Tag Archives: Money

Is Dollar dull again?

Soaring Gold & Silver along with the escalating US-China Trade war may lead to Dollar fade its value. A weaken Dollar & surge in the inflow of capital towards India can help appreciate the value of Rupee.

So, what exactly does Strengthen Rupee or Weaken Dollar mean for the Economy & for you as a Consumer? Let us discuss it Today.

Strong Rupee Impact –

  • Cost of Production Rises as raw materials become expensive.
  • Exports become costlier which may mean Business like textiles, IT etc may lose to its competitors. IT sector earnings may decline, as most of them serves the clients abroad.
  • Imports are cheaper. The appreciation may help in reducing prices of imported consumer goods like your iPhone, Computer or TV etc.
  • Strong rupee may impact the job creation and the overall growth.
  • The stock market gains from foreign inflows, funds keep coming in, and the additional liquidity keeps stock prices high.
  • Also Foreign investors, who can borrow cheap abroad, for example ~1% in Japan, & invest that money in Indian bond market, with yields ~7%, can gain from a strong rupee.
  • Strong Rupee helps Government manage inflation on the lower side and the fiscal deficit.

Weak Dollar Impact –

  • A week Dollar may mean higher prices of commodities like Oil, Iron, Copper etc as they make up for the downfall in dollar.
  • Rising prices of commodities increases the cost for producers which ultimately pushes the prices of goods further downstream like Food, Gas etc, directly feeding into Inflation and off-course making a hole in your wallet.
  • Prices of Imported goods rise and foreign Travelers may need to scale back on Vacations. Topmost imported goods in US are (Consumers watch-out)-
    • Electrical Machinery (including computers and hardware)
    • Vehicles and Automobiles
    • Pharmaceuticals
    • Medical equipment and supplies
    • Furniture, lighting, and bedding
    • Plastics and plastic goods
    • Oil and petroleum products
    • Gems and precious metals
  • Some Business are more likely to take hit than others like Luxury products. When consumers tighten their belts, the first industries to take hit are those manufacturing luxury items and nonessential products.
  • Fuel prices may surge, when the dollar weakens the price of gasoline increase because the nation depends at least in part on imported oil.
  • Exports are more competitive in the global market gaining market shares and at times saving U.S. jobs in the process.
  • Multinational Companies and the Shareholders may gain from the Weakening Dollar.

Lastly let’s look at the Factors that help Influence a Currency Strength –

  • Policies Anti-Inflationary monetary policies and Fiscal discipline helps a Strong Currency by keeping debt and inflation in check.
  • Stability- A well-established, strong & stable government boosts the confidence of Investors, which in turns promote the Currency.
  • Interest Rates- Investors seeking a higher rate of returns are attracted by higher interest rates, and their Investments help promote a Country’s Currency.
  • Geo-political factors- Apart from the factors mentioned above, other external factors like Trade wars, trusted partnerships & support from other Nations can also impact a Nation Currency.

Thank you for Reading. Press that like button below if you got any value out of it. Follow us for more.

Because Financial Literacy Matters!

Keep Learning, Happy Weekend

Money Matters

Two weeks back we discussed about the Worth of Money where we mentioned things that are above Money, and why they are above Money. Today lets discuss about why Money Matters!, if you haven’t read my previous blog post the Worth of Money i highly encourage you to do so.

Money, means a whole lot of emotions to many of us. Often times we either avoid the topic or doesn’t discuss thinking what others will think. Majority of us have associated the negative emotions like Greed, Lust, Selfishness with Money. The way majority think about Money is also the reason why majority lacks it. Today we urge you to think like Minority.

Let us think of Money as Freedom, Money as a Tool, Money as a Servant not just for you but also for your loved ones. Make Money a positive emotion and wealth will follow you. That said, I am not saying Money doesn’t make a few of us blind, and force us to do even the gruesome crimes like murder, rape etc. But before criticizing Money lets not forget it is just a Tool, And a Tool is as good as the person using it. All Money do is give you the Power, and the Freedom of Choice. How you use this power or freedom is totally up to you. You can use Money to give back to the society, or you can use it to further exploit the society. Just like you holding the cash have the choice where, how and when to spend.

