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I was recently looking at a meme on money that said that while ordinary people lost sleep because of small amounts, (a particular) industrialist loses sleep only when he loses some millions. This is not really true. Even those with big money lose their mind and sleep on loss of small amounts. They understand the value of even small amounts, because it’s only the small amounts that accrue to bigger amounts.
Table of Contents
- Money and Income
- Abundance
Money and Income
Money and income are synonymous for the individual. After all, what is that money which is not with us? Some thing is money only when it belongs to us in whatever form of asset, else it is not money. Money with others is either a source of stress with the sense of relative deprivation, of anxiety, or in a macro economic context a source of power for that person vis a vis others in the society.
And how does an individual have money? Through income. Income is the only regular source of money whether it be from salary or business profits. There can be non regular sources of income as well: in the form of inheritance, winning at lottery, receiving donations/gifts on certain occasions like marriage etc. But the non regular sources happen very rarely, and some may even come along with grief eg. loss of life of a loved one, which no one really likes.
Abundance
Abundance is a broader concept which includes many other intangible things like happiness, sense of fulfilment, accomplishments, friendships, among others. However, the main source of abundance is money. Many things in life is possible only when one has money – because everything, and particularly the quality has a cost attached to it. A good education, access to an important seminar, a meditation retreat, a good physician – all that comes with money, as it opens up access to many avenues that form the inputs to a better life.
Though money by itself is only one source of abundance, in a contrary manner, in absence of money, there is no abundance. Imagine a person who may have a loving family, good friends, but no income of one’s own – can such person have sense of accomplishment or fulfilment? After all, the output of achievements and accomplishments is money! If there is no money at the end of the tunnel, it is at best a hobby – which in reality means little except for some praise by a near and dear.
1) Outlook To Money
(a) Materialist and Money Minded
In a life where our aim is manifestation of abundance, it is ironic that many people have a negative outlook to money. Such people speak of “values” as having greater significance. And their vocabulary is filled with words like – “materialistic,” and “money-minded” and similar words for the other people who are doing well monetarily in life. Speaking of others in such terms is primarily a mindset of poverty. This has to be understood a bit deeply.
A person who is earning through legitimate means, and focused on his work does not mean they are undermining any values. Just because they are passionate about their work, and protective of their time, does not make them materialistic or money minded in the sense of those words. It would be better to say that such persons are rooted in reality and enjoying their work.
Calling someone materialistic or money minded is indirectly accepting one’s own disconnect with elements of prosperity and abundance. Disparaging someone in such a manner is putting up hindrances to ones own chances of manifestation of abundance.
(b) Greed
Dictionary says greed is reprehensible acquisitiveness; insatiable desire for wealth or intense and selfish desire for something, especially wealth, power, or food.
Now, this word needs some explanation and lets leave the food part aside. Lol. A person would be greedy if they do things only for money without regards to anything else. A businessperson indulging in illegal acts to make more money is greedy. Or consider those big businesspersons who took huge loans from banks and didn’t repay the loans and escaped to other countries so that they cannot be compelled to pay back.
Also, greediness is not just a function of money, but also many things and situation – for example, a teacher who doesn’t teach properly in school where he is employed and hopes that students will join his coaching class where he moonlights, is greedy. What do such people lose? Respect.
One of the important aspect of abundance is respect from people who looked at you with hope and trust. If a person breaks hope and trust for their selfish ends, it is being greedy. Being greedy is not in the ambit of abundance.
2) Understanding The Importance of Money
Not everyone understands the importance of money. Many people, often give importance to non monetary aspects of life, and blissfully and deliberately underplay the importance of money.
For example, a poet who writes good poetry keeps posting snippets on Instagram, people like those snippets and the poet gets a sizable following. Now what? If there is no money at the end of the whole process, it is just a hobby. A hobby by itself may give limited happiness, but it won’t give money or abundance, unless it is put to commercial use. Having a skill without any commercial application is a waste.
Why is it a waste? Because every hobby, or a skill that is developed requires the person’s time and someone’s money, even if that is one’s own. Unless the hobby or skill forms a small part of the person’s life and done only for relaxation (while the person has a main source of income), then it is not an issue. However, where a person doesn’t have a main source of earning, and squanders away time and someone else’s money on such a hobby or to develop such skill without putting it to any commercial use doesn’t understand the value of money.
Such naive people need to understand and accept the reality and not live in a dream world. Living in a dream world is a waste of life.
3) Risk and Money
No money comes without risk. Every work, every profession, every business is an adventure in risk. The risk is of loss of one’s time, and loss of investment. But, success is also an outcome of taking risk. If a sprinter would fear falling how can they run? But if they take the risk of running, there is also the likelihood of winning. Winning brings prosperity.
