Personal inertia | Financial inertia


We are discussing here the linkage between ones own personal system or attitude which directly reflect the way they react to timely financial orderliness/ investments/updating records or for that matter simple personal things in their life. The difference is between their laziness and their dynamism.

Those who have the inherent personal quality of being lazy, will, in all likelihood, also have a disorganized method of managing their finances. Let’s assess such people’s financial orderliness. The last time they might have updated their bank passbook would have been a few months ago. Even If the bank has given them monthly statements they are not locatable because they were not filed at all. Most of them in that class (lazy) forget to renew/reinvest matured bank fixed deposits on time losing interest benefits.

Contrary to the above a methodical personality will have his wardrobe neatly arranged and can find anything easily. Their room is spick and span. The work desk is not stacked with unnecessary papers like that in a government office but is neat and orderly. If wardrobe, work desk and other things in the room are messy, untidy, disorderly, whatever is the excuse, it clearly shows that the person concerned is lazy. Giving explanations such as ‘I don’t get the time’ is merely rationalizing.

There are people who do not or cannot keep a track of the SIP investments in their mutual fund schemes and the market value. If asked their reply is ‘I don’t know’. It is imperative they very much need to change their attitude towards finances. If they don’t, they will never be able to grow the wealth whatever they possess or even lose it.

An attitude of carelessness and disinterest in the money matters will leave them constantly struggling to make ends meet. They will be continuously working to bring money home for monthly sustenance. Such people must get over this lethargy. Here are 10 things one should do right away if their attitude is as in the aforesaid category,

Financial records:

Get your bank account books updated, file your bank statements and do your bank reconciliations. Use a software program such as Tally to write your finance books. Make sure your income tax documents are filed and in order. Consult your chartered accountant to ensure this. Make sure your equity and mutual fund investment records (account statements, broker contracts demat records etc ) are up-to-date and in order.

Investments’ performance and switch if required:

Once your investment s records are updated, study each investment made and decide next action. Seek help from a professional investment advisor if required. If you decide to exit do so right away and simultaneously study prospective investments to ensure that your money does not languish in your bank savings account.

Loan details:

Collate all your loan details including terms on which the loan was availed. Compute the amount outstanding and find out if this can be reduced if you have a surplus amount, repay your loan to the extent possible and if not, then find out if there is another lender willing to take on the loan at a lower cost, and switch right away.

Surplus money investment:

Make sure you don’t allow any of your funds to simply lie in your bank savings account. If you have not located suitable investments, create a bank fixed deposit of the funds till you do so.

Create a budget:

Money simply drains out of yours hands due to expenditures, especially if you don’t plan them out. Make sure you are in control of your expenses by creating a budget.

Follow up on monies due:

If you have given loans to friends and family, make sure you get them back when they are due.

Adequate insurance:

Protect your family from a financial catastrophe in case of your unexpected demise or ill health. Consult an insurance advisor to work out how much insurance you should buy.

Set a reminder for payment of premiums for all your insurance covers (life, health, car, etc). Paying premiums on time will ensure that your policies don’t lapse.

Credit card:

Credit card dues are the most costly loans. Pay dues on the due date to avoid penal interest.

The inference is if one is alert and makes sure that he is completely up-do-date on finances he need not have to pay unnecessary interest but at the same time grab opportunities to earn money by timely investments. This is ‘Financial inertia’.