Most of us live paycheck to paycheck, and are a few paychecks away from insolvency. Some of us are already broke and are spending way above the means i.e. we earn 100 dollars and spend 110 (this situation is worse in some countries than other). The point is many of us lack financial literacy, because it isn’t taught in any class or anywhere in this professional world! The Education system is designed in a way to not let you be free but instead follow the instructions. It doesn’t teach you how to think, but what to think. That is why you need to take control in your hand. You need to switch gears, or it will be too late before you reach the destination. The first step to be Financially Literate is to understand the financial mean – the Money. So, lets discuss why Money Matters.

5 reasons why Money Matters –

1.Basic NeedsMoney help you build a shelter, buy some clothes and get food on your plate. Without these you pretty much can’t survive.

2.Dream Executor Money can help you execute your dreams. It give wings to your desire. You want to be a pilot, go enroll in a University. You want to be a hotelier go own a Hotel. You can also start a Business of your choice, without the headache of getting it the required fund, because even if you are not funding it fully with money comes the networking, the contacts, the people whom you can ask to invest. With proper funding dreams get traction in the physical world.

3.As a Fuel – Money act as a fuel for the causes you care about. You can start a project or a movement to help the needy, the weak or the underprivileged. Money is not just for the self it can also help fuel your selfless desire, and things you truly care about.

4.Gives a ChoiceMoney gives you an opportunity to choose what you like. Think for a second, Did you buy a car you like or the one you had to? Did you buy the watch you always wanted or the one you just had to? Did you buy your dream house or the one you can afford? With enough Money you can afford that Dream Car you always wanted, or the Mansion you always dreamed about. Money can give you access to all the exclusive & luxury items.

5. To achieve the highest self Money helps you live with abundance & prosperity, true to your purpose. Your consciousness matters! With Money you can spread the consciousness, open up your heart, and feel the bliss, spreading joy everywhere.

Still not convinced, just imagine the smile you can give to a child, buy just buying them a little balloon. So next time you think about MONEY, choose your words wisely.

Thank You Riters, I hope you are enjoying this beautiful Sunday with your loved ones. Like if you liked this post, follow us and do check some of the tips and tricks to financial freedom.

Hustle on the Side

Lost Job, Shit happened, now what?

No worries. Well yes you can’t buy Lamborghini or your favorite scarf at Gucci but definitely you can eat some Luchi (Indian Bread eaten with Chickpeas). Jokes apart, well lets discuss how to keep your cash flowing to get that necessary food on your plate! Below are five side hustles that you can do to keep some extra cash flowing that can act as an add-on to your Primary Income source or can be a savior in case you have been a victim of the Crisis like Covid. These Side hustles can earn you anywhere from $500 to $2000 a month with little effort. So without further adieu let’s dive in.

1. Online Store Dropship that scarf, or retail that shirt; whatever you choose selling items online can be a good source of Income. And with this pandemic pushing more & more people online with contact-less door to door delivery, your store can be the next big thing. So get your domain and hit that Shopify to keep the customers rolling. Now, if you are wondering you can’t get your supplies from China and hence can’t make that extra buck dropshipping, don’t be dishearten check out ever green platforms like Amazon and use it to your advantage. To read more about how to sell online click here.

