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Stuck in a Rut: Entrepreneur Unable to Save with Growing Kids - Help!

Ramalingam Kalirajan |7510 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 21, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - May 25, 2024Hindi

Hello , am a 45yrs entrepreneur, working hard and sincerely, My problem is am unable to save even 1 Lakh rupees till date .. I try to track my expenses but after 2-3 days I forget... Life is going on meeting daily expenses but unable to grow or save money.. I am in a stage of depression as kids or growing up and though am able to meet thier basic needs , I am now not confident on savings for thier higher studies and marriage

Ans: You’re a hardworking 45-year-old entrepreneur who has been struggling to save money despite your best efforts. Meeting daily expenses is manageable, but you find it challenging to save for your children's future, such as higher education and marriage. This situation is causing stress and leading to feelings of depression.

Firstly, it’s important to acknowledge your commitment to your family and your business. Being an entrepreneur is challenging, and balancing business responsibilities with family needs is a huge achievement. Your desire to improve your financial situation and plan for your children’s future is commendable and shows your dedication as a parent.

Identifying the Problem Areas
Lack of Savings Discipline: Despite trying, you’ve been unable to save consistently. Tracking expenses only for a few days before stopping is a common issue many face. It indicates a lack of structured financial planning.

Overwhelm and Stress: The stress of managing day-to-day expenses, coupled with the worry of future financial needs, is causing you to feel overwhelmed. This stress can further complicate your ability to manage money effectively.

Absence of a Clear Financial Plan: Without a structured financial plan, it’s difficult to save and grow your money. A plan provides direction and helps in setting achievable financial goals.

Steps to Take Control of Your Finances
1. Establish a Realistic Budget
Start Simple: Begin by setting a realistic and simple budget. Track your income and list down all your expenses. Categorize them into essential (like groceries, rent, utilities) and non-essential (like eating out, entertainment).

Use Technology: Leverage budgeting apps to help you track expenses automatically. These tools send reminders and help you stay on track without much effort.

Review Weekly: Instead of trying to track every day, set a time each week to review your expenses. This will help you stay consistent.

Set a Savings Goal: Include a savings goal in your budget, even if it’s a small amount initially. Start with what you can afford and gradually increase it.

2. Automate Your Savings
Direct Savings: Set up an automatic transfer to a savings account or a recurring deposit as soon as you receive your income. This ensures that saving happens before you spend.

Start Small: Even a small amount like Rs. 1,000 per month, if saved consistently, can grow over time. As your financial discipline improves, you can increase this amount.

3. Focus on Debt Management
Prioritize High-Interest Debts: If you have any debts, especially high-interest ones like credit cards, prioritize paying them off. This will free up cash flow and reduce financial stress.

Negotiate Better Terms: If possible, negotiate with lenders for better interest rates or more manageable payment terms. This will make debt repayment easier.

4. Plan for Long-Term Financial Goals
Children’s Education and Marriage: Start by estimating the future costs for your children’s education and marriage. Based on these estimates, set aside dedicated savings or investment plans.

Systematic Investment Plans (SIPs): Consider starting SIPs in mutual funds that align with your risk appetite and financial goals. SIPs are flexible and can help in building a corpus over time.

Diversify Investments: Don’t rely solely on one form of savings. Diversify between fixed deposits, PPF, and mutual funds. This balance ensures safety while also providing growth opportunities.

5. Address Emotional and Mental Health
Seek Support: If stress and depression are affecting your well-being, consider speaking with a counselor. Mental health is crucial for effective decision-making.

Family Involvement: Involve your spouse in financial planning. Sharing responsibilities can lighten the load and also bring new perspectives.

Mindfulness and Relaxation: Engage in activities like meditation or yoga to reduce stress. A calm mind makes better financial decisions.

6. Consult a Certified Financial Planner (CFP)
Get Professional Advice: Consulting with a Certified Financial Planner can provide you with tailored advice. They can help you create a structured financial plan that aligns with your goals.

Regular Reviews: Regularly review your financial plan with your CFP to ensure you are on track and make adjustments as necessary.

Final Insights
Your situation, though challenging, is not uncommon. By taking structured steps such as budgeting, automating savings, managing debt, and planning for long-term goals, you can gradually build financial security. Remember, even small steps can lead to significant progress over time. Addressing the emotional aspects of financial stress is equally important, so don’t hesitate to seek support where needed. With discipline, planning, and professional guidance, you can achieve your financial goals and ensure a secure future for your family.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.