Not many of the younger generation may have heard about Chris Cairns, the former New Zealand cricketing star currently fighting for his life in Australia after suffering an aortic dissection — a tear in the inner layer of the aorta — last week.
But cricket enthusiasts and BlackCap fans would fondly remember him as one of the finest all-rounders to have played the sport for New Zealand in recent times. With his powerful hitting and medium pace abilities, Cairns represented his country in 62 tests and 215 ODIs. He scored 3,320 runs, took 218 wickets, and batted at an average of 33.53 in the long format, and blazed through ODIs with 4,950 runs and 201 wickets. His unbeaten 102 against India in the 2000 ICC Champions final saw New Zealand winning that trophy.
Cairns retired in 2006 but his life thereafter has been a bit of a roller-coaster ride, to put it mildly.
From winning a libel suit and compensation worth 142,000 dollars in the UK against former IPL commissioner Lalit Modi in 2012 (for a tweet insinuating Cairns' involvement in match-fixing as the reason for his absence from the Indian Premier League) to being acquitted for perjury and misdirecting the court in relation to match-fixing allegations against him by some players in 2015, to owning a virtual sports company to washing bus shelters, to becoming a diamond merchant to ultimately driving trucks and washing bus shelters for 17 dollars an hour with the local county, Cairns saw many ups and downs.
Where did it all go wrong for the New Zealander and what can we learn from the challenges he has had to face? While rags to riches stories are always inspiring, riches-to-rags stories, too, hold many valuable lessons. Here are 4 ways to save and increase your hard-earned money, so that your wealth provides a safety net in dire times:
Plan, Plan, and Plan
While endless and mindless splurging on your favourite things is extremely tempting, it is just as dangerous and reckless. Your expensive shoe collection or your ever-growing shopping bills won't rescue you in times of financial stress.
Hence, start out with an assessment of your income, liabilities, and risks and chalk out a plan that details your financial goals, the amount required to achieve them and the duration. This will enable you to take control of your income and expenses and have an effective investment strategy to ensure a comfortable retirement and achieve other goals.
A sudden financial windfall makes us want to spend more since we feel it will last forever. But, having your life mapped out financially ensures that you can foresee what’s coming and stay away from habits that put your financial health in danger.
Save for rainy days
As Robert Kiyosaki puts it, “It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” Making money is much easier than preserving and saving it for the long term. And let's face it, we all face rough patches in our lives, where financial stress can be overwhelming, as was the case with Cairns.
Getting your money to work for you even in times like these can be tough, but you can get an edge by setting aside an emergency fund, the purpose of which will be to help you tide over tough times without having to dip into your investments.
Ideally, an emergency fund should cover all compulsory expenses for at least 6-12 months with a comfortable margin for any unanticipated expenditure. You can also consider investing these funds in a liquid mutual fund so that you continue to earn returns on your rainy day reservoir.
Invest Hard
Do not discount the power of patience, time, and compounding. Investing allows you to harness the power of compounding, which is simply earning interest on your interest, and significantly multiplying your gains in the long run. In fact, Warren Buffett, perhaps the richest investor on this planet, credits his extensive wealth to compounding.
Investing allows you to harness the power of compounding
Let's say you invest just Rs 5,000 per month in the market for 20 years. At 12 percent assumed returns, you’ll end up earning more than Rs 37,00,000 over your invested total of Rs 12,00,000, taking your overall gains to nearly Rs 50,00,000!
Most of us like to increase our expenses when we get a raise. Instead, increase your investments every time you earn more. One day you’ll pat yourself on the back for this.
Become financially responsible
It takes ages to earn wealth, but only seconds to squander it. Overcome the “poverty mindset” that you will never have enough money when you have the power to change that reality. Seek out a financial planner who can help you realise the value of money and bring your goals on track. Invest in learning as much as you can about financial planning and personal finance so that your wealth does not slip out of your hands like sand, all because of some poor money choices and adverse life events. Take your first step, today.
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