Our needs, aims and actual financial realities

It's been 15 days now, since we have added the a very positive word in our day to day dictionary again i.e. “ATMA NIRBHAR Bharat” i.e self-reliant and self-sufficient Bharat. If we try to remember Mahatma Gandhi called for self-reliant and self-sufficient villages while getting the freedom. Now, the Government is taking a lot of efforts to achieve the same goal at the national level. I want to ask the question to my readers, are we really ready for being “ATMA NIRBHAR ''?. When we want our country to be the “ATMA NIRBHAR”, then we should aim for inclusive growth of each sector of the society by taking a good amount of  efforts for becoming self-reliant and self-sufficient.

Since the last century from Swami Vivekanada to every great Economist, Educationist, and scientist have claimed that the upcoming period or century belongs to the BHARAT. There is a need to learn the art of “FINANCIAL SURVIVAL” till we achieve the benchmark which we have set for ourselves. Financial survival is the key for the next six months in the current scenario. The question is, are we ready to change and upgrade ourselves to make our country a really great country of the world? There is no doubt that again Bharat will be known as “SONE KI CHIDIYA” but one thing we should remember is that great success also needs some changes in the way we do business , lifestyle we carry or even the way we manage our financials.

This is the high time to know about the difference between the past, present and the future financial behaviors of the individual. It's pretty clear that we cannot continue the same financial behavior or our spending habits as before. I understand that the common man is confused about his financial strategies as on one hand either he is losing the job or getting the less salary in the existing jobs. Being the head of the family, even if he/she is facing the stress one must understand that he/she should be ready with the financial plan for at least 6 months or 1 year. You probably claim to record all the transactions and compare it with the next month. I appreciate it if you are doing this activity on a regular basis. Let’s understand the method which an expert always follows while doing the financial planning.(And remember it's not a rocket science, you can also do the same)

Financial planning has 6 steps.

1. Recording all the financial details always (one may use the app like expense manager etc)
2. Analysing the past trend of income and expenditure with the help of the recorded data of financial transactions
3. Visualising the changes in income or jobs in the near future
4. Formulating the strategy to accept and adapting the changes in the day to day life
5. *Becoming financial inclusive from home itself. Conveying the financial planning to each member of the family and making them part of the team for successful implementation. Person can become financially independent only when his or her family supports him or her wholeheartedly.
6. Actual facing the situations and analysing the variance in planned policy and actual scenario.

*I have included the 5th point, as I am writing this blog not only for understanding financial management but also to consider the emotions, feelings of family while teaching good financial behavior.

Let's take a case study to understand the current situation of the middle class person from India.

Abhay is working as production manager in the private limited company in Maharashtra, India. His wife Nutan is a school teacher in a private school. They are having two children, the elder one is pursuing hotel management while the little girl is studying in the school. Now let’s understand the financial behavior of Abhay and his family for the last 3 months with the help of their income and expenses details.

Particulars	January	February	March
Opening balance cash	0	3,000	2,200
Income
Abhay's Net salary	45,000	45,000	45,000
Nutan's Net salary	35,000	35,000	35,000
Other income (Interest / Dividend )			6000
Total Income	80000	83000	88200
Expenses
Recurring expenses
Flat rent + Maintenance charges	12500	12500	12500
Maid's salary	4000	4000	4000
Vehicle fuel + Maintenance charges	8000	10000	6000
Family shopping	6500	8500	4000
Grocery + Vegetables + Milk purchase	8000	9500	11500
Outing expenses	8000	9500	6000
Internet + Electricity + Netflix	3000	3500	4500
Total Recurring expenses	50000	57500	48500
Non - Recurring expenses
Purchase of water purifier	11000
Half yearly insurance premium			15000
Purchase of microwave		12300
Total Non Recurring expenses	11000	12300	15000
Savings
Recurring deposit with banks	5000	5000	5000
SIP in Mutual Fund	6000	6000	6000
Liquid cash kept at home	5000	0	5000
Total savings	16000	11000	16000
Closing balance of cash	3000	2200	8700

If we analyse the spending patterns of recurring and non-recurring expenses along with the level of the income, we can easily conclude that Mr Abhay belongs to the middle class family. From the month of March each person is observing the changes in the income and expenses as well. In the next blog, we are going to understand how to cope up with this situation and what changes are required in the financial behavior with the help of Mr Abhay’s case study.

I would like to thank all the readers of the blog. Kindly download the attached the excel sheet having the financial details of Mr Abhay.  Please prepare your own financial details for the last 3 months to plan your financial behavior  with the help of the next blog.

Click here to download the excel file Excel working

(If you are good at “Marathi” the regional language of Maharashtra, India, you can read the “Marathi” version of this blog by clicking the link https://managingrupaya.blogspot.com/2020/05/financialrealities.html )