Mad About Money

MadAbout

Money May, 2017, Issue no. 8.

HOW TO EARN MONEY, HOW TO AVOID LOSING IT

CAN REAL ESTATE INVESTMENT

MAKE YOU RICH?

How to earn money, how to avoid losing it pg. 12

Not everyone can be rich, but everyone can dare to be rich pg. 22

The desire to be rich is not really like the desireto have ice-cream pg. 28

MadAbout

Money

Editor’s letter

Mad Mad

Money

Issue no.8

Content

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32 Will their financial dreams match harsh reality?

Importance of staying rich once you are there

Welcome to this edition of Mad About Money!

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_ Getting rich is actually the beginning of the journey

12

_How to earn money, how to avoid losing it

In our previous edition we talked about how to stay rich once you get rich so that your money stays and you do not lose it all.

16_If getting rich is

difficult, staying rich is that much more difficult

18_ Dissecting assets

T

his edition, we would go in-depth into a few specific financial assets so as to understand them better, assess their money making attributes and most importantly how intelligently can we use them to make ourselves rich. Our cover story this issue thus focuses on Real Estate and explores how it can make you rich.

and liabilities

20_ Teach your kids to

handle money so your legacy is a blessing, not a curse

Real Estate happens to be the top ranking wealth building tool that billionaires worldwide invest in, to get richer. However, investing in real estate doesn’t necessarily mean just buying a piece of property. Also, not everybody is born a billionaire to invest in property as and when he/she likes. So our cover story this issue is quite an interesting read that talks about how to invest in real estate with less money and more importantly, how exactly to go about it so that the investment can give you great returns.

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_ Not everyone can be rich, but everyone can dare to be rich

26_Grow up and get rich 28_The desire to be rich is not really like the desire to have ice-cream

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Remember, Budget is like a doctor, not like a butcher

34_Clash between

Cover story:

08 Can real estate investment make you rich?

parents’ fear of unknown and our dreams of tomorrow

Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form of by any means electronic, mechanical, photocopying, recording or otherwise, without the permission of MadAboutMoney magazine. All information in MadAboutMoney magazine is checked and verified to the best of the publisher’s ability, however the publisher cannot be held responsible for any mistake or omission enclosed in the publication.

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OUR COVER STORY THIS ISSUE IS QUITE AN INTERESTING READ THAT TALKS ABOUT HOW TO INVEST IN REAL ESTATE WITH LESS MONEY AND MORE IMPORTANTLY, HOW EXACTLY TO GO ABOUT IT SO THAT THE INVESTMENT CAN GIVE YOU GREAT RETURNS.

Editor’s pick

Dissecting Assets & Liabilities

Our other sections in this issue would further go on to dissect assets and liabilities and our regular columns would talk about yet another financial fear that we all face and how to overcome it, financial lessons for kids and how to teach them about handling money so that they grow up to be rich and of course other crucial financial education write-ups in order to keep you rich once you get there. So like each month Mad About Money is here to talk about everything to do with money that draws your attention and passion, but in a different way, with a slightly different touch… that unique magic wand of mindset change that just makes all this not only attainable in practical terms but also sustainable for you and your coming generations to enjoy!. Simply put, if taken in seriously and internalized with sincerity, it holds the power to change lives and destinies. Are you up for it? Keep reading and keep getting rich! Sachin Mittal

pg. 18

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Vijendra Singh,

Shravan Giri,

GIVING A TIGHT TWIST TO MONEY

TECH AT HIS FINGERTIPS

Manager Money Craft

Swadesh Mishra, Officer Out-standing

THE WORLD IN HIS POCKET

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Creative Technologist

Rajiv Ranjan,

Joint Creative Technologist

JOINING FORCES IN TROUBLESHOOTING

MAD GANG

Money

THE

Anubha Rathore,

Arts & Crafts Designer

DESIGNER CRAFT CREATOR

Dheeraj Kumar,

Chief Money Scientist

SEES THE GLASS HALF FULL

Akanksha Mishra,

Associate Money Scientist

HOPEFULLY OPTIMISTIC

Johny Chopra,

Soma Ghosh,

Buzz Ambassador

Chief Buzz Creator

SPREADING THE GOOD WORD

CREATING THE BIG BUZZ

WHO MAKES IT POSSIBLE EVERY MONTH Abhijit Banerjee,

Ahmed Ansari,

Idea Ambassador

Lord of the Ledgers

AN IDEA FOR A SONG…

TIGHT FISTED… ALWAYS

Magazine designed by:

Dillip Rout,

Account-ability Officer

Wire | Digital Creative Agency

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GETTING RICH IS ACTUALLY THE BEGINNING OF THE JOURNEY

YOUR REAL JOURNEY ENTAILS YOU TO KNOW HOW MUCH TO SAVE, HOW MUCH TO INVEST AND WHERE AND HOW MUCH TO SPEND AND HOW.

All of us dream to be rich. To live in a palatial house, to own a fleet of sports cars, to make heads turn with respect and admiration when we enter a room, etc, etc. Let’s face it…all of us dream about being rich, being successful, making it big in life. And hence, getting rich is usually our end destination…the finish line towards which we are racing…the point where our stories are supposed to end with the line ‘and I lived happily ever after.’ etched on it.

that getting rich is actually the ‘beginning’ of your journey and not the end!

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ou believe in this too. Think about it. But my question is - is it true? Is getting rich really the last milestone of your life? The end of your journey? What happens if you win a lottery, or get an inheritance, or crack a major business deal and reach that level of success and wealth that you have always dreamt of, only to lose it in the next 2 days? What then? You haven’t ever thought about this right? Well, none of us does really, unless someone pokes a finger in your eye and asks you to see it. That person today is me. And you need to see…

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THE IMPORTANCE OF ‘GETTING RICH’ BEING THE START OF THE JOURNEY They say if you aim for the stars, you will land up on the moon. So if you aim to get rich, you will always land up short of it. You need to tell yourself that the starting point of your journey is getting rich, so there is no option but to be rich in the first place. Affirming yourself this develops the right money mindset for success in the first place. Most of us never become rich simply because we do not possess the right mindset. So realizing this start of the journey is crucial.

IMPORTANCE OF ‘STAYING RICH’ ONCE YOU ARE THERE The real journey is not really in getting rich but to sustain the wealth and the success once you attain it. All rich people would say the same thing, that it is where the journey starts, not the end at all. People who understand this earlier, focus on financial education more than money itself since they want to learn how to make money as well as keep the money once it is there. This is the second stage of preparing yourself to be rich. If you only focus on money, it will never come to you. Only and only financial education can show you the right path towards money and more importantly the right path in staying rich later on.

THE JOURNEY ITSELF The actual journey is to keep being rich and not lose it all. When a person suddenly becomes rich, he/she tends to overspend it all in all his dreams…the houses, the cars, the world tours. Of course one should do them too. But financial education tells you what are really assets and really liabilities. Things which always eat up your money without making money themselves are all liabilities. Your car, the palatial house, the trip would never make money for you hence they can’t afford to use up all your money. They can at best be a small percentage. Your real journey entails you to know how much to save, how much to invest and where and how much to spend and how. And that is your real journey, which starts from the moment you get rich. And financial education is your only true friend on that path. So what are you waiting for? Get educated. Get rich. Stay rich.

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CAN REAL ESTATE INVESTMENT

MAKE YOU RICH?

REAL ESTATE IS A POWERFUL WEALTH BUILDING TOOL AND HAS MADE MILLIONS OF BIG INVESTORS. A LARGE PORTION OF THEIR BUSINESS AND WEALTH IS STILL BASED IN REAL ESTATE AND IT IS ONE OF THE MAIN INVESTMENTS HELPING THEM STAY RICH. FINANCIAL SAMURAIS CONCEDE THAT MOST MILLIONAIRES HAVE USED REAL ESTATE TO MAKE THEIR FORTUNES. IN FACT, STATISTICALLY SPEAKING, REAL ESTATE BAGS THE TOPMOST POSITION IF YOU GO ABOUT CONSIDERING WHICH ASSETS THE WORLD’S BILLIONAIRES ARE MOST INVESTED IN. IT IS ESPECIALLY TRUE FOR INDIA’S HIGH NET WORTH INDIVIDUALS (HNWI). A RECENT REPORT BY A LONDON BASED REAL ESTATE FIRM FOUND THAT INDIA’S HNWI INDIVIDUALS HAVE HEAVILY INVESTED IN FOREIGN REAL ESTATE AND 87% OF THEM ARE PURCHASING PROPERTIES ONLY FOR INVESTMENT PURPOSES.

