In the ancient times money was just a concept that was a human invention to make human life better. Today whether we like it or not it dominates human life to a large extent.I was born in a village and money was never a priority for us and our icons were never the rich but people who lived a simple life of sacrifices.Making money was not considered as a great virtue and even though we may lack money some times, the neighbors or well wishers helped us and we returned the favor when there is a need for them. Decent education and health care were available from the government institutions at affordable prices and our needs were limited. But things changed up to a large extent even in villages in the last decade.
After completing my education when I started my work life in a big city, I realized how big the role of money in the life of an urban Indian. The system is corrupt to the core and from good education to health care, huge money is essential for a better life in any urban city and the government doesn't play much role in providing basic amenities to the urban population. Even though I don't want to compromise my principles for money or any materialistic thing,I realized I
should know the rules about money and learn to handle it well for a better life in the current urban India. After observing things for a few years, I found out that there are a few skills that we need to learn.
The way money works is not fair, same for life in general. We all may have seen it, nice guys most of the time finish last. Most of the time success with money or love is not achieved by people who deserve it, but by whom who know the rules and take actions accordingly.
I have identified the following skills that one need to develop if you want to handle money well:
1. Learn to negotiate - In the world of money you need to learn to negotiate.If you are from a family with strong values you were taught in the childhood that bargaining is bad and never put a price tag on you. It works only in the ideal world. In the real world, it is the other way. If you don't negotiate for your interests, you will end up as a loser be it in your career or your investments. Learn to negotiate with out compromising our principles and beliefs.
2. Conduct thorough research before you make an investment decision - Some of us do sufficient research before even making small purchase decisions, but we never do the same for investment decisions that affect us significantly and may require long term commitments. Never go by the words of financial advisers who sell financial products for their own benefits. I made the mistake 3-4 years back and paid heavily for it and to reduce my loss I still have to keep investing.
As a starting point read the book "What Your Financial Agent Will Tell You And Why You Shouldn't Listen" from Deepa Ragahavan
Learn and understand very well about each investment option and take your decisions wisely. Don't hesitate to ask questions about things you don't know and read the product brochures carefully before signing them. In the era of internet if you don't do research it is your laziness. Very few financial advisers really cares about your money other than worrying about his commission. Read sites like Jago investor, Yahoo columnist Deepak Shenoys blog , Moneycontrol or other informative sites regularly.
3.Learn as much as you can about finance and market - Keep an eye for detail and learn as much as possible about the terms we associate with money. For example learn about compound interest, systematic investment plan, various types of mutual funds, dividends, equities, ULIPs and so on. The simple rule that I have seen that work most of time is "buy assets when every one else is selling and sell when every one else is buying".
4. Learn about tax laws - I used to strongly believe that I need to pay all the taxes as a law abiding citizen of the country with out seeking much exceptions. But later I realized in the real world, it is the not the case. The best paid people in India pay taxes much less than many of us think. The reasons is Indian tax system has many loop holes and exceptions that either they or their well paid tax consultants know to use and we don't. When I first came to know about that I used to get angry, but if it is not against the law and not a breach of ethics there is nothing wrong in using it till the government take action and close those loop holes.
5.Learn to shop well - Quality is most of the time(at least in India) not related to price. Paying a lot for something doesn't mean you get the best. Always try to find out the best offers available in the market, speak to different vendors and compare the prices from 2-3 places before purchasing something.
6. Learn to keep your debts to none or minimum - Use your credit card wisely and understand the terms and conditions carefully. Don't take loans unnecessarily to purchase assets that depreciates in value in the long run, even though some loans like home loans are good in India to reduce tax burden.
These rules may be simple that many from urban families know well, but there may be a lot of people like me who doesn't know even this when I started working. I made all the 6 mistakes in the real life. Even though I said all these, I believe one should never equate money with happiness. Never compromise on your principles, your family and loved ones for the sake of money. In the long term, money cant buy you love or happiness in life.
Note: I don't claim to be an expert in financial matters and these are just observations based on my own experiences. It is up to you to take it or not.
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