Real-world how to manage money

Written on June 16, 2020

5 min. read

Money. When I was a child, my parents, relatives and well-wishers, I have heard this sentence multiple times. Sometimes they are addressing me or they are saying to someone who is studying. It is. Study well, you will get a good job.

Let’s see the statement again… Study well, you will get a good job. You must also have heard this in your life, someone saying with this meaning. Inherently, it contains many things. Job is like a package. Let’s unpack it…

A job means you will earn decent money for living. People will recognize that you can take care of a family and your would-be mama to reach out to you in some of the different channels available. If you have faced difficulty in your life due to a lack of money or you could not get what you wished for due to a lack of financial support, you might have some desire to get a good job. Lead a happy life. So inherently, this is roughly the relation of all the things what people have in their mind…

Job => money
money => society values you => get married
money => … => joyful life.

So our focus in the education system is mostly oriented towards getting a job. We learn many things. How the earth revolves? What the atom contains? How civilization evolved? History of the land. How satellite works? How to compute this and that?… But….., but we don’t learn a word about how to manage money once you earn through some work that you do. Not much focus on it. We are tuned towards, how to make money and how to buy things and be happy.

Once a good friend of mine, who is elderly, told me a story…. It goes like this…

Ramana Murthy is an aged man in the village, who gets a pension from the government, Rs 2,000/- per month. Ramana spends the money on his well being. Ramana’s monthly costs are, on average, Rs 1,600/- and he has few hundreds left with him by the time he gets the next month’s pension amount.

Kameshwara Rao lives in the town and earns (after TDS) Rs 72,000/- per month. He took multiple loans for a car, gadgets and other credit card bills. For which Rs 30,000/- is paid as EMIs. With other expenses of rent, children’s education, day-to-day life, and weekend movies in malls. On average, his spending is Rs 82,000/-. After the first half of the month, Kameshwara Rao does not have much money left. As the month-end approaches, for the last week, he starts depending on the credit card for daily living needs. He feels, thank god I have a credit card, which saves me every month. Otherwise, I have to ask other people and most of my friends are also in the same situation as me and it’s tough to get money from people as loans around the month-end.

From this perspective, Ramana Murthy is richer than Kameshwara Rao. My friend made an interesting statement….

Definition of rich is if your monthly expenditure is less than your monthly earning, you are rich.

This point has stuck well with me. I looked into my life, it is almost like Kameshwara Rao’s life. Even though earning very well, the expenditures are also high. The fundamental problem is we keep improving our standards of living as our earnings increase. Let me correct the previous statement, we don’t improve our standard of living, we improve our standard of spending. That is the reality. Only when you can make your life more enjoyable by staying rich (with the above definition), we can call you are improving your standard of living.

All the definitions of society for standards of living have to be re-examined. We might have been brainwashed by the advertising experts. They read psychology and understand our behavior and design our habits, such that we spend mindlessly and consume the junk their clients produce.

What did I do? I closed my credit card. The person working in the bank tried to convince the benefits that I would get with a credit card. But I said, please close. I closed the bank accounts, which I am not using and kept just one bank account that I use. This made life simple. Otherwise, when I need to file IT returns, I need to get the statement of all the bank accounts. It’s a headache.

With these changes, life became simple. If I have money, I will buy it. Otherwise, I will wait until I have the money. Initially, I found it difficult not to have money at the month-end. But slowly, my spending habits got re-adjusted to the new reality. I can spend when I have money in my account or my pocket. These constraints I have put for myself lead to a joyful life. People in my family occasionally cribs, this guy does not have money. But that’s ok rather than going through the mental process of how to get money to clear credit card other non-sense stuff that we invite with bad spending habits we get into. Be aware there are whole large systems are designed to just make you get into these bad spending habits.

There is also a conspiracy theory that the owners of these systems are controlling the curriculum of the education that we go through. They lobby the governments and ensure that not a single word about how to manage money is part of the general curriculum followed by countries.

Don’t become prey to these systems due to the lack of financial education. Know how things flow in and out. Spend time and learn the roots of the creation of the so-called money, for which we spend the majority of our life to get some amount.

In conclusion, I what to leave you with some questions.
How is the money system built?
Who controls the printing of money?
What are the different approaches people use for leading a joyful life?
What is the difference between working for assert creation vs. working for salary? Assert means that which generates income on a periodical basis.
Look more closely into people’s lives, are they really joyful or are they just showing off?