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y real estate investment, I don’t mean buying a property and waiting for another 10-15 years until its market value increases. What I am referring to are investment in real estates which include ‘income producing properties’. These properties lead to constant income, like rental estates which generate revenue from tenants and Real Estate Investment Trusts (REITs). Remember, a house in itself is not an asset- It takes money out of your pocket via maintenance. Investment real estate puts money back in the pocket.

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CAN IT BE THE ROAD TO BECOMING RICH? Real estate has worked for many. Many self-made billionaires started off with real estate to build the kind of wealth they always dreamt of. Could real estate become your starting point too towards the road to becoming rich? Obviously, a big yes! But it is not to say that there aren’t any accidents in real estate industry. There have been incidents when people started out with great enthusiasm, only to find their bank

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Money accounts empty. Owning a piece of land is one thing and knowing what to do with it, is another.

WHY SOME INVESTORS ARE NOT RICH The lack of it is the reason why some real estate investors are not rich today. They are not willing to go through that process of looking at 100 deals to find that one RIGHT deal. As they say, you have to kiss a lot of frogs before you find your prince. This process is very important. One has to grow in the process and learn from mistakes. New investors fail to do that, and real estate fails them. Real estate is not a lottery, or an overnight success formula. It is not for an impatient investor. Getting educated about what you are going into is of extreme importance. Remember- If you are able to empty the purse in your head (is able to do the math about pros and cons), no man can take the profits away from you. And, expertise is needed for that, which comes from practice!

HOW CAN REAL ESTATE INVESTMENT MAKE YOU RICH? Understand that you have made a good investment when you are not working for the property you bought, like repaying mortgage amounts; rather the property you invested

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DO YOU REMEMBER PLAYING THE GAME ‘MONOPOLY’? IN THAT, THE PRINCIPLE TO BECOMING RICH WAS 4 ON 1, I.E. GET FOUR GREEN HOUSES AND THEN SELL THOSE TO SET UP ONE RED HOTEL. OBVIOUSLY THE HOTEL WAS WAY MORE REVENUE GENERATING THAN 4 GREEN HOUSES.

anyway be taken care of by rental income the property will bring. Where else, can you make so much with so little?

in is working for youpaying monthly mortgage amounts by itself via rental income and also generating extra revenues.

make down payment on another profitable investment property. This way, keep learning and climbing the ladder.

Do you remember playing the game ‘monopoly’? In that, the principle to becoming rich was 4 on 1, i.e. get four green houses and then sell those to set up one red hotel. Obviously the hotel was way more revenue generating than 4 green houses.

GETTING RICH WITH REAL ESTATE IN LESS MONEY

Increase in returns with leverage: If you buy a property on home loan, then even when you pay only 10% down on a property, you will still get rental income for entire 100% property, which is an awesome return for putting 10% money.

Not everyone has a rich father to inherit millions of money from. Everybody starts from somewhere or the other. One leading wealth generating aspect of real estate which makes it accessible for people of all length and breadth to invest and earn from it, is Leverage! Leverage is the key to real estate wealth. In simple language, it is equivalent to sayingwhile the bank will pay for your property, the profits earned on the property will be 100% yours.

Earn profits on a property for which you paid only a fraction: If you buy a property worth 20 lakhs by putting 2 lakhs down and then sell it for 24 lakhs after some years. You will straightaway get not only the principal payments to pay your loan, but will also get 2 lakhs profit. So, technically you are making 100% profit on a property you paid 10% for. Essentially, you will earn 2 lakhs, while the bank will get only 18 lakhs back, plus some interest, which would

Real estate investment works similarly. You can start an income stream even with one room apartment. Buy an apartment, and put it on rent. Afterwards, you can choose to flip it (i.e. sell and buy other property, if you see profits in the deal) or accumulate enough money from rental to

EARNING FROM SHORT-TERM REAL ESTATE INVESTMENTS Beside leverage, if you are interested in earning from short-term real estate investments, you can choose to go for fixing and flopping of properties. Flipping constantly in short time periods can be considered as investing (don’t do it unless it’s profitable) since this can lead to constant income. But remember, in this, you would need a great eye

for real estate. It involves buying properties and selling them via forced appreciation, i.e. fixing, or by rise in market value of the property. Once you fix the ills of the property, get the fixtures done and bring the property in good health, it will ultimately sell in higher prices than you bought; make sure you don’t spend on the fixtures more than you get in profits. The trick is to invest in a property which would demand minimal fixing to increase its value.

Important Points Real Estate investment is a game. Like all other games, it has its rules, its

tools and pathways to success! A property bought for personal use is no asset, invest in ‘income producing’ real estate to become rich. Be willing to go an extra mile to look for the right property deal and keep educating yourself about real estate investment. Make sure to use the benefits of ‘leverage/debt financing’ when investing in real estate. Make sure your property generates enough revenues to pay off monthly mortgage payments. Try to ensure positive cash-flow from the property after you deduct monthly EMI commitments from monthly revenues generated by the property. If you have a good eye for real estate, then flipping and flopping may generate good returns in a short-period of time.

There is a reason why traditionally people use to call property owners the lords and now we call them- ‘landlords’. There is a reason why millions have made their fortunes in real estate. It’s because it never goes out of demand, i.e. People will always need a place to live and it gives the investor, the control over their investment, like no other investment medium. You can raise its value by renovating the place (forced appreciation) and when markets tank, you can choose to hold on your property until market rises again, or keep it on rent while earning income in slumped market conditions. Sure, real estate is not the only way to becoming rich, but having been used by many stalwarts, real estate has sure proved itself to be the easiest way to becoming and staying rich. If becoming rich is your goal, the odds are that real estate is the way towards it.

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HOW TO EARN MONEY, HOW TO AVOID LOSING IT

HOW MUCH TO SAVE, HOW MUCH TO INVEST AND WHERE AND HOW MUCH TO SPEND ON LEISURE HAVE TO BE CHALKED OUT AND WELL PLANNED.

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here are many ways to earn money and many ways to keep it safe. But the ones I’m going to discuss today are the least spoken of and understood things, where people usually go wrong.

HOW TO EARN MONEY Unlearn all that you have been taught till now…hard work, better jobs, better salaries, etc, etc. Well all that counts but would never really make you super rich and successful!

HOW TO EARN MONEY AND HOW TO AVOID LOSING IT… DEFINITIVELY THE TWO GREATEST TEACHINGS OF LIFE. ONCE YOU KNOW HOW TO DO THESE BOTH, NOBODY CAN STOP YOU. ALL THAT YOU HAVE EVER DREAMT OF WILL CEASE TO BE DREAMS AND TURN INTO REALITY.

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What you need is a mindset change. A shift from ‘working for money’ to how to make ‘money work for you’. Yes, the only way to be successful and rich is if you go on doing what you are anyway doing – like hard work, job hopping, etc but keep thinking, learning and implementing ways in which your existing money would make more money for you.

This might include investments, selfdevelopment courses which would help you to get better jobs, startingup a side business. Anything for that matter. But the mindset change to always think of what can work and where to put in money to make it grow is the most effective way to make money and get rich. Sooner or later you will see that this mindset has become a way of life for you and there are multiple income streams which are somehow making money for you even if you do not work.

HOW TO AVOID LOSING IT For most of us, earning money and getting rich spells the end to all money problems. Nothing can be farther away from the truth. Once someone is rich, keeping that money, sustaining the success and continuing

to be rich is a huge challenge in itself. Usually people who have suddenly had their hands on fortunes, maybe a lottery or an inheritance or even through business or work, end up losing it pretty soon. There are thousands of examples of millionaires going broke sooner or later. This is because they have always focused on money and never on financial education. When one focuses only on money, then once he is rich it seems as if he has reached the destination, his journey is over. He starts to over spend on houses, cars, world tours, etc which are all money-eating liabilities which would never make money for him. He also ends up giving huge sums to loved ones who might be short of cash at that time.

CHALLENGE TO STAY RICH IN FUTURE Long story short, the individual faces a challenge to stay rich in future. The only way to avoid losing money is to educate oneself in financial education. How much to save, how much to invest and where and how much to spend on leisure have to be chalked out and well planned. Get help from couple of financial advisors if you have to, but remember, being rich is just the starting point of your journey and you need to keep staying rich. Again, the best way to put your money to good use is distribute it in things which would make more money. Develop this mindset and earning money or keeping it safe, both would not be a problem at all!

