TECHNIQUES FOR FINANCIAL INDEPENDENCE

01Show, don’t tell: Dating tips for 2020 to add spark to your relationships

Unlike any generation in the past, the Indian millennial is fully aware of who she/he is, in terms of their belief system, values, and non-negotiables. This is a generation that has put financial independence above marriage, prized gender equality, stands up for what they believe in and fought side-by-side to make a place for themselves on the world map.

Millennials made memes a language of love - step aside roses! But when you break away from this supposed homogeneity you realise that each individual is diverse. It is the quirks that make up each person, something that their parents, friends, and neighbours think may be weird, but that one anomaly that the right kind of partner will love and cherish. And so in 2019, Indian millennials continued to defy mainstream expectations, living life on their own terms.

From the earth-shattering Game of Thrones finale to the moon-moving Chandrayaan, Indian millennials’ dating habits proved that the 2019 journey was nothing short of a roller coaster ride. Here’s a look at OkCupid’s recap of how Indian millennials dated in 2019 and the top trends that will rock their dating lives in 2020.

Meme connection: An interesting and quirky trend of 2019 was a large number of people connecting while exchanging memes and cute animal videos. Profile photos that include animals are 3x more likely to get attention. This is a popular choice as users are 4.5X more likely to talk about their hobbies, jobs and pets than they are to talk about what they want out of a relationship on a first date. 40% of the users would like to connect over questions about their goals, hopes, wishes and plans for the future.

Protip for 2020: If you’re hanging out with buster, put a picture up and get ready to talk.

Show, Don’t Tell: 2019 has again proved how right the “Show, Don’t Tell” strategy is in dating. On OkCupid, we match you on the things you care about so the best way to write a great profile is - instead of describing yourself with a long list of adjectives, talk about the things you love and enjoy doing. If you’re an adrenaline junkie, mention the time you went skydiving; if you’re funny, describe the time you made everyone laugh with your maid of honour toast.

Protip for 2020: Don’t limit the pictures you share to just those on your dating profile by connecting your Instagram account because it’ll get you more messages and explain your personality in more vivid detail. In the 21st century India, romance has evolved to be equal and inclusive, a sentiment we see gaining more strength this decade.

Choice: In 2019 it became clear that nobody is looking to be set up by friends or family. An overwhelming 92 percent feel their values are vastly different from their parents’, and a majority of them (79 percent) also do not believe they echo their friends’ choices. As the generation today is witnessing a world with less and less social friction, matching with people online on apps like OkCupid is the best way to interact with potential partners. Moreover, the onset of digital technology and easy access to the internet has played a critical role in helping millennials meet like-minded people and make their choices.

Protip for 2020: Be open to serendipity, put your best foot forward and make it count for you.

Melissa Hobley is CMO at OkCupid

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02

Pro Tips for Reaching Early Financial Independence

You’ve heard before that you have to set money aside — money for emergencies, for buying a car or house, for a kid’s college education, and for retirement. This is hardly news. What you may not have heard before is that setting that money aside helps your future self twice! Below I explain how, and give some pro tips on how to free up some money to actually do this.

The first benefit is the obvious one. Big goals like a college education, retirement, or down-payment on a house aren’t something you can cover out of your regular income (if you can do this, please teach me how!). No, when we’re talking about things that cost tens or hundreds of thousands of dollars or even millions of dollars like financial independence (a.k.a. retirement), we need to save up for them. That’s why you (and I) need to set aside money regularly from our ongoing income.

The less obvious benefit (less obvious at least until I tell you about it 😊) is because we’re all human so when we have more money, we tend to spend more money. Then, we get used to spending at that new, higher level. This is why if you want to reach financially independence, especially if you want to get there before you get gray and wrinkled, you have to guard against expanding your standard of living as your income increases over time.

By saving money, you remove money from your wallet or checking account, so you can’t spend it. This means your future self will need less to retire on.

When I realized this, it spurred me to maximize how much I set aside in my 401(k) and Health Savings Account (HSA). What’s even better is that these are both tax-advantaged accounts, so the federal and state governments are actually helping me with it 😊.

