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Money Talk

by | Apr 30, 2015 | Basics, Credit Cards, Finance

Generally, the middle class, salaried folk do not talk about money to their kids – it is almost a taboo. In contrast, the businessmen always try to get their kids involved in their business. In fact, the builders whom we deal with ensure that their kids – as young as 16 years old – handle multi crore projects.

In the investment class that I teach, I always ask the question – “Have your parents told you what to do with the money that you are going to earn?” I’ve never got a positive response, never. Wait, I did get a positive response once. The conversation went like this

“Your parents told you what to do with your earned income?”
“Yes, Sir”
“Very good, very good, so what did they tell you?”
“Don’t be a slave to the loan companies – avoid EMIs at all costs”
“That is good advice, very good advice, but have they told you what you should actually do with your money?”
“Yes, Sir. They said, I should keep a small part of my income for my own needs and spend the rest in the seva of my guru!”

I really wished very much that these particular set of parents did NOT talk to their kid about money!

The problem with not talking to kids about money is that over the long term, the kids develop a feeling that their parents really don’t know that much about money and when they start earning, they don’t listen to the parents and fall prey to the Insurance agents masquerading as “Financial advisors” or the absolute worst “Bank Relationship Managers” and get taken for a ride by all of them.

In my opinion, the amount of wealth one builds in a lifetime depends to a large extent on how one invests in the early years. So, this lack of knowledge can be disastrous.

The rules of building wealth are simple. Do drill it into the kids:
• Work – Earn a living
• Live within your means – Spend less than you earn
• Save
• Donate.
• Plan for unexpected contingencies :
o Have mediclaim coverage to take care of unexpected medical problems.
o Have a 6 month ‘Emergency Fund’ for support during job loss, etc.
o Start a retirement saving fund from the first pay cheque itself.
o Avoid Life Insurance policies until someone is dependent on your income.
• In the old days, ‘Karza’ was a bad word (with good reason). People who were ‘Karze mein dooba’ were looked down upon. The modern day credit card is exactly the same – avoid it like the plague.


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Written By: niranjan

Financially Stupid Niranjan


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