Securing your financial future usually involves some relatively simple steps--start saving at the right time and invest in an age-appropriate asset class. But that's easier said than done. Rising costs and our fast lifestyles mean that many of us can find ourselves living paycheck to paycheck, with little scope for any investment money.
Instead of living in constant stress worrying about our financial future, it's a good idea to broach some difficult financial conversations that can make a huge difference in helping find the resources you need to meet your financial goals. An investment of Rs5,000 a month could help you accumulate Rs10 lakh at the end of 10 years, considering an annual growth rate of 10% with some SIPs, for instance.
Negotiating a raise
Asking for a raise is anxiety-inducing for the best of us--we don't want to rock the employer-employee boat too much. But negotiating a well-deserved raise is an art that could a long way in serving our financial goals. The first step is to know how much you should be getting paid in terms of market rates. Even if you believe you are being underpaid, there is a time and place to bring that up with your boss. It's usually best not to spring a surprise on him or her during a stressful period, or just after you've signed a contract to work on a mutually-agreed compensation. That can reflect poorly.
The second step is probably the hardest: ask! It's rare for your boss to just give you a raise if you don't ask. You should probably highlight how your work is adding value to the business, and how a competitive compensation is good for the company's employer brand and the business. If your request is turned down, ask for a specific performance plan that could help you achieve that goal, or ask for other benefits like paid vacation days. If you're checking off all the boxes and your employer still can't afford to pay a higher salary, then you might want to consider jumping ship.
One should always ask for a minimum 20 per cent hike on base salary between jobs, Bhajneet Dhingra, a senior recruiter told HuffPost India. If you have a niche skill, you can easily negotiate up to 40 per cent raise for a new job, he says.
Talking to your spouse
Financial worries can strain your personal relationships. Even before you decide to get married, it's a good idea to talk to your partner about your long-term lifestyle goals and be honest about your financial priorities and liabilities--do you have any long-term debts to pay off, how you hope to retire, whether you want to have kids, etc.
If your financial goals are aligned, you are more likely to come up with spending strategies to meet those plans. If you're married and if you choose to have separate bank accounts with your spouse, it's still a good idea to communicate regularly with our partner on your long-term spending goals and how you both are progressing. Even decisions like renting a house versus buying can make a huge difference in your financial well-being.
Ask for that loan
As with everything, there is an opportunity cost of any job or professional commitment. 'Opportunity cost' is the money you could have made over a period of time had you chosen to not take your current job. In other words, it's everything you give up to make time for that commitment. So if your salary is X, the cost of that job opportunity isn't your salary X times the number of years you put in, but the potential money you could have made if you founded your own business or had a share in the profits of your company if it did well in a comparable period, for instance.
But often times, even people with good ideas and entrepreneurial acumen are too shy to ask for a loan. But the vast majority of companies that started small were first funded by small loans from friends and family. Securing angel investing is an art in itself but there are a number of emerging online platforms that make it easier, crowdfunding for instance. Here, again, communicating candidly about your plans will be key.
Talking to your landlord
Property owners usually expect a standard increase on your rent that is built into your lease contract and it can be daunting to renegotiate those terms. Here, too, there are ways to save money on rent by, for instance, negotiating a two-year lease, instead of the standard 11-month contract.
You can offer to pay a few months of rent in advance as a way to bring down the rent from the standard prices. If you are a good tenant, then you can also show how you're contributing to maintaining the property, and making sure it's in good shape. If you shave Rs1,000 off your rent each month, that's Rs 12,000 a year that can be used towards buying insurance or your other financial goals. Here, too, you should start by doing research on existing property and bringing it up with your landlord a few months before your lease expires.