In his highly recommended book, “Profit First,” Mike Michalowicz offers a compelling metaphor for squeezing more profit out of any business. He points out that most of us if we have a brand-new tube of toothpaste, will put a large dab of paste on our brush each time. However, if we’re down to the last of the toothpaste and can’t quickly get a new tube, we’ll use far less paste and make it last for days. This isn’t limited to your business — the same applies equally well to your personal budget.

With this in mind, here are some pro tips on setting money aside.

Impose on yourself a 3% cut on discretionary expenses (you can’t cut your rent or mortgage, but almost all of us can cut down a bit, or more than a bit, on groceries, clothes, and eating out); then, after you’ve gotten used to this slight austerity for three months, rinse and repeat each quarter-year; by the end of a full year you will have reduced your discretionary expenses by 11%. If you’re able to keep doing it for another three years, you will have reduced it by over 38%! Say your discretionary expenses start out at $15,000/year, at the more achievable 11% reduction, you’ll have freed up $1650 for savings. Assuming a plausible 7% return on investment, 30 years later you’ll have accumulated over $167,000!

The next tip is advice I’ve given my kids, which has helped them set aside far more than the overwhelming majority of their Millennial peers. Each time you get a raise or bonus, immediately set aside half for savings; let yourself enjoy the other half so you don’t feel deprived and can keep doing it. This makes sure you’re not expanding your spending at the full rate your income increases. Over time, you will find that your savings rate builds up impressively. Let’s say you get an average annual raise of 5% and use half of it to increase your savings each year. Thirty years later, your savings will be more than double your initial annual income, and more than 50% of your ending annual income!

Once you pay off a loan, whether a car loan, a credit card balance, or a student loan, keep making the same payments into your savings or investment account. Since you weren’t spending that money anyway, saving it will be painless. If you have a five-year auto loan of $20,000 at 3% interest, your payments would be $359. Once you pay off the loan, investing the same $359/month for another five years with the above-mentioned 7% annual return will accumulate over $25,700. Keep at it for 30 years, and you’ll have nearly $438,000 set aside!

Between these three tips, you could easily turn yourself into a millionaire without ever needing to get into the ranks of “the 1%-ers” income-wise!

As a caveat, beyond the obvious fact that the above amounts are a hypothetical example, they need to be taken with another grain of salt. The reason is inflation. According to the Bureau of Labor Statistics (BLS) inflation calculator, over the past 100 years, annual inflation has averaged about 2.78%. This means that if inflation continues at a similar average rate, a million dollars 30 years from now will be worth about $439,300 in today’s dollars. That’s a lot less, but still not too shabby for something you can achieve without taking extreme measures.

Going beyond helping your future self, you’ll also be helping your present self by setting money aside. A therapist I coached once experienced a slowdown in client traffic. While she was perfectly aware rationally that this is just part of the normal ebb and flow of business, the loss of income made her very anxious.

I asked her to imagine how her emotions would be affected if she had $100,000 in an emergency fund. As you can imagine, she would have been far less stressed. This is why I coached her to increase how much she sets aside as soon as client traffic recovers. With that experience reinforcing what she already knew, she was highly motivated to follow this bit of coaching 😊.

What are some of your strategies for keeping your spending below your income and investing the rest for the future?

Opher Ganel has set up several successful small businesses, including a consulting practice supporting NASA and government contractors. His most recent venture is a financial strategy service for professionals, especially mental health providers.

This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

03

Want Financial Independence? Here Are Your First 5 Steps

Financial independence is not about how much you earn, it's about how you manage those earnings. 

When we were young and first paying bills, we believed that money represented independence -- and by extension, happiness. What we would eventually learn is that financial independence is about making smart decisions that give you financial freedom. 

My husband and I grew up in 900-square-foot homes just blocks away from one another. Shortly after our wedding, we were thrilled to buy our own 900-square-foot abode. It wasn’t much, but it was cute and inexpensive. And money worries did not keep us up at night.

Image source: Getty Images

Fast forward, and many of our friends had purchased much larger, flashier homes. Ego drove us to sell our affordable home and buy a bright, shiny, and too-expensive home instead. Sleepless nights began. The fact that some of our new neighbors used lawn chairs as living room furniture and were as anxious about money as we were was no comfort. 

