-5 years later or have to settle for a picnic nearby is a choice dictated by the performance of your money.

Assessing your money is the first step in taking charge.

How to assess your money?

You know how much you earn and how much you spend (if you don’t then here’s how to do that). We assume you save a good percentage of your earnings; 20% and above is good.

Now it’s pretty simple. Ask yourself these questions:

Q1. Do I have Rs 50,000 which I can access in a couple of days for an emergency?

- If yes and it’s in a liquid fund.

Rating – exceeds expectations

Action required – No

- If Yes and it’s in a savings account

Rating – Meets expectations

Action required – Possibly look at moving the money to a liquid fund or an ultra short term debt fund.

- If you have Rs 25,000

Rating – Needs improvement

Action Required – Invest more till the amount becomes Rs 50,000.

- If you have no savings

Rating – Put yourself on savings improvement program

Action Required - Start putting savings in at least a bank account or RD or ultra-short term debt fund till the goal is achieved.

Q2. Do I have enough savings to last me at least 6 months if I lose my job or can’t do a job for some reason?

- If yes and it’s in a liquid fund/ FD or RD.

Rating – exceeds expectations

Action required – None

- If Yes and it’s in a savings account

Rating – Meets expectations

Action required – Possibly look at moving the money to a liquid fund or an ultra short-term debt fund.

- If No but I have at least 3 months

Rating – Needs improvement

Action – Invest more till the amount becomes sufficient for 6 months.

- If No – and I couldn’t survive a month without my job

Rating – Put on emergency improvement program

Action- Start putting savings in at least a bank account or RD or ultra-short term debt fund till the goal is achieved.

Q3. Do I have any big expenses coming up in a few years? Am I putting away anything for that?

- If Yes – and I am putting away something in debt funds

Rating – Exceeds expectations

Action Required – No

- If Yes and I have money in an FD

Rating – Meets expectations

Action Required – Explore Debt Funds

- If Yes – and No I haven’t saved a dime

Rating – Needs improvement

Action Required- Start putting savings in an RD/FD or debt fund till the goal is achieved.

Q4. Is a part of my savings working for my distant future?

- If Yes – and I am putting away something in the equity investments.

Rating – Exceeds expectations

Action Required – No

- If Yes and I have money in an FD/RD

Rating – Meets expectations but needs important improvement

Action Required – Learn about investing in equity mutual funds

- If No I haven’t saved a dime

Rating – Put yourself on emergency improvement program

Action- Start putting part of savings equity mutual funds.

If you scored “exceed expectations” for all the four questions, then you are on the right track and your money is doing well. If not then take the suggested remedial actions and get your money on the path to growth.

Do you already do something like this with your money? Why not share your views in the comments section below? We would love to hear about your approach.


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