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Money Tips for Financial Freedom

IMPORTANCE OF STAYING

RICH

Tip 1

Tip 2

Tip 3

Expand Your Income Horizon

Team Work Matters

Hold on to your cash

If you are too fearful to take risks and quit your job for a start-up, try to utilize the money you have in a smarter way. Do thoughtful investments in shares or properties which can bring you money faster and with little effort, besides your regular salary at the end of the month.

If you are aiming for financial freedom and has a family, your spouse also needs to think likewise. As a team, you need to work out on your financial gains and expenses to reach towards financial freedom.

It is good if your invested money has brought in immense profits to you. But, depending on just one type of investment for future monetary benefits isn’t enough.

ONCE YOU ARE THERE MOST OF US DEFINE SUCCESS AS HAVING A GOOD JOB OR MAKING IT BIG IN BUSINESS, BEING RICH AND OWNING FANCY CARS AND LUXURY APARTMENTS WITH A COUPLE OF WORLD TOURS THROWN IN OFF AND ON. EVERYBODY IS IN THE RAT RACE TO MAKE MONEY. MAKING MONEY AND BEING RICH IS EVERYONE’S END GOAL OR DESTINATION IN LIFE.

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W

e tend to think that all our money problems would go away once we are rich! But think about it…imagine you make a lot of money, cracked a great business deal, won a lottery or received an inheritance. But what then? Will you drop down and die the immediate next minute after getting rich? Highly unlikely, right?

So even if you live for a day, a month, a year or for some time after getting rich, don’t you think ‘staying rich’ is also equally important once you have reached your goal? How will it feel if you won the lottery and then lost all your money in a couple of months? Shattered dreams and broken hearts? But guess what… this is not uncommon at all! Many millionaires go broke simply because they cannot manage their money once they become rich in life. The fact that we all hanker after money makes us ignore the more important aspect of learning what to do with money once we have it. So how to stay rich once you are there?

STEP 1:

INVEST TIME IN FINANCIAL EDUCATION The first and foremost step is to understand the nuisances of money and its various aspects like savings, investments,

expenses, etc and how to go about all of it and in what amount in order to meet your own personal financial goals. WE run after money so much that we never pay attention to learning about it. Hence, when it actually comes to us, we lose it simply because we do not know wghat exactly to do with it. Getting financial education, taking advise from a few financial advisors regarding money management, is crucial in order to keep staying rich.

STEP 2:

CURB THE TENDENCY TO OVERSPEND When you suddenly have money, childhood dreams and adulthood aspirations all come flooding in together. You want to buy that fancy car, the gold watch, the luxury villa, want to go on a world tour. In all this, you might feel to be at the top of the world but the feeling would soon vanish along with all your money. You

need to keep in mind that all these are moneyeating elements which would not generate more money for you in the future. Hence, all of these are expenses. Of course you will do some but not over-do it.

STEP 3:

MAKE MONEY WORK FOR YOU We always work for money but once you have money, the best thing to do in order to keep being rich is to make money work for you. Invest in yourself, in businesses and in anything that would generate more money. This is the only way that you can stay rich consistently once you are already there. Once you have the right financial education, are not overspending and investing intelligently to make more money, trust me, nothing can stop you from keep being rich in life! Best luck!

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IF GETTING RICH IS DIFFICULT, STAYING RICH IS THAT MUCH MORE DIFFICULT

are interested in is not the doom of his now-outof-business Kingfisher Airlines, but the status of his company in the times of financial crisis of 2008. As 2008 crash was sinking the world into never seen before debt crisis, Mallya managed to get about INR 900 cr. loan from IDBI bank. His company was in financial crisis at the time of receiving this new loan, but he was lucky enough to have got such a huge loan from a state-run bank. Polar opposite stories of the time of 2008 crisisRamesh Chandra lost almost his entire net worth, while Mallya caught the tools to revive his company via 900 cr. loan. But fast forward some years, their stories have unfolded nearly the same. Ramesh Chandra and Vijay Mallya both are grappling with law only that Mallya has gone into a secret exile.

RAMESH CHANDRA IS A FAMOUS BUSINESSMAN WHO USED TO BE A BILLIONAIRE. HE BUILT HIMSELF FROM GROUND UP. HE OWNED A PRIVATE LTD. COMPANY AND LOVED BETTING IN REAL ESTATE INDUSTRY. WITH PROFITABLE VENTURES OF 1980S, HE LAID THE FOUNDATION STONE FOR A WELL-KNOWN REAL ESTATE COMPANY UNITECH. HE WAS WORTH OVER 11 BILLION USD AT HIS PEAK IN 2007.

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s the crash of 2008 unfolded, Unitech’s prominence dropped to an all-time low and real estate industry in India came to a drastic halt. It cost Ramesh Chandra nearly 90% of his net worth. This basically marked the end of Ramesh Chandra. During the same times, another businessman had a different experience.

Vijay Mallya is a lucky inheritor of vast amount of wealth. His father Vittal Mallya was a very prudent investor. He diversified his ventures and very quietly built a big empire acquiring companies. Contrastingly enough, such times have come for Vijay Mallya that he himself has admitted to have become the poster boy of willful defaulters in India. For now, what we

Though, their timings were different, but both stories send an important message, if getting rich is difficult, then staying rich is incomparably more difficult. Talk about rich and lucky in the same sentence, and there will rise many bashers to criticize you. They don’t want anybody to tell them that probably they didn’t do it all themselves. But the truth is, nothing grand or poor is going to

stay the same for long, mainly because economy operates in cycles. It might make some rich from rags in a day and others viceversa. There are thousand ways to get rich. Recall Sandeep Singh becoming overnight millionaire by winning a 30.5 million USD lottery after his break-up. But there are few ways to stay rich.

net worth on paper, but it might be the most toxic thing for your money? In this story, all others things except real estate, are making your money sit idle, in depreciating assets nonetheless. Real assets are those which keep earning for you. A bitcoin stock which was worth INR 5k once is worth INR 75k now.

FEAR, DIVERSIFICATION AND INVESTMENTKEY TO STAYING RICH

I would like to give two key learning to those who want to stay rich:

If you are one of those riches who don’t do much after getting rich, buy shiny new things and keep using the same old tactics in the market, you are vulnerable to recurrent economic cycles. It is bound to bring you down one day. Let me tell you a story, an uncle of mine was an investor. He had this old school notion that real estate market and gold never go down. I wouldn’t say a thing about gold, but real estate market made many investors dig their heads in the sand after 2008 crisis. He had 8 cars, 5 companies, 4 houses in good times. By 2012, he was 18 cr. in debt, land gone, car gone, one company left and the house he is living in is mortgaged. The story of being rich doesn’t end with owning cars, lands and other assets. Massive unplanned debts won’t help you for long. It may increase your

1ST ADVICE:

Assume that ‘Tomorrow won’t be like Yesterday’. Instill a healthy fear. The seeds to your destruction lie in your money. It may convert you into an over spender gob of money or has the ability to make you rich for your three generations. Never think that just because you did things a certain way in the past and you became rich, you have to do things in that manner only. Don’t let yourself become complacent. Fear can be an antidote. Remember the world around you is changing. You have to keep reinventing yourselfwith new approaches, new knowledge and new experiences. Some start-ups which started in India worked only for 2-4 years, while only some have survived for decades. The reason being, they assumed that tomorrow can be different

than yesterday and they prepared themselves for it. You can’t assume that past successes will translate to tomorrow. 2ND ADVICE:

Diversify your Investment. Billionaires fall from their gold thrones for many reasons and one of the main reasons being that they fail to diversify their holdings. Keep Investing in the growing assets. And keep diversifying. Diversification is a good hedge against these economic cycles. GE reinvented itself, from being a light bulb company to a dishwasher company to bank to wind turbine. IBM reinvented when it treaded from all hardware to service domain. They could have concluded that since in past, they were right, they should continue in the same manner. They didn’t. The results are that they have remained at the top for decades. Coke, Kingfisher and Gillete, all failed to diversity their holdings and as a resultant, they have ceased to breathe their gold-scented air. All are dealing with attacks on their brands. It’s a true saying that, until you find gold, keep digging. I say, even when you strike gold, keep digging for new ones.

