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on only investing (after a great bargain) in "nice to have" and ignore (hate if you can) the "need to have" till you have the six months reserves.

Every month, you should draw up your budget, and follow it like a religion. The first thing you should do is separate your savings account from your normal account. Take pride (as a couple if you are married) on every penny you save and at the end of the month try to find more avenues how to maximize the savings the coming month.

If you are able to do this month on month, you will realize that it will be possible to plan your budgets across wider time spans, like an year also! Find out the alligators that are waiting to swallow your cash streams and kill them first, e.g. your credit cards, loans at high interest rates, EMI, etc. The more you reduce them, the lesser will be your month on month costs and more will be your cash pool, your prized savings!

Once you have savings, treat it as your capital. You need to split this in investments that will cover you for your entire life. Do avoid making it complicated, break it in long term and short term. As a simple rule, investing 25% of your annual savings in long term (life insurance, property, etc) will be a good bet initially and slowly you should maximize this as it creates assets for you.

I hope this looks like a doable plan, and should there be any deviations you have, do not mind daring the step. Remember, as harsh as it sounds, but a lot of our problems are structures to protect our false pride and false status in the society. Take a back seat on these for a while and you will have a more pleasant family and personal life.

Last but not the least axiom to ensure that you do not abandon this path!

"Cash is Security, and Security is the confidence"

All the best for your strive, and I am sure you will hit gold sooner, rather later.

Learn more about this author, Rajesh Saxena.
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