TLDR;
The video discusses the financial challenges individuals in their 40s may face, such as job loss or income reduction, and provides guidance for those in their 20s to 40s to prepare for these challenges. It uses the analogy of the Snakes and Ladders game to illustrate the financial journey, highlighting the importance of making the right decisions to climb up (ladders) and avoid pitfalls (snakes). Key points include the significance of skill development, avoiding excessive debt, building a contingency fund, and the importance of term and health insurance.
- Preparing for financial challenges in 40s.
- Skill development and continuous learning.
- Avoiding excessive debt and EMI traps.
- Building a contingency fund for emergencies.
- Importance of term and health insurance.
Intro [0:00]
The video introduces the financial challenges that individuals in their 40s often face, such as increased workload, job loss, or reduced income. These challenges can coincide with significant financial responsibilities like children's education, house purchases, and retirement planning. The content aims to guide viewers, particularly those in their 20s to 40s, on how to prepare for these potential crises by making informed financial decisions. The video encourages viewers to share it with others in the same age group and emphasizes the importance of planning to mitigate the impact of these challenges.
Snakes and Ladders steps [2:55]
The financial journey between the ages of 20 and 40 is compared to the game of Snakes and Ladders, where good decisions act as ladders, lifting you higher, while bad decisions are like snakes, causing you to fall. The video aims to identify the steps that can help individuals climb the ladder and those that can lead to a fall in their financial lives during this period.
Ladder 1 [3:28]
The first ladder represents the initial career growth when joining a job. Among a group of new hires, only a few experience significant growth due to their dedication to acquiring necessary skills and impressing their team managers. This initial effort leads to better appraisals and sets the stage for future advancement.
Snake 1 [4:02]
The first snake appears around the age of 25 or 26, often in the form of wedding expenses. While weddings are a significant life event, many people overspend, often taking out personal loans to cover costs like cinematography and videography. This can lead to a large portion of their income going towards EMI payments, reducing their savings and hindering their financial progress. It's important to plan and be financially prepared for wedding expenses to avoid this debt trap.
Ladder 2 [5:46]
Term and health insurance are presented as a ladder. Many people view the premiums for term and health insurance as an unnecessary expense. However, these policies provide crucial financial protection against life and health risks. Term insurance offers significant coverage at a low premium, protecting dependents in case of a life risk. Health insurance is also vital, especially during job transitions when company coverage is lost. Investing in these insurances is a step that can lead to multiple steps higher in financial security.
Snake 2 [8:14]
The second snake is the EMI (Equated Monthly Installment) trap, where individuals purchase unnecessary products on EMI due to the availability of "zero cost" and "easy" EMI options. This can jeopardize their future financial freedom. A rule of thumb is suggested: keep total EMI payments less than 40% of monthly income to avoid risking financial stability.
Ladder 3 [9:40]
A contingency fund is highlighted as a crucial ladder. It is important to set aside enough money to cover six months of monthly expenses to address unexpected financial crises. This fund should be parked in mutual funds like ultra short-term funds, low-yield funds, or arbitrage funds, rather than a regular bank account, to avoid impulsive spending.
Snake 3 [10:43]
The video references a "biggest snake" which can be crossed by using all the ladders in the right way. It also mentions financial independence and retirement, suggesting viewers to watch a video on the channel's Telegram channel about a fire-related calculator.
Ladder 4 [11:29]
Skill upgradation is presented as a significant ladder. While many people focus on skill development early in their careers, they often neglect it after their 30s, leading to job-related crises. Continuous investment in skills is crucial, and if there are no major advancements in one's industry, creating a passive income stream is advisable. This could involve starting a side hustle or generating rental income from property. Saving at least one income when both partners are working is also recommended.
Ladder 5 [13:58]
Networking is highlighted as another important ladder. Building a network is crucial for career advancement and business growth, especially as one gets older. Networking can provide access to job opportunities and valuable connections.