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Money KNOWING THE DIFFERENCE BETWEEN ASSETS AND LIABILITIES IS THE FIRST AND MOST IMPORTANT LESSON TOWARDS GAINING FINANCIAL CONSCIOUSNESS. WHOLE OF OUR LIFE WE GO BY THE POPULIST CLASSIFICATIONS OF WHAT’S AN ASSET AND LIABILITY, BUT FROM AGES ‘RICHES’ HAVE DEFINED IT DIFFERENTLY AND THAT’S WHAT HAS MADE ALL THE DIFFERENCE BETWEEN THEM AND US.

WHAT TURNS MONEY INTO MORE MONEY The difference between rich peoples’ approach towards assets and liabilities and ours is rich people consider those things as assets which turn their money into more money on a regular basis, and we, by old populist definitions, consider those things as assets for which we wait for half our lifetimes to give us monetary benefits. A house might be an asset for my grandfather or the accountant whose aim is to make the balance sheet look good, but for the riches and our immediate present, it’s actually a liability. So, what are the new rules of the game? How does rich define assets and liabilities? Where is the middle class going wrong?

unless it generates regular income. If you put the house on rent and generate enough amounts such that it not only cancels your expenses, but earns you extra income, then it can be considered as an asset.

PAYING FOR LIVING WITH THE SOCIETY Make your rental income cover your EMIs, maintenance, taxes, etc., if you truly want to make your house an asset. Until then, it’s only going to remain a liability, which is sort of a ‘cost that you are paying for living with the society’. So, real estate will be an asset only when it generates regular income. Similarly, cash is no asset in itself, unless it’s invested in stocks, bonds, mutual funds, and other investment modes which bring in regular capital gains.

IN THE POCKET AND OUT OF IT

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ccounts define assets as things we own (cash, house, car, etc.), and liabilities as things we owe (our obligations, like mortgages, dues, etc.). Old wisdom is in consonance with this idea. Earlier people believed that owning a house is life’s biggest asset, and what’s better if you own a car; it’s like an icing on the cake. But it’s important to understand that old rules have limitations and applying them blindly will only screw our finances.

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Simply put, an asset is something which puts money ‘in the pocket’ and a liability takes money ‘out of the pocket’. Let’s take house as the example. Traditionally, it’s considered as one of the biggest asset. But is it? The house is not an asset because it ‘eats money’via EMIs, maintenance, taxes, etc. It takes money ‘out of pocket’. It’s not an asset until it’s sold, and even then, when you finally sell it, it will cease to become an asset you ‘own’. That’s why house is a liability, UNLESS… Yes, the house is going to remain a liability

CHANGING YOUR MONEY MINDSET Method 1 Debts have destroyed many people’s dreams of becoming rich. Hence, it is essential you keep a close eye on your existing debts and reduce them to zero as soon as possible. Method 2

LESSON: OWNING ‘THINGS’ DOES NOT CREATE ASSETS. FUNDAMENTALLY, A TRUE ASSET MUST CREATE MORE WEALTH. ASSETS NOT ONLY RETAIN EARLIER CAPITAL, BUT ALSO GENERATE EXTRA INCOME FROM PROFITS. AN ASSET IS WHAT ‘BRINGS MONEY IN’ THE POCKET AND A LIABILITY TAKES IT AWAY FROM THE POCKET.

Our typical middle class outlook makes us turn our face away from money. We pretend it is not part of our life so we do not try to manage it. This must change. Method 3 We learn how to manage our household expenses basis our incomes. But we do not try to play the market and look for alternative routes to make money.

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Money financial education from a young age will positively influence their financial behavior when they are older.

Break the link between spending money and instant gratification. Teach them that they might have to wait to buy something they want.

However, there is a weird trend prevalent worldwide. Despite knowing the importance of gaining financial skills in life, it’s shocking that there is no culture of financial education in schools or at home.

TEACH YOUR KIDS TO HANDLE

MONEY

SO YOUR LEGACY IS A BLESSING, NOT A CURSE EACH ONE OF US HAS AN EXPIRY DATE ON EARTH AND ONE DAY IT WILL BE OUR CHILDREN WHO WILL INHERIT EVERYTHING WE HAVE BUILT AND SAVED. THE INHERITANCE WE PASS TO THEM, CAN EITHER BECOME A BLESSING IN THEIR LIVES, OR CAN RUIN THEM FOR AN ENTIRE LIFETIME.

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he difference will lie in the fact that if we as parents fulfilled our duties. If we have taught them to handle their money now, so they can win in life later. Leaving a legacy doesn’t only mean leaving kids with lots of money, rather it should entail, whatever we have we left our kids with- a lot or a little less, have we taught them to manage that money and turn it into a gift for themselves.

IMPARTING MONEY EDUCATION The main purpose of imparting money education right from an early age is - any education delivered to children when they are young will impact them better compared to when taught at an older age. It works because children are more open to learning new things. Giving

Parents SHOULD talk about money with their kids regardless of income status, kid’s age or time availability. No insurance can secure their life as much as education about money can. It is one of the most important life gifts that you can give them. Being a parent, it’s your responsibility. Learning about money from an early school going age will help them in making informed decisions about how to save, when to borrow and how to invest.

FROM WHERE TO START? There is a culture of savings in India. The rationale behind this is, it is considered that this amount will come handy in emergencies. So, some surplus money is always kept aside. But what about those who live on hand to mouth situation. Most lower middle class families in India are left with little to no savings at month end. That’s why it has become all the more important to learn yourself and teach your kids personal finance and money management. Everybody needs a plan to streamline their income, such that they always have some surplus. Start at whatever age and whenever you

You can teach about borrowing and giving to older kids who can understand mathematical concepts and see things from other’s point of view. Teach your teenagers that they can use credit cards only if they can afford to pay-back the balance every month end.

ACCORDING TO A CHILD PSYCHOLOGIST, CHILDREN AS YOUNG AS 3 YEARS OLD CAN CATCH CONCEPTS OF MONEY MANAGEMENT-LIKE SAVING AND SPENDING. get an opportunity to teach your kids about financial wisdom. According to a child psychologist, children as young as 3 years old can catch concepts of money management-like saving and spending. She says, the sooner the parents cash-in on everyday teachable money situation and start imparting financial education to kids, the better-off their kids’ future will be. It is so because parents are number one influence in children’s lives. Most beliefs and traits are formed at a young age when they are at school and at home. It’s up to us if we want to raise a generation of smart investors and

savers, or irrational spendthrifts. You can teach your children by including them in debates over general household expenses- like what to buy and what to leave, and why some purchases have to be deferred to future dates. Discuss with them different priorities of all family members and let them try to strike a balance between them all. Start giving them choices right from an early age. Make your kid choose from a school trip or a computer game/dollhouse.

SUPPLEMENTING EVERYDAY EDUCATION Teach these lessons by supplementing everyday education with different activities and financial games. Ultimately, if you notice, the activities like spending, borrowing, investing are an intricate part of our daily life. Learning these, will help your kids to make sure they have enough funds for fulfilling both present and future needs. An early financial education will help them generate a sense of financial well-being. Just like learning about mobiles, computers, are no rocket science for them now, money will be no rocket science for them as well! They will generate a sense of financial well-being. Teach your kids everything you now feel that your parents should have taught you about money and finances. After all, it’s the best legacy you can leave for your kid and the world.

