Sushmitha, The 1% Club member, became a mom 3 years back. This major event made her realise the importance of financial planning, especially for her daughter’s future. In this interview, Sushmitha shares how she became financially independent and can now devote more time to her family and herself. Edited Excerpts

Tell us about your corporate job experience and what were your savings plans then.

I began my journey at National Instruments in 2013 as an intern and transitioned into a full-time role after completing my internship. As an R&D engineer, I specialised in developing test and measurement solutions for Bluetooth and WiFi devices and briefly delved into semiconductor testing solutions before taking a break. Throughout my 11-year tenure at the company, I embraced various roles that kept me intellectually stimulated and allowed me to continuously enhance my expertise in my field of study.

During this period, my approach to savings was initially unfocused. I primarily invested in traditional avenues such as RDs, FDs, Gold, and PPF without thorough analysis. Additionally, I held RSUs (Restricted Stock Units) acquired at a discounted price from my company for a substantial period, approximately 7-8 years.

Around five years ago, my husband and I made our first joint investment in a real estate plot in Bengaluru and ELSS funds for tax-saving purposes. This marked our initial foray into mutual funds.

Despite a modest monthly expenditure throughout most of my career, I lacked a structured saving plan. While I was fortunate to retain my earnings over the years, it was not a result of deliberate financial planning.

You have travelled to 10+ countries in 4 years (2015 to 2019). How did you plan your international trips?

During two of these 10 countries visited, I found myself on a work trip. However, reminiscing about two of the international journeys, I recall relying solely on funds in my savings bank account due to my lack of foresight and planning.

For approximately six other countries, my husband and I acquired an HDFC Diners Black card around the 2017/2018 timeframe, which was one of the premier cards for rewards during that period. Leveraging the card’s benefits, we accumulated substantial points. Nearly 50% of our expenses could be covered through these accumulated points.

What was the reason you quit your well-paying job?

From my earliest memories, I’ve pursued excellence not only in academics but also in extracurricular activities like dance and oil painting. Throughout school and college, I maintained top grades while passionately honing my skills in dance, performing in numerous dance programs, and showcasing my paintings in solo exhibits twice.

After striving for perfection across various domains for over two decades, I reached a point where I struggled to sustain such a demanding lifestyle. It dawned on me that I hadn’t paused or truly relaxed in years, neglecting to prioritise self-care and personal fulfilment.

This realisation prompted me to make a significant decision: to step away from my job. My husband and I carefully assessed our commitments and finances, concluding that we could navigate this transition for at least six months. The goal was to embrace a slower pace of life, allowing ample time for self-care and nurturing my passions while being fully present for myself and my family.

This period of introspection marked a pivotal moment in my journey, where I chose to prioritise personal well-being over professional achievements.

What were the events that made you get into finance?

1. Drawing inspiration from fellow colleagues.

I had seen mostly men make financial decisions in the family for the most part of my life. I held the belief that as long as someone managed the family finances, I need not concern myself deeply. However, a female colleague shattered this misconception by exhibiting exceptional financial acumen, clarity of goals, and control over her finances. Her example served as a wake-up call.

Throughout our lives, we’re encouraged to pursue careers and earn but the importance of financial literacy and management remains largely overlooked. It became evident that despite years of earnings, our family had invested little effort in securing our financial future through meaningful savings and investments. Additionally, witnessing a colleague in his mid-40s achieve FIRE while planning for retirement, sparked a desire within me to experience the same sense of security and contentment.

2. Embracing motherhood to a girl child.

As a mother, it’s imperative for me to set positive examples for my daughter. One such example involves demonstrating financial competence and control within our family unit, as it fosters a sense of security. I recognized that unless I was proficient in managing finances, I wouldn’t be equipped to impart financial knowledge and skills to her.

3. Taking a career break.

The decision to take a career break provided me with valuable insights. It highlighted our lack of contingency plans in the event of either my husband or I, or both, choosing to take a break from work. In spite of my apprehensions, my husband was super supportive and saw so much value in my decision to take a break from work. I wanted to be in a position to reciprocate that in the event he chooses to take a break from work. That was another event when I knew I needed to be more serious about finance planning.

What are the initial steps you took to manage your finances?

My very first step was to talk to people and understand how they started off learning about finances. Based on their recommendation I had picked up some books to read.

Once I quit my job and had more time in hand, I came across Sharan Hegde’s Finance with Sharan on Instagram. I took up the masterclass and enrolled in the club subsequently.

To manage my finances, I have diligently followed strategies outlined in Sharan’s course. My first course of action was to input our existing portfolio into provided financial tools. This facilitated a comprehensive evaluation, revealing several areas requiring adjustment, particularly in terms of fund diversification. Subsequently, I took proactive measures to rectify these discrepancies. Also, after putting all the money in the right areas, I realised that I had achieved Lean FIRE.

Do you also help others in financial decision-making?

I have encouraged a lot of my family members to opt for FDs in small finance banks and I’m pleased to see them embracing this approach. I have advised my brother to move to SGBs so that it would give him better returns.

Besides this, I assist my family/friends with whatever doubts they may have related to insurance, mutual funds, etc.

I have also been encouraging my family and friends to join the 1% club. I recently got a friend of mine to enroll. The 1% club was my best investment and there is no greater help I can offer than encouraging them to be part of this holistic community. 

If possible, please tell us about your diversified portfolio.

At present I have my family portfolio diversified in foreign stocks, real estate, SGBs, debt, and equity mutual funds. A part of the debt and mutual funds are also pledged in F&O trading with the help of some like-minded experts I was able to connect with recently. 

What are some financial plans you have for your daughter?

I think education is the major financial goal pertaining to my daughter. We have planned some short-term funds like T-bills and FDs for her education fee that is required within the next 3 years. For long-term education goals, we are investing mostly in equity mutual funds.

We are considering another term insurance to ensure that it covers all our future expenses including that of our daughter.

I also want to educate her early on about finance and some of the things I would definitely like to try out with her:

1. Play games involving money

2. Make her understand the currency

3. Monthly allowance and taxation over that.

4. Maybe a summer job when she is of the age.

5. Create a budget

6. Teach her money management skills.

7. Open a Zerodha kids account.

Also Read: Gen Z investor builds Rs 46 lakh Portfolio after Big Failure in F&O! Here’s his Real Story

Any advice to new moms who wish to plan their kid’s financial future?

1. Prioritise Health and Term Insurance:

It’s crucial to maintain a robust health insurance plan alongside any coverage provided by your employer. Additionally, consider the necessity of term insurance for both parents. The significance of comprehensive health coverage became evident during the COVID-19 pandemic, coinciding with my pregnancy. Unfortunately, I couldn’t be added to a new health insurance plan during this time due to my pregnancy. This highlights the importance of securing insurance well before planning to start a family.

2. Establish a Strategy for Passive Income:

Parenthood often brings unforeseen life changes and challenges. Therefore, it’s essential to develop a plan for generating passive income. This not only provides financial security but also equips you to navigate through unexpected events with confidence.

3. Define Your Financial Goals Clearly:

Welcoming a child comes with significant financial responsibilities. It’s crucial to have a clear understanding of your financial objectives. Determine the amount you wish to allocate for your child’s education, your retirement, and other long-term financial goals as early as possible. Initiating this planning process early ensures greater preparedness and security for the future.

Disclaimer: The above content is based on the information provided by Sushmitha. The 1% News doesn’t independently verify non-public data reported by interviewees.