Karthik Pasupathy (aka KP)

Your Family Is Like a Startup. It Should Show Growth Every Year.

silhouette of man standing beside shore under brown sky during daytime

Your family is like a startup. It is made up of a lean team that works hard and looks out for one another. You add headcount at a point. There is recurring revenue. There is an operating cost to keep things running and crucial decisions are made to avoid any obstacles.

And, similar to how growth is the ultimate metric for a startup, growth is also the ultimate metric for a family.

Reason? Growth is an indicator of well-being – be it a company, individual, or family.

Successfully running a home is a key skill to have as it teaches you a lot about managing finances, making life-changing decisions, and facing uncertainties (like COVID-19 or a health crisis).

If you’re an aspiring entrepreneur whose personal finances and family are a mess, the company you’re planning to build won’t be any different. It will become a mess too!

So, before heading out to build your next amazing idea, set things right for your family. Make them comfortable in terms of finances, health, and emotional well-being.

During the last couple of years, I’ve followed small but effective techniques that helped me create and maintain a decent growth in the quality of life of my family. I’ll break them down one by one.

Set The Foundation Right

Before going into how to set your monthly and yearly budgets or how to invest your money, let’s get the basics right.

A good home – This might sound silly, but a good home plays a key role in the emotional well-being of your family. It is where you spend most of your time. A home is where you create memories. My first advice is don’t cut corners when finding a home. Make sure it is spacious (considering kids and their private space), well-lit, and is located close to all the necessary amenities. If it costs you 10-20% over your intended budget, go for it if you think the new place meets all your requirements and could make your people happy.

Insurance – Insurance had personally helped our family in several critical situations. If you’re an earning member of your family, get term insurance for you, and a health insurance package for your family (a floater). If the company you work for is providing health insurance for you and your family, I would still recommend you to take another policy. Reason? The insurance your company provides will be valid only as long as you’re employed. If you’re planning to take a break from working or planning to move jobs, it will be a while until you get your insurance back. The secondary health insurance will get you covered during those times.

Health – You can save a ton of money and be in a better emotional state if you’re in good health. So, perform some form of physical activity for at least 150 minutes a week (~20 minutes a day). If you’re not up for working out at a gym, go out for a brisk walk, do some shopping and come back. You can also take up to 10 minutes of mindfulness meditation every day. It is calming and gives you mental clarity. You can make use of free apps like Medito, or freemium apps like Headspace for meditation.

Emergency cash reserve – Have a rainy day fund that equals 30-50% of your annual salary and keep adding small amounts to it whenever you have extra cash. Don’t use this money to buy stuff or plan a vacation. Just let it be. Use it in case of a personal emergency or if your relative or friend is in dire need of money. Life is uncertain. You never know when you’ll need money. Having an emergency fund will get you covered.

Financial runway – COVID-19 is a perfect example of uncertainty. We’ve seen companies shutting down, and laying off people. Having a financial runway will help you fight uncertain situations and give you peace of mind. The ideal capacity of your financial runway should be six months’ worth of your monthly expenses. This should also include EMI payments and other small expenses that you incur every month.

You can also go further and save up money that could last you for one or two years if you’re planning to work on a startup or if you’re planning to take a break. I read recently that the best thing money can buy is freedom. Even if you got laid off or quit your job, you don’t have to rush into a job or company you did not like. The financial runway you have will keep you covered until you find the right opportunity.

Okay, now that we’ve seen the basics let’s go a little deeper. Now that you’re at the end of the year, let’s see how you can plan your expenses for the whole year, invest wisely, and improve the quality of life for your family.

How to plan your finances for the upcoming year?


I know you’re immediately thinking of creating an excel sheet with your monthly expenses on it. But, there is more to budgeting than adding your routine monthly expenses. Here’s how proper budgeting can give visibility on your finances and prevent you from scrambling for money at the last minute.

Prepare a yearly expense overview – When you begin a year, create an excel sheet that gives you a holistic view of your finances for the upcoming calendar year. This includes your routine monthly expenses and recurring yearly expenses. When I say recurring yearly expenses, it includes the premium you pay for term insurance, health insurance, car, and bike insurance; Renewal of subscription services like Amazon Prime, and Disney+; And expenses for festival shopping. If you sum all your recurring expenses, you’ll be surprised by the number.

Plan vacations – Decide where you’d want to go and how much will it cost your family (or you if you’re planning to go solo). Open up a recurring deposit for six or nine-months and use the funds to go on your vacation.