2. Freelancing Web designing, writing, photography, digital marketing, online tutor you name it, anything that can be done digitally can be done through freelancing. For starters you can check out platforms like ‘Fiver‘ or ‘Upwork‘ and once you have a belt of projects completed under you, you may like to showcase the same through a personal website. If you serve your client well you may very well turn your hobby into a full blown Business. All you need to start freelancing is to master a skill, and that is where you can

3. Blogging or Vlogging, Social Media – Be a Influencer, teach something, or just crack jokes, Social Media is platform for all, provided you are ready to put in the required effort. To put the numbers in perspective those with 100,000 followers can earn around $700 per photo in Instagram. And in Youtube with 20,000 views you can earn around $100. Affiliate Marketing, Sponsors, Ads, and selling products are some ways to earn through Social Media. But remember you personal brand won’t be build overnight you will need to understand the system and leverage it to your advantage. To know more on how you can crush it on Social Media platform, there is a great book ‘Crush It’ by Gary Vaynerchuk (a Belarusian-American entrepreneur, New York Times bestselling author, speaker, and Internet personality)

Garyvee says

4. Dividends – If you invest in right stocks, you can have the regular payments added to your account quarterly/annually. There are companies that pay a part of their profit at regular intervals back to the Investors, for owning their stock. All you need to do is open a account with brokerage like Zerodha and do your due diligence picking up the stocks. You can start with as little as 100 rupees.

5. Real estate A vacant land, or a building is referred to as Real Estate. Real estate investing is the purchase, ownership, management, rental or sale of real estate for profit. A way to start this is get a duplex, and rent either one or both the portions, using rent to pay off the mortgage payment.The loans also provide income tax benefits under Section 80C (up to Rs. 1.5 Lakh on the principal) and Section 24(b) (up to Rs. 2 Lakh on the interest paid).

Bonus content – ‘Flipping’ – you can flip anywhere from a book to a watch, you can even do something called ‘Domain Flipping’. A Canadian blogger Kyle MacDonald has even flipped red paper clip for a house, doing a series of 14 trades online. You can also use eBay or Amazon to flip. Refer this link here to know more on how to flip items on eBay. Flipping items is all about art of selling, master it and you will never sleep hungry anytime.

Don’t forget Successful businesses can also start out as side hustles.

Thank you for reading 🙂

Learn to Grow

Welcome Everybody, this is your host Salrite from riteFinance, today lets learn to learn to grow!

“Anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young.”

Henry Ford

“Learning is not attained by chance. It must be sought for with ardor and attended with diligence.” 

Abigail Adams

To be successful in any endeavor you need to be able learn new skills and techniques. If you know how to learn and stay motivated, there is nothing that you can’t achieve. The same applies to Financial Literacy. Having the know how of finance, you can grow wealth and be financially free! And with freedom comes happiness, peace and satisfaction.

Learning comes in Audio, Visual and written form.And one of the conventional and yet the best way to learn is Books. Some great leaders, entrepreneurs and investor spend a huge chunk of their time reading, the likes of Bill Gates, Warren Buffet, Jeff Bezos to name a few reads a book a week or more.

There are some great Books to teach yourself Financial Literacy, Below are our top picks-

  1. The Intelligent Investor by Benjamin Graham : This one is also a recommendation from Legendary investor Warren Buffett.
  2. Rich Dad Poor Dad by Robert Kiyosaki & Sharon Lechter : It advocates the importance of financial literacy, financial independence and building wealth through investing in assets.
  3. MONEY – Master the game by Tony Robbins : 7-step blueprint for securing financial freedom.
  4. How to Win Friends and Influence People by Dale Carnegie : This is my personal favorite and a easy read on Leadership that will help you in every aspect of life.
  5. The Millionaire next door by Thomas J. Stanley : This book is a compilation of research done by the two authors in the profiles of ‘millionaires’.

Start with these five, and you won’t regret what you learned.

Another great format to absorb the knowledge is through Audio Books, you can tune into one and keep listening even while you are walking, doing your daily house hold chores, or traveling (Post Covid ;)). By Signing up here you can get two free Audio Books.

Now, time for my best source of learning – Audio Visual – Video Format – Youtube. Some of great channel we recommend for Financial Literacy are: Minority Mindset, Graham Stephan and Andrei Jikh.

