S9 Financial Planners

1
What did your school never tell you about
personal finance?
Indian schools are mostly the place where many of
them have the best of their memories and best of
their knowledge. We learn about different
concepts, theories, and subjects like physics,
chemistry, history, maths, and above all so much
about unity, discipline, expectations! One thing
that is surely missed amidst all of these is
understanding or rather I must say a glimpse of
the real world. Dont get confused, I am
directing you towards the most important aspect
of ones life that is Personal Finance. How we
can earn money is definitely taught but the
importance of sustaining it is ignored! Many
know what Money is, what is its use it? But how
many of us have been taught in school the
lessons of Personal finance which mainly consist
of learning the difference between Savings
Investment, nature of Inflation and avenues of
investment, and so on. I wont say changes are
not happening, but I wish mainstream schools
start incorporating real-life lessons and give
teaching a much-needed makeover. As its been
said, Learn from others mistakes, to avoid your
own. Today, I want to call your attention to
some crucial learning on Personal Finance in
general that unfortunately school never tells
you. Early the better, latter the bitter The
thumb rule of managing finance is Earlier you
start the better you get. Start with the
mindset of savings from the beginning, right when
you start getting pocket money. If you have
passed that age then teach your kids the
importance of delayed gratification. Ideally, we
waste a lot of time for the right age to arrive,
so to start saving or investing. Practically
speaking, we all know responsibilities increase
and so does pressure when the so-called right
age knocks. Investing in small chunks is easy
when all your money is for games, movies, and
dates. Think of this activity as an internship
where you are still learning but feel as if you
are grown up!!
2
Saving vs Investment We all know, the digital
world has made learning accessible within a reach
of a click. In fact, sometimes its too
overwhelming with the ocean of information
available to us. Now knowing the differences
between savings and investment is an easy task.
There are many who are still struggling
though. It is said, saving is for our short-term
needs and investment is for the long-term, but it
can exactly be vice-versa too. We need to
understand our short-term, mid-term and long-term
goals and accordingly sieve the earnings into
baskets of investment and savings. Avenues to do
that are many but without clarity on goals,
doing random investments is completely
unadvisable. Inflation- Mehangai kitni badh
gayi hai! We often have heard this line from our
parents when we were young. But what is
Inflation? Did our school ever tell us about it?
One can get all types of definitions now, online
or in books but to make it easier to
comprehend, Inflation is like that mechanism that
slowly gobbles up our savings and brings us to a
vulnerable state that reduces our purchasing
power. It is important to know about how
inflation works, especially a much-needed term
while one is planning to save. Here when digging
deeper, it gets clear that savings in the bank
will not be enough to beat inflation. One needs
to understand avenues of investment to do
it. Liabilities Being in college we all learned
about assets liabilities as of the basic
understanding. And unfortunately, if you are a
science student in India, this lesson holds no
grounds. But it was only limited to companies
assets and liabilities to make PL Balance
sheets. However, many of us were never told that
there are personal liabilities or assets that
need to be taken care of in the future. There is
too much pressure already built around the word
liability. First, let me reduce that. Asset
and Liability in personal finance go hand in
hand. Many of us cannot create assets in todays
life without the help of liability for eg buying
a car or home with a loan. We build assets with
the help of taking liability on us. The thing to
learn here is what is a good liability and what
is bad. Here we need to garner more knowledge
about asset and liability management for which
crucial thing to learn is budgeting. If you need
help doing this, the best is to have a financial
planner beside you to guide you. Wants vs
Needs Budgeting brings me to the topic of knowing
the difference between wants and needs. Like I
spoke earlier about delayed gratification. Many
of us survive in an environment of instant
gratification rather than a delayed one.
Therefore we forget this leads to too much
pressure on ourselves or our parents and even
schools fail to teach the difference between
wants and needs. For instance, no school has
ever taught the importance of emergency funds
whereas more than 45-50 of Indians are not
equipped in case of emergency. Whereas E-commerce
sales have increased from 30 to 40 in the last
year. Its alarming that people are busy just
shopping but not saving. It does not mean I dont
shop but I want to emphasize the importance of
balance in doing both.
3
Changes happen gradually but we need to be a part
of that change! Bring in this thought from the
beginning, so what if the school did not teach
us! We can start by teaching our kids the
importance of personal finance.