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MadAbout

Money

MadAbout

Money

NOT EVERYONE CAN BE RICH, BUT EVERYONE CAN

DARE TO BE RICH By Soma Ghosh

LET US START WITH THE DEFINITION OF THE WORD ‘DARE’, SHALL WE? IN COMMON PARLANCE, ‘DARE’ REFERS TO THE COURAGE TO DO SOMETHING. BUT WE HAVE PREVIOUSLY NEVER REALLY LINKED SUCCESS, MONEY AND BEING RICH WITH ‘COURAGE’ OR BRAVERY, HAVE WE? NO. WE HAVEN’T. WE HAVE CONNECTED SUCCESS WITH HARD WORK, WITH PATIENCE, WITH INTELLIGENCE, WITH EXPERIENCE AND A LOT OF OTHER THINGS. BUT COURAGE? WHY DOES ONE NEED COURAGE TO BE RICH? AND HOW IS IT THAT EVEN THOUGH SOME PEOPLE DO NOT END UP BEING RICH BUT CAN DARE TO BE SO? Let’s look at the heading of this article in a different way. Let’s say, all those who dare to be rich might not end up being rich. But all who are rich have definitely dared to be so. In other words, being rich is a subset of daring to be rich. So basically you need to dare to be rich anyway, in order to attain it. And like it has been already mentioned, everyone can dare to be rich….so you do not have a problem essentially. You have a good chance of getting rich in life! Confused? Don’t be. Here’s what all this means really…

Why do you need ‘courage’ to be rich? Being rich is not any and everyone’s cup of tea. It’s not like you dream about money, put in hard work and voila! You wake up one morning with a lot of bank balance! It is not like that at all. Gradual progress to success and making it big in life takes a lot of effort, and unlike what most say… it is not always hardwork requiring will and patience. Most of it is sheer mindset and attitude change and the way of looking at career, money, success, yourself. And that needs courage. You need to ‘dare’ to be rich in order to really get rich. Only dreaming about being rich, desiring about being rich would never do you any good.

Stop thinking about joining a good company and think about buying a good company. See what I mean? You entire mental plane has to shift to a higher level. And remember, when you aim for the stars, you land up on the moon!

Step 2

MAKE MONEY WORK FOR YOU Stop working for money and make money work for you. This requires a change in the way you view the world around you and how you think about things. Start identifying where to put your money in that will return more money to you. Stop spending and start investing. These can be assets, self-development side businesses, anything, but your aim should be that even if you do not go to work money should work for you and still make you rich.

Step 3

GO AHEAD AND TAKE THE PLUNGE The rich can hardly be rich without the risks that they take. Instilling the risk taking ability in yourself and developing financial knowledge in order to take the right risk is crucial for success. Leaving everything and pursuing your passion, taking a wild chance on a new product, investing in a radically different advertising channel, are risks or the giant leaps of faith that take you to where your destined to go. So, now that you know, would you dare to change your mindset and take the plunge in order to get rich? Go ahead. Best of luck!

How do you ‘dare’ to be rich? Step 1

CHANGE YOUR MONEY MINDSET The way you think of money, success, work, career, everything needs to change. You need to be able to think big. Stop thinking of getting a job and think of creating jobs.

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MadAbout

Money THIS MONTH’S FEATURE STORY

By Sachin Mittal

You don’t have to slay your expenses like a butcher. Debt makes one do that. A hurling debt is already a limitation towards your expenses, then why to create another limitation in form of budget. I am not saying don’t have a budget or don’t cut-down on expenses. But, you will continue to default and fail until you change your approach towards budgeting. You need to diagnose your spending habits like a doctor. You need to see which your problem areas are. Budgeting is not a mere how-to-guide to control expenses; rather it is a plan to get in control of your money. Finances are best managed when breathing space is left between rules and execution. Let’s learn how to create a good budget:

MAKE BUDGET A LIFESTYLE CHANGE

REMEMBER, BUDGET IS LIKE A DOCTOR, NOT LIKE A BUTCHER A budget helps in keeping spendings in check. It helps people to keep track of the money they earn and spend. ‘How to budget’ is the first lesson of financial freedom, followed by ‘how to save and invest’. When so many people already know how to create a budget and understand how important it is for managing finances, then why most of them fail to live by it? Why their budget fails them?

B

udgets fail because most people, including financially educated ones, fail to realize that budgeting is not a strangling activity. Post budgeting, you shouldn’t feel caught up rather relieved and relaxed! People have a tendency to make rigid budgets, which are a sure recipe for failure. A lot of times, people give up on budgeting after their first

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experience. Remember, a budget is like a doctor, not a butcher. This is an excellent analogy. When you go to a doctor, he asks you the problems and symptoms you are experiencing and then diagnose the diseased areas, followed by giving you the medicine to eliminate the problem. Instead, a butcher just slays whatever’s in front.

Budget needs to be viewed as a lifestyle change instead of a strict diet. Diet brings self-deprivation, but lifestyle changes bring sacrifices. That’s the difference. When we follow a diet, we stop following the specifications of that diet as we meet our targeted weight. And as soon as we move to our old habits, we find ourselves caught in the same mess again. But when lifestyle changes are brought, they are permanent. They are to stay. They are brought with an approach so as to make them a part of life for forever. Budgeting should be viewed in a similar manner. A diet budget will lead to strangulated cutting down of expenses, which may work in short-term, but you are bound to get frustrated and move to past habits. Budget doesn’t have to become a burden. Let’s not convert it into another obligatory debt for ourselves. A more planned budget would be a lifestyle budget. It will be compatible with your requirements. The key to bringing lifestyle changes in budgeting is to distinguish between our needs from our wants. Write down your wants and needs separately. Distinguishing between needs and wants will be your first step towards diagnosing the problem with your spending habits. It will help you understand what are the expenses, which you can cut (from wants) without being a butcher. REMEMBER, Spending isn’t evil. Ultimately, we earn so we could spend on ourselves. But planning our spending will go a long way in growing our money. So, how can you cut on your wants? Let’s say you want to buy a luxury car of the sorts of Mercedes or BMW. But, lifestyle budget would say, you can rather buy Hyundai if it fulfills your needs. If you go out to watch movies every weekend, then for at least three weekends of every month, you can choose to cuddle up on the sofa with your partner and watch a movie with popcorns at home only. It will not only be comforting, but will also be an exciting change. Similarly, in case cable TV does not figure in your needs section, then you can cut your cable expense and start a habit of watching TV channels on internet (You Tube, Netflix) instead.

EXAMINE FINANCIAL GOALS A budget should allow you to understand not only your spending threshold, but also your financial goals. A good budget is based on some goals. At this step, you need to figure out your financial goals, both long term (owning a house, start saving for retirement and kid’s college education) and short term (buy a laptop, invest in Mutual Fund, take family out for vacation, increase savings by 20%) financial goals. Now, you need list your goals on the basis of your priority. Note, you can add two goals on the same priority. Also add the amount needed to be saved for completing each goal. This will tell you how important which goal is to you and how much work you need to do.

GAUGE PRESENT SCENARIO Now, you need to figure out your current monthly income and expenses. Make a list of your sources of income (salary, dividends, interest, money from government security, etc.) and present expenses. To simplify the expenses section, divide it into four sections, i.e. Fixed Expenses, in other words, needs (housing, EMI, rent, food, etc.), Discretionary Expenses, in other words, wants (vacations, entertainment, etc.), Emergency Expenses (repairs, maintenance, gifts, medical, etc.) and Goals Fund (contribution for goals). Now, add up these expenses and compare your income with expenses. If your income is higher than expenses, then you are doing well. Still, if you think you can improve your condition by cutting on unnecessary expenses, do that. Now, you would need to find profitable ways to invest the extra income. If your expenses are higher than income, then you will need to cut down on your wants section drastically. I am not saying don’t invest a penny into it. If you are investing 50% of your income in this section presently, then don’t spend more than 10% in it. Look for creative ways to enjoy your wants in lesser expenses. Another way to balance your expenses with income is to increase your income by getting a second job (part-time), like babysitting, selling crafts, etc. or doing some freelancing. In both cases, do keep your financial goals at vantage point when deciding on how to invest extra income (in case of former scenario), or how much extra do you need to earn (in latter case). A good budget is the key to a successful financial future. Going nuts and bolts about having a budget will make this practice a burden. Don’t do that. A doctor won’t stress you if you have high fever. Understand your money instead of spiking your blood pressure. Don’t go frantic, if you aren’t 100% successful. Ask yourself, why you failed and what you need to change. Don’t get intimidated by the practice. It’s an exciting journey to get in control of your own life. A good budget is which requires least record keeping.

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MadAbout

Money

MadAbout

Money

GROW UP

Below are a few exercises which definitely going to make you richer as you get older.

& GET RICH 6 DAY TO DAY TIPS FOR KIDS

TO GROW UP AND GET RICH

GENERALLY TURNING A YEAR OLDER ADDS FEW EXTRA PENNIES TO YOUR KITTY. PEOPLE GAIN KNOWLEDGE, EXPERIENCE; THEY DO EVOLVE, TURN WISER RESULTING IN BETTER INPUT AND EVENTUALLY ENHANCING THE OUTPUT & HENCE THEY END UP EARNING MORE. BUT IS THIS ALWAYS THE CASE? NO.