Leaning is an Investment in self, in fact a much needed one. To be able to stay at the top of your game, you need to, you must keep learning be it via Youtube, Blog or Books.

Thank you readers, stay happy, stay focused, stay motivated and keep Learning!

Bubble, oh no!

Time for some practical: Pour a cup of dish soap into 6 cups of water & stir it well. That is how Bubbles are formed, now you burst it!

Oh no!, not the Bubble Minku loves. Lets do it again.

Increase the price of an asset significantly surpassing way beyond its true value, and make the majority believe the price will continue to rise at least in the foreseeable future. There you go, that is exactly how Financial Bubbles are formed. Eventually the reality kicks in, and like every bubble it bursts!

Welcome to riteFinance, this is your host SalRite, With some saying the current Stock Market is in Bubble, today lets discuss about Financial Bubbles.

As per the legendary Investor Warren Buffet, Bubbles form when “People see neighbors ‘dumber than they are’ getting rich“.

Financial or Economic Bubble is not a new thing, in fact the official history of the first ever recorded Bubble dates back to as far as mid 1630s, though the term itself was coined around the 1720 AD. To dig a bit deeper, lets understand the five stages of an Economic Bubble with the example of what is known as ‘Tulip Mania’ of mid 1630s.

Stage 1 – Tulip comes to Vienna from Turkey, are soon distributed to Netherlands and becomes a status symbol in Dutch community. With a saturated intense petal color that no other plant had, and a profusion of varieties, Tulip soon becomes a coveted luxury item, increasing its asset value. This stage is referred to as ‘Substitution‘.

Stage 2 – This is when the news of Tulips start spreading, and becomes a topic among the majority . It is now that the Speculative purchases happen, and the bets are placed on the future value. As the flowers grew in popularity, professional growers paid higher and higher prices. Buy now, sell later at a higher price becomes the motive for Investors. This is referred to as ‘TakeOff

Stage 3 – Exuberance – a state of unsustainable euphoria. This is when the asset overshoot its intrinsic value leading to a jump in the portfolio of several. A few lucky/rational Investors sell at this stage, while the majority continue to buy in. At this stage Tulip becomes over-valued. At its peak, value one Tulip bulb was equivalent to a House. By around 1636, the tulip bulb became the fourth leading export product of the Netherlands, after gin, herrings, and cheese. Tulip mania reached its peak during the winter of 1636–37, when some bulbs were reportedly changing hands ten times in a day on paper (it is the time when future markets appeared in Dutch Communities).

Stage 4 – Critical stage – a state where some begin to sell. When the market realizes that an asset is over leveraged and way too over valued, some begin to lose faith and starts selling. This is when they realize there aren’t enough buyers. For Tulip it was the revelation of their true value. In around February of 1637, for the first time in a routine auction no buyers were available for the Tulips. This time coincides with the outbreak of Bubonic Plague in some European Cities. This lead to the 5th and last stage of a Bubble.

Stage 5 – Crash (pop) – Burst of the bubble, and the reset for the economy. In case of Tulip, Bubonic plague probably acted as a needle that led to the demise of its Market. With no buyers available sellers were left with nothing but a flower.

A few hundreds years later, now a Tulip is worth a few bucks and can be ordered online, but nevertheless bubbles keep forming and keep popping. As we humans are irrational beings. This leads to another story, this one more recent.

2008 Housing Bubble

This was the result of irrationality of the masses combined with financial engineering of the elite few, the Bankers. Lots of Subprime loans were made between 2004 to 2006 rising from 8% to around 20% in the United States, at the same time NINJA loans (No Income, No Jobs, and No Assets) grow in popularity and many of the Millennial with lesser Income would write a higher figure in the application, that no one in Banks would verify and they will easily sanction a loan. The greed of the Bankers didn’t stop here they combined all the A, B and C rated loans packaged them into something called CDOs (Collateralized Debt Obligation – a type of structured asset-backed security that include mortgages, loans or bonds), and sold it to the Investment Banks, betting further on loans. As if this wasn’t enough the CDOs were swapped for Insurance what is called as Credit Default Swaps. CDS acted as a financial instrument that could hide these risky investments (to read more on CDOs or CDS click here) Even the rating Agencies like S&P didn’t downgrade the bonds & kept ratings high. Couple this all with Inadequate regulations by the policy makers, and you see a Huge Economic Bubble.