Consider us a cautionary tale -- a couple of kids who had to learn the hard way. If we had it to do over again, here are some steps we would have taken:

1. Forget the Joneses

Guess what all our friends with new cars and impressive houses had in common? Debt. Lots and lots of debt. Today, Americans are more than $14 trillion in debt. I'm not sure what it was back then, but we were all in over our heads. We were trying to live a dream that we hadn't earned and making ourselves sick doing so. Did you know that money is the number one source of stress for 44% of adults? Furthermore, 28% of those surveyed by Northwestern Mutual said that money makes them feel depressed at least monthly.

One more note about keeping up with the Joneses. Of all the couples we hung out with back when we thought we had starring roles on Lifestyles of the Rich and Famous, only two are still married (and we're one of them). I don't know with certainty that that's because of finances, but money is the number one issue couples fight about. 

2. Take advantage of company retirement plans

This tip is almost painful to write. My husband and I both started working early and worked our way through college. And yet, because we were so young and desperate to keep up with the now-divorced Joneses, we did not contribute to our 401(k) plans for years. Not only are there tax benefits, but most employers also match your 401(k) contributions, meaning it's essentially free money. And that's before you factor in the compound interest. 

Even when we did start to contribute, we viewed it as a sacrifice -- and its only recently that we've begun to pat ourselves on the back for those monthly contributions. 

3. Milk company benefits

My husband's company had a great tuition reimbursement program that paid for much of his undergrad work. I now know that I should have looked for a company that offered the same benefit, as it would have saved me $30,000, at a minimum. 

What older, wiser me would recommend is that you look at all the benefits offered by your company and monetize them -- whether it's tuition reimbursement, a company gym, pet insurance, a mobile spa, financial counseling, legal consultations, or free food. Use the company gym rather than paying for your own, save money at the vet by using pet insurance, and stop bringing lunch if your company provides food. 

4. Meet with a financial advisor

It's easy to get the idea that financial advisors are for people with more income, less debt, and a greater knowledge of investing. Those are precisely the folks who don't need the help. 

When you find the right financial advisor, your entire outlook on money will change. You'll worry less about how much you earn and think more about how you're going to use the money you have available.

The Vanguard Group investment advisors crunched the numbers and say a good financial advisor can add 3% to their clients' returns. Doesn't sound like much, does it? But let's see what 3% might have done for us over the years.

For the sake of this scenario, we'll assume that we have invested $1,000 per month for the past 20 years and earned 6% interest. Compounded annually, we would be sitting on $441,427 today. 

If our financial advisor could truly improve the performance of our investments by 3%, that means we would earn 9% interest. Our monthly investment of $1,000 would now be worth $613,921 in 20 years, a difference of more than $172,000.

5. Invest, invest, invest

Here's one of the primary things I remember about being young: I could not imagine getting older. Investing felt like throwing money into a black hole, with no tangible evidence that it had ever been earned. 

Investing your money is different from saving it. When you invest, you buy assets -- such as stocks, shares, or real estate -- with the intention of getting a decent return on that investment. When you save, you put money into an interest-earning account that you can access when you need it.

Investments bring higher returns, but also come with higher risks, and as such should be viewed as long-term strategies. In addition to making you comfortable in retirement, investments can help you:

Outpace inflation by generating a higher rate of return.

Earn extra income by investing in assets that pay dividends. 

Increase your overall net worth -- giving you a greater buying power and making you more attractive to lenders. 

Leverage tax advantages, especially toward your retirement fund. 

Financial independence

Here's what I wish I could tell that goofy young couple, living in a house they couldn't afford, working their way through business school: 

You don't have to know all there is to know about money today. Just get started and learn along the way.

Compound interest is either your worst enemy or your best friend. Make friends with it. 

You're going to be middle-aged one day and you're going to wish you'd started investing while you were still in diapers. 

All that stuff you're tempted to buy is going to be sold in a garage sale one day. The investments you make will be there when you're old. 

True financial freedom means having options. Don't want to wait until you're 80 to retire? You won't have to. Want to pick up and move halfway across the globe? You can do it. 

And that's the point. If you're looking for financial independence, it's up to you to make it happen. Not to belabor the point, but it's not how much you earn; it's how you manage that money that counts. 

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