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VIRTUAL MONEY LESSONS

LET’S BE GROUNDED & DO A REALITY CHECK! UNFORESEEN EVENTS LIKE ACCIDENTS, LAYOFFS, EMERGENCY MEDICATION ETC CAN HAPPEN ANYTIME, TO ANYONE BURNING A BIG FAT HOLE IN THEIR WALLET. HENCE IT’S BETTER TO BE PREPPED UP TO TACKLE SUCH SUDDEN INCIDENTS. AND THIS PREPARATION STARTS PROBABLY FROM THE DAY WE ARE BORN.

Probably the most difficult time to assess the value of money is during school days when neither do you earn nor do you have an idea of real world & story behind earning every penny. But those teen years are one of the most crucial times to start your journey to be a millionaire. So it is advisable to play famous virtual money games like Money Metropolis, Financial Football and likewise. This not only gives a fair idea of valuing money, but also the significance of investment, saving, collaboration, foresightedness and risk taking ability.

ACTIVELY PARTICIPATING IN SOME HOUSEHOLD ACTIVITIES It’s time to apply the knowledge you gathered from the games you played to day to day life. There may be plenty

of household activities every week or month; it is excellent to take up one or two of them & do them diligently. This may be paying telephone bill, electricity bill or buying groceries. One can learn to negotiate, handle money and deal with outsiders by such household works.

BE A MONEY MENTOR If you are blessed with a sibling or anyone younger in family, be their money mentor. Teaching them the value of money and the way to save and spend can indirectly aid you and reinforce your money mind-set.

INVESTMENT IS THE KEY Once you start earning on your own, investment is essential. Be it stock market, fixed deposit, real estate or anything non-depreciative! One is more prone to unnecessary splurging at this age. This can be detrimental in coming years and hence advisable to keep a check on monthly budget/cost and standard of living.

ENHANCE YOUR SKILL AND PROFILE Enrichment through career can never go waste. Taking courses, higher studies, certifications from accredited institutes shall always add value and give you an edge. These make you professionally ready and business equipped. Moreover such investments are for long term purpose & hence immediate tangible outcomes may not be possible. But this is definitely a key to earn more in future days.

CUTTING DOWN LIVING EXPENSE AND STICKING TO A MONTHLY BUDGET This solely depends on the city you are dwelling. But after a period of time when you are settled somewhere, it’s time to focus on curtailing certain expenses. Buying products in bulk, canning excess food to consume later, reducing waste or anything unnecessary are helpful in curbing living expense. These points cover what you may do till you’re 35-37. What happens after that? More investment, more savings and doing more of something you love. Remember, be a happy millionaire, not someone who might regret of doing certain things at the cost of own happiness.

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MadAbout

Money

THE DESIRE TO BE RICH

IS NOT REALLY LIKE THE DESIRE

Let’s say when you really desired to have your first cigarette with your friend. Remember all the risks that you took to do it? Or your desire to look like and be perceived as the confident teenager. Remember all those things you told yourself in front of the mirror so that your mindset changed?

TO HAVE ICE-CREAM

EVERYBODY IS IN THE RAT RACE TO MAKE MONEY. EVERY EMPLOYEE THAT YOU KNOW OF, EVERY BUSINESSMAN YOU KNOW OF, BANKERS, MARKETERS, ADVERTISERS, DOCTORS, LAWYERS, TEACHERS, YOU, ME, EVERYBODY ON THE PLANET IS RACING AGAINST TIME AND EVERYTHING ELSE TO MAKE MONEY, AND THEN MORE MONEY. BUT WHY?

W

hy do we all run after money and aim to be rich? Is it because we desire to do so? You may answer yes, but think about it, do we really do what we do because we really ‘desire’ money or do we do it because that’s what we are supposed to be doing and that’s what we have been told to do?

If we really ‘desired’… I agree that the above question is confusing and complicated. You might be thinking – Of course we all desire money, isn’t that why we are hankering after it in such a place? Let’s take a few examples from your childhood to understand this better. Think about those times when you have really desired something –

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When we had actually ‘desired’ something The new toy you desired so much for which you worked so hard and got good results so that your parents bought it for you. Such examples are endless…but more importantly, what we do learn from our own past is that…when we had actually ‘desired’ something we went beyond anything and everything and did whatever it took to achieve that. So if you are not changing your mindset, working hard, taking risks, etc, etc do you think you really ‘desire’ money? Get the point? You are just after it because everyone is after it and because you do not know what else to do with your life. And this is precisely why most of

If you are not changing your mindset, working hard, taking risks, etc, etc do you think you really ‘desire’ money? Get the point?

us never make it big in life. Simply because, they never desire it enough!

The ‘desire’ to be rich The desire to be rich is not really like the desire to have ice-cream or desire to go on a trip. It is much beyond that. People spend lives dedicated to this desire and aim. So the desire to be rich, to be successful and to make it big in life comes with a deep rooted desire for something else, your inner goal that is connected to being rich. Ask yourself this – How do you define success? If you answer that owning a luxury bungalow or owning a sports car…ask again…how would you ‘feel’ once you own these? So what exactly do you ‘desire’. It is not the money, the bungalow or the car, but something beyond it and beneath it. Once you get that answer and if it’s true, then you know that you ‘really ‘desire’ to be rich.

Where does the real ‘desire’ lie? For example, to me success means to be able to create jobs for others…I feel a high from doing that, I feel that I am adding value to the world, contributing to society in my own way. In order to be able to be a job creator, of course I need to be rich, successful and owner of a company myself. But these are not the desires…these are rather outcomes of it. The real desire lies in being able to create wealth for others. So I can safely say that I desire to be rich and honestly speaking, I have been able to become what I have simply because I had that desire. To conclude, it can be said that, unless you desire to be rich, you can never do what it takes, never take those risks, have the right mindset or work so hard for it. So desire it. Dream it. Eat it. Sleep it. And get it! Best luck!

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MadAbout

Money

ARE MILLENNIALS REALLY ABOUT THINKING BIG AND DOING LESS? AND MOST IMPORTANT, IS THERE A DISCONNECT BETWEEN US AND OUR FINANCIAL MANAGEMENT? ARE WE PREPARED FOR THE WORLD WE ARE LIVING IN OR HAVING NUMEROUS OPTIONS FOR EVERYTHING- FROM DESERTS AND PEOPLE WE WANT TO DATE TO VARIED ROUTES TO SUCCESS, HAVE RUINED OUR SENSE OF REALITY?

Millennial

Finance

Millennials and Crisis of Unmet Expectations

WILL THEIR FINANCIAL DREAMS

MATCH HARSH REALITY? By Amita Jain A lot has been said about millennials (born after 80s). The Me Me Generation, narcissistic idiots, who still live with their parents, is in bad debt, with no job security whatsoever. We have been categorized as ‘narcissistic’, ‘lazy’, ‘entitled’, at the same time ‘opportunistic’, ‘entrepreneurial’ and ‘idealistic’ on the same pedestal. Amongst all the things we are labeled as, most profoundly common trait is- we are a generation of dreamers. We dream big. Our dreams fall in that zone of iridescent success/utopia that most times they lose touch with reality. Our expectations from life and career are immense. That’s the reason many analysts fear that millennials are going to be hit hard as reality strikes them. As they move further in life, likelihoods are high that they will have a lot of unmet expectations. According to forecasters, the crisis of unmet expectations will befall us at least once in our lifetimes!

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reams are good. They keep us going. But they shouldn’t keep us in a state of inebriation. Reality should well be a part of our dream. From that perspective millennials are vulnerable. There is a need to define a clear path towards financial freedom. Just dreaming about success won’t do. It depends upon us whether we are going to pave the way for a realtime secure financial future or will we keep ourselves intoxicated in our dreamland. This month’s millennial finance will unravel the disconnect between our financial dreams and ground realities and will suggest measures to sail our dreams in the right direction. Let’s learn how we can make our dreams, our biggest financial strength instead of weakness.