Eventually, the home owners defaulted on their payment, this meant the riskier loans, CDOs hold by Investment Banks all lost their values, and suddenly the whole Financial system collapsed on its weight. Lehman Brothers the fourth largest investment bank in US back then filed for bankruptcy. And the Market corrected itself, not exactly though, the fed came in, and bailed us out. Enforcing strict regulations, and making much required policy changes combined with Quantitative easing kept the US Economy on its track.

Even before 2008 crisis, which is the most recent one (prior to this pandemic) there were several Economic Bubbles. One such was the dot com bubble of 2000, caused by excessive speculation in Internet-related companies. While several big companies like pets.com went out of Business, it was not the end for all, with growth in the technology sector stabilized a few like Amazon.com, eBay saw rise in their Market Share following the crash.

Another Bubble that can be looked at, dates back to 1840s Great Britain. Referred to as Railway Mania, this was the period when the shares of Railway Companies soared in their value, only to be declined later. Following the crash, the larger railway companies such as the Great Western Railway and the nascent Midland began to buy up strategic failed lines at a discounted price to expand their network. So what was the down fall of some, became an Opportunity for others.

Bubbles are primarily of two types –

  1. Equity Based – characterized by easy liquidity, tangible and real assets like tulip mania, railway mania and dot-com bubble.
  2. Debt Based – characterized by intangible or credit based investments with little ability to satisfy growing demand in a non-existent market like United States Housing Bubble (of 2008).

Can we predict these bubbles?

Well, we may not be able to predict accurately nevertheless we can identify it, based on the over leveraged asset price, high risk lending or borrowing practices, and when the people tend to rationalize borrowing, lending and purchase decisions based on expected future price rather than the ability to repay.

What can we learn?

There are few things that these Bubbles teach us –

  1. In every crisis lies an Opportunity, only if one knows how to capitalize on it.
  2. Bubbles are natural, every Economy goes from a Boom & Bust Cycle.
  3. Certain theoretical research models states that bubbles (as long as they do not burst), raise economic efficiency and welfare.
  4. Regulations have a big role to play in an Efficient Market.

If you want to read more about how the Bubbles work, there is a great article you can refer here.

Thanks for Reading, Lets us know what you think about the current Stock Market scenario in the comments below? Do follow us for more @ritefinance

A Duty of Care

Welcome everybody, today we are talking about ‘Duty’ [starts firing – gun shots everywhere], no no hold-on not ‘Call of Duty’, oh no!

Lets talk about your Duty towards your loved ones – ‘Insurance’, specifically ‘Life Insurance‘.

In Layman terms, Insurance is something people buy that protects themselves from losing money in case of an unfortunate event. Be it ‘Car Insurance’ that insures your car against any potential damage, or ‘Life Insurance’ that insures you that your nominee will be paid in case of your demise.

Like everything in life, it too comes with a cost, ‘Premium’ – an amount to be paid (often monthly). But that can be seen as a small price to be paid for the mental peace & financial security of your loved ones. Life insurance = financial security for nominees in case of death of policy holder and Financial security = fulfillment of the family’s financial needs.

Now Life Insurance are broadly of two types – Term Insurance & Endowment (if you wish to read more about other types of Insurance you can check the link here). Endowment is something where policy holder get a particular set amount on maturity, while Term Insurance is a pure Insurance policy where policy holders’ nominee gets a fixed amount on the unfortunate event of policy holders’ demise.

