Talking about Personal Finance is a constant struggle for me. I don’t want to sound like a preachy expert. I don’t want to be appearing to impress by using jargons and numbers. And I wouldn’t like to spoon feed people.
But I do want to share what I know and hope that people take care of their own personal finances.
I do not know if I am failing or succeeding. And I don’t care. It’s the journey that interests me.
Along this journey of talking about personal finance, I have realized that it’s better to show rather than just tell. Also, more than any theory, there is a need for a tool in our hands that can help us manage our money.
That tool should be easy to use and give us necessary data/metrics so that we can improve our money management further.
That brings me to the three guiding principles that have helped me conceptualize the software. (Check out RupeeManager, being launched in September, 2009)
The three principles of money management are (I call it the Three M Principle…..mmm):
1. Measure: (Know Yourself)
2. Manage: (Know how your money is doing)
3. Make Your Rupee Work: (And not just You working for Money!)
1. Measure: It’s common knowledge that whenever you need to manage something, you need to measure it first. I was talking to my sister the other day and she told me she knew how to handle her money. (She was polite and didn’t tell me that she doesn’t need a blog to tell her how! And she’s right). She said, “just spend less than what you earn, and everything is fine”.
“Brilliant”, I said. But, to my questions about the numbers that proved that she was on track, she drew a blank. If she had numbers on what percentage of the earnings go into what categories of expenses, we might have had a discussion on how to improve upon that. If she had figured out her risk profile/appetite, we could had a discussion on whether her investments match that or not.
In other words, if we had a way to measure income, expenses, portfolio, risk profile, etc, we could have a discussion on how to improve them. No records, no improvements. Or perhaps, ignorance is bliss! 
The RupeeManager is primarily aimed at helping you measure your rupee. Once you are aware, other things follow.
2. Manage: Now that you have numbers ready, the improvements follow naturally. For example, you see that your percentage spend on “eating out” is 2-3 times the monthly grocery bill or it forms 25+% of your expenses.
It’s perfectly okay if “eating out” is high on your agenda. But if the figures scream at you, you would think twice before rushing out for another “eat out”.
Also, you will get an idea how to balance your portfolio according to your risk profile. You will match the portfolio with your risk appetite and see if you can take more risk or go more conservative. In other words, you get to decide your asset allocation strategy.
3. Make your Money Work: Other than tracking your earnings and your expenses, it is important to see if your money is working for your future.
We are adding a feature where you can customize your spending plan between fixed expenses, discretionary expenses, short term savings and long term investments. It’s like assigning goals for your money. (Sehwag, go and batter them into pulp. Dravid, stick around till the end. Dhoni, Yuvraj, finish it off. Etc, etc. )
The software that we are building will be based on these three principles of money management. So that’s what “RupeeManager” will be all about.
Do you have any suggestions? We’re listening.
However it still remains a mystery as how less we know about personal finance. The only solution is to share whatever useful stuff you find.
Some readers have come back to me saying that I should facilitate easy sharing of my content. So go ahead share it with your friends and family
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Coming Soon! A Personal Finance Workshop & Software "RupeeManager". Stay tuned
I just came across a software for personal finance management called ‘Perfios’.
You can try it out at http://www.perfios.com