Gadgets and home decors – If you want to buy a new couch, a 4K TV, or the next iPad Pro, plan ahead and see how you can pull it off with your salary.

WARNING! – Don’t plan your expenses assuming you’ll get an X% salary hike in the coming year. That is the biggest mistake you could do in financial planning.

Doing all this before the beginning of the year will give you visibility on how much of your yearly income will go into routine expenses, how much will go into yearly recurring expenses and how much into a vacation or/and buying the next iPad pro. You can invest the remaining amount to grow your wealth.  Please make sure that the remaining amount you’re about to invest equals 30% of your yearly income (the more the better). If not, you’re spending too much!😄 See if you can cut some corners.

Now that you’re done with budgeting, the next step is investing

How to invest your money?

Similar to how a startup invests in its growth, you should also invest considerable money and time in increasing your wealth. Creating wealth puts you in a better spot at the time of a crisis. I’m no investment guru. But, I would like to share a few techniques I use and the philosophy behind my investment practices. So, don’t follow my advice to the T. Take it with a pinch of salt.

Don’t jump into the stock market because it looks cool – Investing in the stock market needs a good understanding of the market, the economy, and a ton of other factors. It takes time to learn and master it. You can’t simply open a DEMAT account and buy off stocks that look cool to you (You can, but it is too much of a risk if you’re a beginner). Start with something safe like mutual funds.

Invest in mutual funds – Identify one or two good mutual fund schemes and invest your money in them. I would suggest investing 50-60% of your investment amount in mutual funds. To begin with, you can invest in large-cap, blue-chip, or index funds and later invest in aggressive funds once you acquire enough knowledge in the investing space. The simplest trick is, to visit Value research online or groww, look for a five-star rated fund and set up a SIP (systematic investment plan).

Note: You might get recommendations from your bank about ULIP plans (a combination of investment and term insurance). It will be attractive. But, it would be great if you could pay for a term insurance policy and continue investing in mutual funds.

Increase your investments every year – The amount you allocate for building wealth should increase by 10% every year. Imagine you started investing Rs.10,000 in mutual funds this year. The amount shouldn’t be the same every year. You should increase it by 10% every year or once every two years. This will gradually grow your money and help you build wealth. The best way to do this is, to invest the amount you receive as the salary hike into wealth creation.

Tax saving funds –  It is a common practice to invest in Equity-linked Savings Scheme (ELSS) to save tax (up to Rs.1,50,000 every year). The catch is, investing in this fund will lock your money for three years. You can invest in such plans in the form of monthly installments. But, I suggest you do it as a lumpsum amount.  Do this every year and after three years, you’ll get a lump sum amount every year which you can use for paying for your kid’s education, buy gold, go on a vacation, etc.

Invest in gold – The only piece of economy that hasn’t changed for centuries. Investing in gold is the best option as it will grow at a steady rate. A piece of advice is don’t buy digital gold. Buy physical gold and keep them in a safe place or in a bank locker. Gold is the only asset that grows with time and is also easy to cash in.

Other forms of investment – Other forms of investments include stocks, real estate, PPF, and the National Pension scheme. Evaluate the pros and cons and invest wisely. There’s a ton of literature on the web about each of these topics. Read up before making a decision.

How to improve the emotional well-being of your family?

Spend quality time – Meet your friends, family, and loved ones. Meet them often, and call them up.  Do whatever you can to stay in touch. Even great minds like Epicurus understood the importance of friendships. Good friends help you wither the hardest situations in life.

At home, practice small things like having breakfast and dinner together, cooking together, or simply sitting and talking about random things over coffee and cookies. Go out with your family and have a good time. We can be busy and run behind growth, but nothing trumps family time.

Take a break – Working all the time is not going to do any good. You’ll be exhausted and burnt out. Take a couple of days off every quarter to refresh your mind. It will give you mental clarity and will help you work efficiently.

Read books – Reading makes you smarter, and happier and keeps you away from the negative vibes we’re exposed to through news and social media. Read a blend of fiction and non-fiction to keep you from being bored. Read at least one book a month. Start with something small (like the ones I published) and gradually head to reading the works of other famous authors.

I know it is a lot, but all the points I’ve mentioned above are actionable and easy to follow. I’ve been doing this for the past couple of years and it has put me in a good spot. Always remember that it is never too late.