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  1. How to become a millionaire: The only thing stopping you is your laziness

How to become a millionaire: The only thing stopping you is your laziness

Are you one of those who never pay their bills on time? If yes, then you are making one of the biggest financial mistakes of your life!

By: | Updated: September 25, 2017 11:13 AM
How to become a millionaire, saving, investing, not paying bills on time, credit card bills, electricity bills, phone bills, late fees, financial discipline, laziness, millionaire, equity, debt funds, saving, investing, not paying bills on time, credit card bills, electricity bills, phone bills, late fees, financial discipline, laziness, millionaire, equity, debt funds In our hectic and busy work schedule, we hate having to pay bills even though we can do it through the click of a button.

Are you one of those who never pay their bills on time and also seldom care about its implications? If yes, then you are making one of the biggest financial mistakes of your life. True, the amount you will be paying as late fees may be small, but remember that you are paying it every month, and taking into consideration the number of bills these days – ranging from mobile, electricity and credit card bills to school fees – the late fees, if saved and invested judiciously, will culminate into a bigger amount over the long term, which you are unable to save just because of your laziness.

Even if you are able to save, say, Rs 500 per month by paying your bills on time and the same amount is invested, then you can make big money over the long term. You might be surprised by what you can do with as little as Rs 500 per month by resorting to ‘Financial Discipline’. In fact, while most of us tend to concentrate on financial planning & budgeting for the future by analysing the inflow and outflow of funds via sophisticated algorithms, we tend to miss out on a very basic aspect of financial discipline: ‘Paying our bills on time’.

“In our hectic and busy work schedule, we hate having to pay bills even though we can do it through the click of a button. With an increase in the number of amenities, we now have to pay such fees across multiple service providers like gas, phone, electricity, credit cards and even our income taxes, which carry a penalty if not paid on time,” says Dasvir Ankhi National Head-Wealth distribution and Advisory Business, Sales, Tata Capital.

Postponing good economic decisions is worse than making bad ones. The amount you could save through paying your bills on time, if prudently invested in various instruments like fixed deposits, mutual funds and stocks depending on your risk profile, investment goal and time horizon, can help you build a substantial corpus for future needs.

Take the following example:

 

Growth Rate

20 years

30 years

40 years

8% (Debt fund)

Rs. 2,94,510

Rs. 7,45,180

Rs. 17,45,504

10% (Balanced fund)

Rs. 3,79,684

Rs. 11,30,244

Rs. 31,62,040

12% (Equity diversified fund)

Rs. 4,94,628

Rs. 17,47,482

Rs. 58,82,386

In the table illustrated above, an 8% growth rate can be achieved by a good debt fund which is low on risk. “A return of 10%-12% can be achieved by investing in a balanced fund and an equity diversified fund, respectively, over a long period of time – at higher risk. The difference is clearly visible – Rs. 500 invested every month for over 40 years will generate only Rs 17 lakh in a debt product while close to Rs 60 lakh can be generated via equity diversified funds,” says Ankhi.

While it is important to invest in the right assets, some individuals take the conservative route and ignore the stock markets altogether. Keep in mind that to beat inflation one does not have any option but to invest in a growth asset like equity, which can give kicker returns over the long term.

“Equity markets help you to build substantial corpus over the long term. One of the investment avenues — Mutual Funds – has proven to be a fantastic investment instrument whereby one can invest as little as Rs 500 a month like a systematic investment plan (SIP) to be managed by professional experts,” informs Ankhi.

To help you create a corpus to invest without having to shell out more of your savings, here are 2 tips to pay your bills on time:

# Thankfully, a lot of service providers have tied up with banks to ensure your bills are paid as soon as they are generated. All you need to do is follow the instructions via your net banking once and forget about it.

# You can also get discounts up to 10% if you prepay for certain services like electricity. In case of school fees, you are likely to get a decent discount if you pay the fees for the full year in advance instead of paying every month.

Here we have assumed only Rs 500 being paid as late fees, while many people waste thousands of rupees in late payment fees and penalty interest every month. Imagine how much they would be able to save and accumulate just by being a bit careful.

If you are able to do this, then that foreign vacation also may not remain a dream. Thus, having an organised life plan goes a long way in ensuring financial security!

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