Imparting Financial
knowledge to their children at a young age is very important for any
Parent. Equally important is to acquire
Financial Knowledge themselves.
Financial Knowledge is not about where to Invest or how to
multiply? These are Investment Knowledge. An understanding of their Financial situation
and priorities are the Basic Financial Knowledge required, to start with.
Many people might say
that money is not important in life. It
is totally untrue. Money is very
important in life. It is as important as
the blood running in our body. The
example of Blood is apt as you cannot have less or afford to have more. Both are dangerous. This concept is very nicely expressed by
Suresh Padmanabhan in his book I LOVE MONEY, which I read many years ago.
The financial situation
and priority are different for every individual and is determined by Age,
Personal Commitments, Years of Service left and existing Assets. The problem often is on the understanding of
the reality and setting the priorities.
Many people often feel that what they have is not enough for the future
living. This is common in people who are
above 50 years of age, more so with the people who have retired. Ironically, many such people leave behind lot
of money when they leave this world. Was
it worth going through the tension and pressure, for the money that they had no
use for? This is an interesting question
and an important one.
When you discuss
Financial security and Safety with people, they always express the ‘Fear of
Unknown’. Some of them also express the
‘Fear of insufficiency”. All these comes
out of “What if?”. Too much emphasis on
this question is dangerous. People
always have the tendency to suspect that what they have might not be enough to
cover their Living and Medical needs.
The fear is more on the Medical needs.
To add to this, people normally say that they want to be self-sufficient
and do not want to burden their children.
This is more of an Ego at play.
Our Children are our greatest Asset and the biggest and best form of
Insurance. Just like an Insurance Policy
that pays you on Maturity, upon proper payment of premiums; the regular Premium
paid to your children in the form of Transfer of Values will reward you with high
returns at the time of Maturity. If the
value systems have been passed on to our Children properly, we need not be
insecure about our Children taking care of us.
Just like how we feel it is our duty to take care of our Parents, it is
equally logical for us to believe that our Children will take care of us during
adversity. We can set aside some funds
for our future medical contingencies but cannot be worried whether it is enough
or not, beyond a certain point.
In the name of Future
Safety, one takes lots of efforts, indulges in sacrifices, faces tension,
undergoes Pressure and takes risk. If that extra money, earnt, is not going to
be used for him in his lifetime, are all his actions justified? If one requires only a certain amount to
cover his Living and Medical needs, any amount he might have beyond that is
only a number. The number may be bigger
or smaller. It will only help his legal
heirs. So how is it logical to go
through everything to increase the number which is irrelevant?
I am in no way
suggesting stopping earning, once you have enough for your living. The earning
process can go on till the last day.
But, once self-sufficiency is attained, risks, sacrifices, tensions and
pressures should be avoided in making those extra bugs. The purpose of money is to lead a life. The Purpose of life is not to earn
Money. One needs to have time and space
to lead a normal life. If most of the
life goes in education, employment and earning money; when will one find to do
things what they want to do and lead a normal life.
Stretching the
boundaries of duty beyond normal borders, exaggerated living standards, high
expectations, Greed, Fear of Unknown are all unwanted guests in our mind, who
push us to go through the ordeal of chasing more money. To overcome these factors the first thing one
needs to do is understand the situation clearly keeping in mind the
reality. Many times, we find people
self-certifying their Financial Plan and take pride in ‘Know it all’ attitude. This is the first thing that one needs to
avoid. Planning the Finance should be on
an inclusive and transparent basis.
Keeping your plan known to your Children will help them understand your
thoughts and their duties.
When a reality check is
done on your finances, always calculate the House that you own and live and the
Gold in Hand. These are your real
contingencies. While you are in Service
you need to exclude the own house where you live in and the Jewels you have,
when you calculate your Net Worth. But
when you calculate how much you have for future use; you need to include them
while calculating the Net Worth.
(To be continued...)
(To be continued...)
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