Here an interesting view that needs to be examined. We have heard the adage “try, try, and try again.” Sometimes, this concept of “keep trying” is taken to such extremes that many students waste their life pursuing a goal in which they are failing persistently. While their focus is on taking risk for success, they have certainly not understood the factor of time as an essential aspect of prosperity.
If people don’t take care of the time element in their goal to achieve success and money, then the risk and efforts are a waste. A balance should always be exercised between the time element and success element for the desired prosperity to be meaningful.
4) Career and Money
Career is a major determinant and provides a limit to the quantum of income and the money that one can have. A welder would never be able to earn money like the engineer, a daily laborer can never earn money like that of a businessperson. Here, many social factors come into play. The socio-economic background of the person, the place they come from, the education they received, the outlook of their family.
Even when one gets placed in adverse situations of life for no fault of theirs, one can still overcome one’s life situation through education, reskilling, and enterprise. The main thing is how is the person’s outlook? If a person is fatalistic and gives up trying, then such person has no scope of improving their life situation.
One needs to realize how best to use one’s skill and maximize their earning potential, while progressing towards opportunities that gives them growth. Career is not just one entry point and one exit point. In fact, career should be looked as a set of such points. Life itself should be seen as a long career with many opportunities.
A detailed write up on this subtopic is at Career Choices and Realities
5) Budgeting Expenses
Budgeting is the nut-bolts of allocating money available to different heads of expenses. It is making a plan for normal circumstances. “Normal circumstances” because for the unforeseen there is a contingency fund that one should always maintain. It is just allocation. It is not necessary that it has to be spent. It’s only in Government, where the focus is on spending without any focus on quality or requirement of such expenses.
Budgeting is mainly making a list and making an allocation of the amount one is willing to spend on a particular head of expense during a particular period of time. It is a good way of financial planning. Now a days many apps and software are also available for this purpose.
6) Saving Money on Expenses
Saving is an essential aspect of earning. One can save only when one earns, and only when the earning produces some surplus. Saving is done for the future – for the “rainy day,” the days when one won’t have the regular resources, so one can rely on one’s savings.
This may sound strange, but one can save on one’s expenses. Often people are moved by psychological factors like FOMO (fear of missing out) or by status symbol, more specifically, many products with no additional functionality are marketed purely as status symbol items, with high price which has no direct correlation to their functionality. For example, in products like mobile phones and laptops, some brands charge too high prices, and project themselves as status symbol items, whereas similar or better functionality products are available from other brands at lower price.
In such cases, one should decide what is the thing that is important. Is it functionality or it is just the status symbol of the brand. Such decisions often tend to influence all our buying activities. People even end up buying the common salt from a big company that charges much higher price.
Then, in expenses, when buying any product or service, it is always good to check if there are any discount codes or coupons available. Often there are, which can be easily found by searching the internet, or even asking for discount code directly from the seller. Once, I wanted to buy a software, and I asked the seller, if they could provide me any discount? And the reply came quick with a 20% discount code!
Similarly, big hotels and restaurants may have membership options which are offered free. They offer discounts, and cashbacks on dining and stay and also invitations for special festive occasions.
During COVID, the movie theaters had closed down, but in normal times, they offer bulk discount. So, if you are a regular to movies, then these bulk discounts can be quite a saver. Usually these come in the set of 12 or more tickets, valid for 12 months. There can be variations to this, but these offer good discounts.
Similarly, even in OTT platforms, there can be wide variations in the subscription rates. Often people take subscription to many of these simultaneously. One should evaluate whether being subscribed to 7-8 OTT platforms is providing any value? Or if one really has the time to watch these. Sometimes while we takes an annual subscription, we ends watching only two – three movies, sometimes even forgetting that we ever took such a subscription!
Often, Apps also have the option of Discount Codes during checkout. However, these are placed in such a manner that one can overlook that tab. So, while ordering through Apps, one should be on lookout for such “Apply Discount” or “Discount Code” tabs.
Internet is a good source for finding coupons and discount codes for many products and services, particularly digital services.
Besides, at times there are options during purchase that if one uses Credit Card or Debit Card of particular issuer or particular bank, then one gets discount. If one has such a card, then one should use them.
Saving money doesn’t mean sacrifices. It means not wasting money on things that are unnecessary or will never be used. Every penny saved is money earned. Besides, being frugal and prudent is good for mental health and also for the pocket.
7) Investing Money
While saving money is an extremely good habit, mere saving is not enough. Saving by itself is a limited strategy particularly in our times when there is high inflation. In such situations of high inflation, the value of savings diminishes over a period of time. The money saved must be invested. There are many avenues of investment.
(a) Investment in real estate, like land, and properties.
Usually, while the price of land keeps on increasing, those of constructed property keeps on decreasing. However, the property can be put to good use if it is rented out.
(b) Investment in Gold, Diamonds etc.
This continues to be a popular form of investment for those with surplus income. Not only does such property is easy to hold and carry, usually their market value keeps increasing. However, if one needs urgent money, liquidating these can be problematic as these are not ready cash, and needs buyers who are willing to pay the market price.