THE DREAMERS:

OCD OF SWITCHING JOBS A 28 year old friend of mine, recently enlightened about her financial health told me how she quit 5 jobs and 3 different career paths to finally realize her constantly ruining financial condition which made her give a proper thought to her life goals. Now she is happy finally settling as hair and make-up artist, she has long-term plans to grow in the same field and she has also started to manage her finances well.

instant gratification. Millennials dream so unrealistically because nothing seems impossible to us. We come of an era marked with freedom, no world wars, stability, urbanization, globalization, and king of all, internet. Bluntly stating, we don’t know much about uncertainties. Statistics show that millennials are severely debt-laden, underemployed and live paycheck to paycheck. We dream of having a separate vacation house, home theatre, swimming pool on terrace, but we don’t do what is required for these aspirations. Student loans, auto loans, home loans, have already gripped us tight. It is not to say that millennials are not well-educated or conscious about their present situation, but they don’t seem to do much about it. As per reports, 90% of millennials think that it’s important to save regularly, but more than 39% don’t do any savings (for emergency/ investment purposes). And 43% don’t even use a budget to manage savings and spending, instead more than 90% say they would prefer to take up a menial part-time job over budgeting. Baby! No pain, No gains.

The veracity of our dreams and loss of touch from reality is evident in our constant OCD of switching jobs. Gaining new experiences isn’t bad, but it shouldn’t come at the cost of being financially irresponsible. Dreams are good as long as they don’t prove detrimental to future. Problem is not dreaming; problem is not having a constant dream. We are a generation too obsessed with

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MadAbout

Money ARE MILLENNIALS DOING

ENOUGH TO BECOME FINANCIALLY SECURE? SOCIAL MEDIA INSIGHTS SHOW THAT ABOUT HALF OF FINANCIAL CONVERSATIONS ONLINE ARE DRIVEN BY MILLENNIALS, GENERATING MORE THAN 6.5 MILLION POSTS, LIKES, SHARES AND COMMENTS EACH MONTH.

They have the aptitude, but lack in attitude towards becoming financially smart and secure. Their hearts might be in the right place, they might be gaining information about being financially independent, but it would continue to be hogwash until it translates into our actions. Failing to save systematically can be really harmful in long-run for our generation, since we are losing on compounding benefits. Similarly, giving no importance to budgeting is another financial sin you are committing. We tend to fulfill our bellies with dreams and working hard to earn money. But we are losing on the smart work which is needed in our financial situation. Dream demands planning. Do you have a plan in place? at an early age, yet we dream. Our dreams give us the vision to see an ideal future and the potential to make it happen. All you have to do is connect with your financial groundings and make it a part of your lifestyle. Give our unique financial position the right attitude. We can redefine what financial freedom means. Remember, a generation’s greatness isn’t determined by the data, but how they react to the challenges they face.

THE OTHER

SIDE OF THE COIN No! I am not seeking a silver lining here. There truly is another side to Me Generation. We are open-minded, entrepreneurial and financially conscious, unlike Gen Y and Gen X. Enough ink has been spilled over our dismal financial situation and our bad financial management, but there is more to the picture. We know the importance of managing finances, but given our unique financial position, we are not aware of the ‘how-to’ part of it. I say unique financial position, because none of the previous generations were this ambitious, debt-ridden and open to new education, at such an early age.

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Social media insights show that about half of financial conversations online are driven by millennials, generating more than 6.5 million posts, likes, shares and comments each month. Why this is not reflected in our attitudes, is something to be pondered upon. Though there is disconnect between our savings and seemingly good financial knowledge, millennials are heavily cutting down on big-ticket lifestyle to back their lofty dreams. But sadly so, this idea isn’t completely working out. The money they save by trade-offs and not pursuing a rich guy’s lifestyle (owning cars, big homes, branded clothes, using credit instead of debit card) is all going towards paying off debts instead of contributing

SOME FINANCIAL TIPS FOR MY MILLENNIAL GENERATION 1. Have a monthly savings plan. No matter how inconvenient savings seem along with burdensome debts, building savings is most important for millennials. It is a financial strength they will realize with time. Save at least 3% of your annual income. Remember, if saving is a habit, failing to save is too.

2. Save and then invest your savings in diversified investment tools. When you save and invest from an early age, the power of compounding becomes yours. You are in for amazing long-term returns. For example, if you invested INR50000 in apple stocks in Dec. 1980, it would have grown to INR1.43cr. by today, giving an annual return of 16.75%.

3. Don’t shy away from budgeting and lose sight of numbers. Budgeting is no out of date, traditional financial custom. It is still very relevant and will remain so in future. For start, make a relaxed budgetary plan of income, spending and savings.

I strongly believe it’s about making your weakness your greatest strength. Our generation is debt-ridden

to savings.

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MadAbout

Money

Desi Finance

Papa Kehete Hai Clash between parents’ fear of unknown and

OUR DREAMS OF

TOMORROW By Amita Jain

Life is full of opportunities at every step. It gives us many scopes and chances to innovate and be proud on ourselves. What we do with these opportunities matters! And what we don’t do, matters as well. For every path that we take, makes us who we are today.

Yesterday, my neighbor came with a peculiar question to me. He asked me to tell him ways to discourage his son, from becoming an entrepreneur. So frustrated and hopeless was he with his kid. He asked me, “Ansh beta! Ever since you left your seven figure salaried job, you must have seen many downsides, tell me all about them so I could tell my son, not take on the same life.” I was startled. We were not even regular meeting pals. I was surprised that without even knowing me properly, how can this mid 40s looking man judge my life so low? As I was about to raise these questions to him, I was reminded that he and my papa (dad) go to the same park for morning walk. Still dealing with the realization that after all these years, my dad has still not approved my decision of leaving the job to start a company of my own; I told uncle that I will call him tomorrow. This neighbor reminded me of so many past memories.

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H

i! I am Ansh, 30 years old entrepreneur, life coach, investor, and a to-be father. I was first in my family to leave the stability of nine-to-five job. I am writing this piece for those budding entrepreneurs whose ambition of starting a business doesn’t go down well with their parents. I was in 5th grade when I first found the entrepreneur in me and that was when I also received a tight slap from my papa. I wanted to buy a new video game, and I knew papa wouldn’t allow that. So, I devised an idea. I would cycle to Nayi Sadak and buy comics in heavily discounted wholesale prices, and then rent it to the kids in my class for 10 rupees a day. Eventually, my papa got to know about this via my cousin and I got bad beating. He said I should focus on my studies. But, for me, it wasn’t about money or video game anymore, I loved the excitement of turning an idea into reality and understanding people’s spending habits. My experiments and learning from markets have continued ever since. Many Indian parents shirk from letting their children travel on untrodden paths. This friction is especially common between parents and children of first generation entrepreneurs. It is not about if parents are right or wrong. It is rather important to understand that these are just their opinions, which in all probabilities are a result of their inherent conservatism and their own life’s struggles. They have never experienced any entrepreneurial journey and do not know if it’s the right thing. By being protective, they are just being who they areour parents. But times have changed. Earlier there was only one insurance companyLIC, now there is a swimming pool of them. It all depends upon how strong your resolve and passion for entrepreneurship is. Knowing that existential

questions from parents can sometimes depress/frustrate aspiring entrepreneurs, I have listed some “Papa Kehte Hain” dialogues for you, to help you rise above parents’ perceptions and beliefs. They will also come handy in making your parents understand your point of view. 1.

START-UP FAIL HO JAYEGA! (Your start-up will fail.) This was the first dialogue I was vilified with when I first told my papa that I am going to leave the job of Marketing Head to do a start-up of my own. I understand that middle class is a status achieved and listening to their kids wanting to start their own company might seem too risky to them. Probably, their idea of rising in economic status is to wait for the day when their progenies will earn better than them and will eventually lead to upper class. But what about inflation, papa? Living in a world which is so rapidly changing, the biggest risk would be to not take any risks and fear from failing. I myself have failed a few times in my venture, and I might fail again. But the truth is, the biggest learning of my life has come from failures. I always say- being entrepreneurs we should fail often. Remember, “…successful people shoot for the stars, put their hearts on the line in every battle…In the long run, painful losses may prove much more valuable than wins…” And parents! It’s important to give your children a chance to fail. Until when can you control your kids’ destinies? All you could do was to prepare your kids for this world. 2.

MAINE SAB DEKHA HAI! (I have seen it all.) This is another dialogue I hear most dads speaking, including

mine. My dad tried to start business with some Sharma Ji, but it didn’t work out so well. And yes, he has many negative opinions about starting a business. I understand where they are coming from. They lived in times when owning a business was considered as a way for survival rather than a way for growth, experience and satisfaction of creating something. Desires and expectations from lives were different. Now, people have high expectations and numerous choices. Buying FD could is not the only form of investing money, now we are thinking in-terms of diversification of portfolios. When it comes to starting a business, parents/friends/relatives will have many preconceived notions and advices. They will tell you horror stories and how it’s safe to stay in your present job. But, it’s important that a serious entrepreneur dissects between perceptions and unbiased reviews. Bring yourself from dreaming state to sobriety. Check every opinion and advice that you get.. 3. IF YOU ARE GOING TO DO THE SAME TYPE OF JOB THAT YOU ARE DOING NOW, THEN WHAT IS THE POINT OF LEAVING SUCH A GOOD JOB AND COMPANY.