This is where it gets interesting no Insurance Agent advertises or sell you Term Insurance, while everyone will pitch in for an Endowment stating it to be an Investment / Saving Option. So are they right about it, or are they simply doing it for their cut aka commission? Well yes, its in their favor!, Endowment plans charge a hefty amount in premiums and a huge portion of it goes to insurance agents as commissions and administrative costs (read more here about things Agent never tell you)

Lets discuss about the benefits of Term Insurance over Endowment, why you may need one? and also I hope by the end of this blog post you will know Term Insurance is the only real Life Insurance.

1. Premium aka the priceIn Term Insurance you can get the same cover as Endowment at a much lower premium, for example – If you are a smoker male in your late 20s, you can get a cover of 1 crore by paying INR 1500 every month for 30 years. while you get the same cover of 1 crore if you pay over INR 10,000 every month for 30 years for an Endowment plan, around 7 times the price compared to Term insurance. Think it this way, you end up saving around 6 times the premium (i.e. 30 lacs in this case), if you go for a Term Insurance. Well yes, you won’t get anything on maturity if you are still alive but nevertheless its a life insurance it meant to be like that, why not invest the cash you saved on a better asset! Buying Term Insurance in above scenario saving around 8.5k per month, if you invest the same amount in Stock Market and get an average market return of 10% annually you can make around 2 crore, twice the amount you get on maturity from an Endowment plan. Isn’t it cool? That said I am not promoting one thing over the other, all I want to say don’t listen to a random agent or fake financial gurus be it offline or online, do your own due diligence before Investing/Insuring.

2. Sum assuredIn Term Insurance you get a sum assured way higher compared to an Endowment plan for the same amount of premium.  As a thumb rule, you are allowed to buy cover of up to 20 times your annual income (cover ranging from 10 lakh to 20 crore). Now, thing to keep in mind you will only be paid the promised amount in case of your death during the policy tenure (after all its a insurance against your life).

3. Features / payout options – Term Insurance provide you flexibility when it comes to the pay-out the nominee receives the sum assured in lump sum, equal installments or a combination on the death of the policy holder during the policy tenure. The policyholder has option to customize the payout based on their family needs. In an endowment plan, the payout is lump sum either on the death of the policyholder or as a maturity benefit on completion of the policy term.

Above are the major benefits, now when it comes to buying a Term plan there are certain things you need to take care of – Coverage, Policy Duration, Features of Plan, Premium Affordability to name a few. To know more about the same you may wish to read an article here or here.

Finally if you are wondering where to avail a plan, you can consider checking out policybazaar.com and you may probably need to do your own due diligence. In the end if you are left with the extra cash and considering to Invest read our blog post here, and follow us for more tips & tricks on how to Manage Money and Invest Wisely for Financial Freedom.

Thank you Readers

The Initial step to Freedom

Everybody wants to be financially free, but a few knows the way and a very few actually puts in the effort.

Welcome to riteFinance – the pathway to Financial Freedom! Today we will discuss how to create wealth.

The very first step to wealth creation is to know your spending aka track your expenses. To track your expenses you can use a simple excel sheet or a more suitable tool like mint. Whatever you choose the process is very simple, you need to list down all your expenses from day 1 of every month to the last day. And you need to do this for at least 3 months to get an average. If this Average is more than 100% of your Income, then you need to either A. Cut down your expenses, or B. Increase your Income, though an Increase is always advisable but cutting down the expenses is the first thing you should do. Remember ‘Live below your means’, buy only what you can afford not what your credit card can afford.

Once we know how much we spend, the next step is to create an Emergency Fund, i.e. set aside 3 to 6 months (6 recommended) of cash reserved, only to be used for Emergency. If you need to know more about the same, we already have blogged regarding the same here.

Now, if you have the above two steps taken. The next question is ‘How to create Wealth?‘. Yes, we haven’t yet discussed that. The above steps won’t help you create wealth, but it will give enough peace to progress towards Financial Freedom.

