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5 things to learn from Demonetization...!




Demonetisation surely taught us how one could live life curbing expenses and be able to save Money in such situations. If this could be practised in one's everyday life and the savings could be properly channelised into good investment options then achieving Financial freedom would no longer be a far-fetched dream.

1. Don’t wait for a crunch to budget or spend wisely:

The first consequence from demonetization is also the mainstay of every financial plan: save and spend according to a budget. During the current crisis, people have been forced to take care of their critical expenses, investments and bills, before considering discretionary expenses, while entertainment and demented purchases have been completely done away with. The restricted inflow of cash means that saving has become a priority, as does sticking to a tight budget. While one need not restrict one’s finances to such an extreme in the normal course, it is this forced discipline of budgeting and prioritizing one’s spending that will help you reach your financial goals with ease. So have a healthy dose of discretionary expenses, but not before you have saved and invested.

2. Don’t grasp too much cash; invest it

If you’ve been keeping back money at home to fend off an emergency, rethink the strategy. Cash does offer flexibility and you should have 3-6 months’ worth of expenses at hand. But even this amount should be invested in short-term debt funds, liquid funds or sweep-in savings accounts linked to fixed deposits. If, however, you have a copious amount lying idle, know that you are eroding its purchasing power. The money is not growing and inflation will allow you to buy fewer things with the same amount some years down the line. Besides, you are forgoing the high returns you could have earned by investing it in, say, equity, for long-term goals. Also try to make most transactions cashless and hold only a small amount of cash at home.

3. Don’t change asset allocation in a panic

Panic is virtually a default reaction in times of financial crises or unanticipated developments like demonetisation. Though Indian investors have wizened up since the 2008 economic crisis, many are still rushing to the security of gold and debt after the 8 November announcement. This is yet another opportunity to remember that asset allocation should be changed only in line with your age, short- and long-term needs, risk appetite and proximity to life’s goals. While one should re-balance from time to time to retain the desired asset allocation, do not take erratic decisions and risk your investments by reacting to short-term aberrations.

4. Keep pace with tech to handle your finances

It pays to keep pace with technology. Literally, as demonetisation has proved. Though banks and other institutions have been pushing online and mobile transactions for a few years now, demonetization may prove to be the inflection point. Even as people are rushing to download mobile wallets and register for Net banking and online transactions, the clear learning is that it is critical to keep track of the latest tech upgrades. The people who were already paying their bills via Net banking or mobile wallets, and using credit cards, did not suffer as much as those who weren’t. It’s high time then to shift to mobile banking, downloading apps for financial transactions, and learning about online transfer of funds. It will not only increase your ease of transactions, but also reduce time and help to save money.


5. Buy your kid a piggy bank, give pocket money

The final takeaway from demonetization is to provide your child a piggy bank and a regular supply of pocket money. The children who already have these proved to be a boon for their parents during the current crisis, with lower currency and loose change helping tide over the difficult time. The learning, however, is not to rely on this stash as a contingency fund since these minuscule savings are unlikely to help you during a bigger financial crisis. On the other hand, the habits of regular saving, discrete spending, making their own purchases and focused saving for small goals will inculcate financial discipline in kids. They are not only likely to manage their finances better as adults but also handle crises with greater equanimity. We at Kushal Landmarks request you all to save your hard earned money & invest it wherever you expect good returns. Work nicely & invest wisely…:)

 Courtesy: Economic Times


This post first appeared on Surgical Strike On Black Money' To Fight Against Black Money Corruption:, please read the originial post: here

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5 things to learn from Demonetization...!

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