Bagavad Gita

“Bound by your own Karma, born out of your nature, deeds which out of delusion you wish not to do, you shall do helplessly against your will” O Kaunteya --Bhagavad Gita - Chap: 18 ; Verse: 60

Sunday, October 17, 2010

The Art Of Money Management For A Novice

Prologue :
“Amassing great wealth is gradual, like the gathering of a theater Crowd.
Its dispersal is sudden, like that same crowd departing”
                                                                                 Thirukkural - Verse 332

Majority of human beings race throughout their life in search of money. But most of them never pay any attention to invest a portion of their hard earned money in the right place so that their money will swim and grow faster against the inflationary current. I started my academic career after obtaining a post graduate qualification in the year 1974 with a salary of Rs.562/-. This amount was adequate to run a family for a month. But now if you go to a good restaurant in Chennai with your wife and a child for evening refreshment the bill will be equivalent to the total monthly salary of 1974. This is the manifestation of inflation which will eat away the worth of your cash wealth silently.
Similar disturbing trend is also seen in the educational sector. The total amount of money I might have spent for my entire education between 1956 to 1973 was less than three thousand rupees. But now you have to spend that much of amount for one term for your kid doing LKG in a moderate private school. For a professional education in a moderate institution you have to spend few lacs now. What is going to be the situation after thirty years from now?

The third worrying factor is the medical bills. We should pray God every day to give us best health possible and to keep us away from chain hospitals permanently. But people living in cities cannot even dream of such bliss. Every day an unknown virus is entering the city without visa and passport and surprises even the medical professionals. Eating out and constantly moving in the crowd has become the order of the day and it ensures your ill-health. More than that people are exposed to more occupational hazards resulting in new type of ailments. You will be surprised to know that an increasing number of patients in hospitals are in the age group of late twenties and early thirties. Every time you encounter any ailment the minimum unexpected expenditure will be around five hundred to thousand rupees. If you enter in to a hospital the bill runs into several thousand rupees. You should always be prepared for such unforeseen expenditure and should keep either the required money as reserve or you should have adequate medical insurance. If you take insurance you should be lucky enough to have your ailment already covered under the insurance scheme. Otherwise you should be prepared for a long drawn battle with the insurance company. Ultimately you will end up with the self realization that nothing can replace the supremacy of the hard cash in your bank account.
It is everybody’s dream to own a Home of their own. But the price of real-estate is permanently moving upwards. It is an investment that will never let you down, but it has its own drawbacks. For making this investment you first  have to earn lot of money.
Marriage of your Children and  Retirement
This is another nightmare. From the marriage hall rent to catering – everything is skyrocketing. Usually it coincides with most people’s retirement. If you spend all your retirement benefits in the marriage of your children then it will become extremely difficult to have a comfortable old age.
For all the above mentioned expenditures you have to make an in-depth planning and formulate a strategy so that you tide over each milestone smoothly with ease. Only proper savings and investments can outsmart the inflationary pressure. Thriftiness and savings should be given top priority in life.

Where to save money safely? We will be discussing in detail in the forthcoming chapters.