To begin your journey, you must know how much of the Income is your expenditure (again if your expenditure is more than or equal 100% we urge you to increase income or cut the expenses). Calculate %Expense of Income, for example if your Income is 100 INR
(or for that matter any currency), and your expense is 75 INR than it becomes 75%.

One thumb rule to manage your Finances especially if you are beginner is to follow 75-15-10 rule i.e. Spend 75% of your Income, Invest 15% and Save 10%. Later on as you get better grasp of your finances and is able to cut more on expenses / increase your income then one should progress to 50-30-20 Rule, 50-30-20 rule can also be called as the Ultimate lifetime Money Plan. It simply means one should Spend 50% of the Income, Invest 30% and save the remaining 20%. And in case your expenses are less than 50%, great you can invest the remaining. You can read more on Investing here.

Remember the you need to Invest like crazy to be Wealthy, while if you Spend like crazy you just end up looking Rich. Choice is Yours.

Tip – Donate a small amount from your earnings to a Charity, and you will start feeling Abundance & Positivity surrounds you, fueling in more wealth and adding a sense of purpose to your life. The more you give the more you will be in a position to receive. Give it a try!

Thank you for reading. For more such Financial Tips, do follow us @ritefinance. Together let’s build Wealth. Happy Learning…

Covid happened, what does it mean for Personal Finance?

Spend less, Save more and hope for the best. Well, yes but not exactly. Covid has left many Businesses and firms bankrupt, leaving millions of employees jobless.  News of Recession and Economic downturn is all around. And no one knows, how long the Economy is going to take to recover or will it even further go down! While we agree its a tough time, nevertheless every tough situation has some thing important to teach us.

One thing Covid teaches us is the Importance of Emergency Fund. It echoes clearly that Emergency Fund is a must. So What is Emergency Fund?, Why everyone should have it?, and How?.

What is Emergency Fund?

As the name suggest it’s a fund set aside only to be used in an Emergency. So can you use it to buy the next new iPhone?, or that fancy Car down the road? The answer is obviously not! It’s the amount only to be used when you have no other source of Income coming in. When you can’t manage your expenses, and is being laid off or became victim of a crisis like Covid.

Why everyone should have it?

Yes, you heard it correct. Not just Individuals, even a Business needs to have some sort of Emergency fund to safeguard its employees and help the Business survive the Crisis by being able to pay off all the basic minimum expenditure. That is not to say, Business shouldn’t look for alternative or cut costs. A healthy Business is the one who is capable of doing it all. Surviving a Crisis is not easy especially if you are operating in a sector that is being hit hard (for example – ‘Theatres’, ‘Cinema Halls’, ‘Gyms’ and ‘Restaurants’ in current Covid19), but having the reserve cash set aside to meet the basic minimum of your operational cost and other expenditures for a period of 3 to 6 months gives you enough time to think with clarity and plan for better handling of Crisis or even turn it into an Opportunity.

For Individuals ‘especially’ keeping aside the Cash can keep their Stress at check, and help them be better prepared to cope with Crisis. Emergency fund won’t  give you a lavish lifestyle or won’t guarantee you funding for the period till the Crisis resolve, you will still have to think of alternative, but it will give you enough Mental Peace to be able to focus on the next steps.

How to have it?

Now that we have established the importance of Emergency fund/Reserved cash for Crisis, you may be wondering how can one have it? Well the answer is pretty obvious Save 3 to 6 months of personal expenditure in a separate account that you can’t touch unless until its an Emergency! Yes, there is no secret sauce to it. You need to, you must Save, Save before you Spend, Save before you Invest, In fact don’t start Investing unless you have the Emergency Fund setup. After all Money is a tool and if it can’t get you peace, it is useless.

All the fancy items can be bought back later, first you need to live below your means and get the Fund setup. It is an essential first step towards your Financial Freedom. And if you already spend more than you earn than by all means either Earn more or Spend less!

Thanks you for Reading. For more such Financial Tips, follow riteFinance. Happy Saving