(c) Bank Fixed Deposits (FDs)
These are also known as Time Deposits, and are easiest to hold and convert to cash. However, in the recent times, the interest rates offered on fixed deposit are much lower than the inflation rates, so even if one invests in such Bank FDs, the value of money is going to get eroded over a period of time.
(d) Mutual Funds (MF)
These are collective schemes where the Mutual Fund manager holds a basket of shares/equities of various companies. This reduces risk, and many people can invest in such Mutual Fund units. Success and profits in the MF is possible when one holds to the units for a long time and invests on a regular basis.
When it comes to Fixed Deposits and Mutual Funds, there can also be tax free options, when one invests in such bonds or Mutual Funds for a specified period of time and gets a tax exemption based on the amount of money invested.
(e) Equities and Shares
This is holding the shares of the company directly (as compared to investment in MF). The fluctuation in Equity and Shares are often and there can be wide variation in prices. Usually, an element of expertise and understanding of the business environment is needed to be successful in the equities and shares.
Besides, the stock market provides opportunity of investment in Derivatives, Futures and Options. These are all specialized securities, and one should invest in these only when one has some expertise.
(f) Private Bonds
These are issued by companies, and are not traded in the stock market. While investing in private bonds, one should see if these are secured or unsecured. There is also another segment of Bonds, which are openly traded in the Bond Market of the stock exchange. In the traded segment, liquidity of the bonds are easier as compared to investment in the private bonds that are not traded.
(g) NFTs and Cryptocurrencies
These are digital holdings and have huge potential for investors as well as in application. This segment is bound to grow in the near future. Even many governments are grappling with this technological innovation the world over, there has been a wide response from declaring it illegal to accepting it. Regulators are slowly catching up with it.
Needless to say, Investment is the real passive income. (quite unlike to the way the word is defined in US law or how this word “passive income” is usually put forth by the online community)
8) Habits and Expenses
Habits, addictions, and temptations form an important aspect of our choices for expenditure. Addictions are those temptations that have become habits. I remember, when I was a kid, I would pester my Dad to take me to buy softy and donuts. Later on, I became addicted to Lassi during the summers. There are many forms of addictions and temptations that are either explicit or invisible. Going out for dinner everyday is a form of addiction. Some are addicted to collect or buy something and hoard them in their collection. Some are addicted to buying fountain pens, some are addicted to hoarding wrist watches or shoes.
Such habits and addictions are a contrast to reason and prudent behavior, and the direct consequence of this is wasteful expense. Advertisements may create in you the feeling of relative deprivation where you get satisfaction only when you purchase the thing. And then the cycle keeps recurring.
Also, some people when their mood is down, they go on a buying spree that tends to improve their mood.
We keep spending money on unnecessary goods and keep hoarding just to mollify our mood and our happiness gets intertwined with and dependent on the purchase and possession of goods.
This is something that no amount of preaching or persuasion will help, only the individual can develop habits or control them. Try doing meditation, try being calm, try not to become dependent on physical goods. Go for an outing, spend time with your family. All these enhance the human side of us and makes us less dependent on external things. Besides, it helps in saving money as well.
9) Controlling Cash Flows
When it comes to matters of money, a very interesting way to save is defer the cash flow.
Usually a business works in the principle of credit. By that is meant, the business expects to receive payments in a certain number of days. When items are purchased on cash, they give cash discount for payment by cash at the time of purchase/sale.
However, if one has larger expenses, the best way is to use a credit card. Here, a word of caution – one needs to be careful to have read and understood all the terms and conditions of the credit card issuer, besides not to be reckless in the use of credit card.
When credit card is used, two kinds of controls are exercised. One has a statement of expenses, so one can see where one spent, which expenses might have been avoided, or which were necessary or which ones were unnecessary.
When using credit card, one gets a time period by when the amount has to be paid to the credit card issuing company – usually it is one month. That gives an ample time to hold on to ones cash.
If one’s expenses are on higher side, credit card can be an indispensable tool. The credit cards usually have an annual fees, and if certain expenditure criteria are met, the annual fees is waived, besides other benefits that can be given by the credit card company. eg. food vouchers, or vouchers to subscriptions to certain services, also points converted to Amazon Gift vouchers. All these are extremely useful when one wants to save and control one’s cash flows.
10) Personal Finance
Personal finance is no rocket science, but it does need a rational mind. Saving and investing is an essential part of personal finance. It requires some reason, and some rationality. One should keep in mind that having a good personal finance portfolio is going to be a great help in living life with confidence. Not only it is a matter of outlook to money, but also how one views the whole process of income, savings, investment, taxation, returns, as a cycle of reason. Being money-aware is an important part of awareness of life.
You may also like to read Understanding Balance Sheet, and Career Choices and Realities