In my case it was marketing. Marketing is my forte. I was doing that in my previous company and my start-up was based on same genre. Listening to this, my papa got so perplexed that why I would study in India’s premier institution, get a wonderful job and then leave it to do what I am already doing. To him, I was leaving a steady paycheck to do the same work for nothing. To him, I was leaving 25 years old stable company, to work for a company yet to be born.

To him, I was letting go off seven figure salary to get nothing in return for at least first three months of the start-up. But, to me, I was moving from getting orders to giving orders in a field I love. To me, I was leaving 25 year old company to bring my vision of a company to reality which will be quite ahead of times. To me, I was letting go off seven figure salary to earn job satisfaction and an opportunity for reskilling, to stay relevant in changing times when jobs will be less and takers will be more. Parents don’t see from these angles because they don’t want their children to get hurt. They don’t realize that they want to send their children to scramble for a piece of the PIE for whose piece the whole world is scrambling for. My dad still fears that my start-up might fail one day. But mind me, only failures will help you win. Next day, I called my neighbor and told him- It won’t matter if you discourage your son. If he truly wants to become an entrepreneur, he will and you won’t be able to do much. So, you might as well let him explore his opportunities.

FINAL WORDS Parents Don’t teach your kid lessons in something they don’t get even after numerous efforts. If they are good at something, give them training in that. Aspiring Entrepreneurs, Becoming an entrepreneur isn’t a straightforward journey. Ask yourself, do you have the strength to crawl through shit to come clean on the other end? Choose your targets and goals which truly inspire you, not just for the sake of Papa Kehte Hain!

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FINANCIAL

FEARS THINKING WILL NOT OVERCOME FEAR,

ACTION WILL

FINANCIAL FEAR 1

I WILL NEVER BE ABLE TO GET OUT OF MY DEBT Having been caught in a bad debt is most haunting financial fear for people of all ages. Bad debt is the debt which you borrow to buy things/services, but that doesn’t earn you any money. Repaying bad debt may feel like you are working for the past and it is draining you out of your cash flow, time and intelligence. You may feel you will never be able to rise out of it. Well, you aren’t alone! Most people in debt feel like this. Is your debt fear holding

you from managing your finances? Don’t let it. The secret to eliminating debt fear is to stay calm and manage finances. First and foremost step towards managing debt is to make a budget. With a budget you will get to know how much you will be left with every month to save, invest and direct towards reducing debt. Secondly, in order to increase your surplus (Earnings-Expenses), look for the areas you can trim your expenses. Also, if

possible, try to increase your income by getting a second job (part-time or freelancing). It will mean more money in your pocket. Finally, take baby steps and set small goals of repayments- for today, for this week and this month. For those who have credit card debt, you can talk to the card vendor and see if you can get them to lower your interest rate. Say, you are shopping around for other profitable vendors.

Don’t let your financial fears derail your finances. Address them and take your first step towards financial freedom. TIP Try to take only good debt (i.e. borrow money to invest in areas which will earn you income). If you have bad debt lurking on your head, develop a financial game plan for repayment by availing above suggestions.

FINANCIAL FEAR 2

I DON’T HAVE ADEQUATE SAVINGS IN MY BANK ACCOUNT

M

oney is life’s necessity. For all the good that can be done with money, a lot of thoughts about money cause us a lot of stress. Just like in childhood, stories of ghosts in the park and getting bullied from seniors kept us awake in nights, money issues have become the cause of serious late-night

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worries for many adults. Financial fears can range from anxiety of getting a bill in the mailbox to piling-up debts. Humans have an odd way of reacting to threats. Getting scared, we try to ignore and avoid them. Truth is, these are fears because you haven’t faced them yet. Don’t get so overwhelmed

with your financial fears that they become bigger than yourself. Face them, understand them and bust them. Remember, things can always get better. Only when you are thinking clearly, can you become a smart money manager. Let’s clear some air around your financial fears to give some hope to both- your finances and sleep.

Another dreadful financial fear is: the fear of lack of adequate saving worries people about two thingshow will they ever be able to retire? And how will they manage financial emergencies? It’s said; when money is tight, savings are the last thing people want to think about. A report suggests that many Gen Xers and Millennials are living paycheck to paycheck lives, thereby socking away their entire earnings and failing to save much. Amidst debts, maintaining a fine

lifestyle, giving good education to kids and fulfilling day-to-day needs, we often fail to acknowledge this aspect of our finances. And suddenly, this neglected aspect hits us in face. Lack of savings brings retirement and emergency fund horrors for many. Savings can give a cushion and soften the blow of unexpected medical expenses, car repairs, kid’s college education etc. Savings also proves to be a great lifesaver in old age. Even though, creating a safety net of

savings may sound daunting, but it is easy. It all really boils down to saving a little amount of what you earn in an account you cannot touch. We suggest saving 5%-40% of your paycheck (lower limit for millennials and upper for those reaching old age) every month into this account. The secret to maintaining consistency in savings is to ‘make this transfer automatic’. This way, a certain portion of your monthly earnings will automatically get saved every month.

TIP Save by opting for automatic funds transfer mechanism, but DON’T become an ‘over saver’ or go into casino mode to put all your eggs in one basket. Use other part of your earnings in spending and investing. Don’t let your fears overpower your financial faculties. Stay smart, Get rich!

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WHEN CONTROLLING YOUR EXPENSES IS NO LONGER DIFFICULT One of the most pertinent financial problems that each and all of us face is expenses control. So, a truly moneygasmic situation would be when controlling expenses is no longer difficult for an individual! Sounds impossible? Well, not really - here goes these few simple steps towards achieving this expense control moneygasmic situation!: 1. Always spend less than what you earn – If you spend more than what you earn,

you will fall face flat amidst a spiraling debt. If you spend equal, you will never meet emergencies. Only and only if you spend less than what you earn and work towards making this gap bigger and bigger, can you save, invest and plan for the future 2. Use your money to generate more money– The golden rule for expense control,

rather than spending your money in liabilities, invest it in assets and avenues, so that it generates more money for you. It can be education that would get you a higher paying job in future, it can be a new business, it can be stocks, etc 3. Plan ahead for the future – Make a habit to look beyond this current month. This

might include looking into loans or products bought on EMI which has to be paid in future, an emergency fund for unforeseen occurrences, retirement plan to take care  of you when you lose your ability to work and earn, etc.

THE GOLDEN RULE FOR EXPENSE CONTROL, RATHER THAN SPENDING YOUR MONEY IN LIABILITIES, INVEST IT IN ASSETS AND AVENUES,

Internalize these three into your life and controlling expenses will no longer be difficult! 

WHEN RETIREMENT IS WORRY-FREE A truly moneygasmic situation is to have a worry-free retirement.

One of the most troubling worries for any working individual is their retirement. The anxiety that they might not have enough to maintain the same lifestyle, or to meet a sudden medical emergency after retirement, always persists at the back of the mind. Hence, a truly moneygasmic situation is to have a worry-free retirement.  How does one do it? Here is the plan: 1.

Manage Debt – Firstly, take a stock of all the debt you have, rank in order of interest rates, duration, etc and plan to pay them out. Be it credit card loans or house loans, being debt free is the first step to being worry-free during retirement.

2. Manage Benefits – Benefits like Long term care is a crucial thing and has to be

taken into account. Consider financial aspects like life insurance etc so as to plan your own long term care for a worry-free retirement phase. 3. Analyze Pension Options – If you are lucky to have a guaranteed pension than

analyze how much and the form of payout for the same. 4. Make a plan – Lastly, for a true moneygasmic worry-free retirement situation,

consult a professional financial planner and structure a proper retirement plan keeping your income, expense, financial goal, etc in mind.

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IF YOU ARE LUCKY TO HAVE A GUARANTEED PENSION THAN ANALYZE HOW MUCH AND THE FORM OF PAYOUT FOR THE SAME.

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