Financial Lessons from Pharaoh’s Dreams

One night Pharaoh has two very special dreams, and he wonders what they mean.

Seven fat cows, seven thin cows

Pharaoh gets Joseph, who is in prison & tells Joseph his dreams: ‘I saw seven fat, beautiful cows. Then I saw seven very thin and bony cows. And the thin ones ate up the fat cows.

‘In my second dream I saw seven heads of full, ripe grain growing on one stalk. Then I saw seven thin, dried-out heads of grain. And the thin heads of grain began to swallow up the seven good heads of grain.’

A thin, dried-out head of grain and a full, ripe head of grain

Joseph says to Pharaoh: ‘The two dreams mean the same thing. The 7 fat cows and the 7 full heads of grain mean 7 years, and the seven 7 cows and the 7 thin heads of grain mean 7 more years. There will be 7 years when a lot of food will grow in Egypt. Then there will be 7 years when very little food will grow.’

So Joseph tells Pharaoh: ‘Choose a wise man and put him in charge of collecting food during the seven good years. Then the people will not starve during the following seven bad years when very little food will grow.’

Pharaoh likes the idea. And he chooses Joseph to collect the food, and to store it up. Next to Pharaoh, Joseph becomes the most important man in Egypt.

Lesson for us: 
SAVE money during our active earning years - it will come to help us during our non-earning (or) less earning retirement period.
Always SAVE for emergency & rainy days!

Shirdi Sai’s Two-Point Solution

Devotees of Shirdi Sai Baba would savour his two golden words: “Shraddha” & “Saburi” meaning faith & patience. These two words (qualities) form the basis for all that we can achieve in this world. Faith & patience is also very much required in our personal financial planning, more importantly when we are investing in Equity Markets.

1 5 March 2012

“FAITH”: When ever we are investing anywhere, we should have a minimum level of faith & positivity about the future prospects of growth of the economy. Without faith, there cannot be any investments happening any where & in anything. Faith would mean unwavering faith which is different from our belief system or being positive. Any one can have faith about the equity markets when the markets are going up. But to sustain the faith in the economy when the markets are going down, separates the successful investor from the not so successful one. And this FAITH can manifest in our decisions only if we are equipped with proper knowledge of our investments for which we will have to invest our time to understand the nature of investments in a systematic manner. Or the easiest way is to engage a trusted financial advisor who would guide the investment decisions for your financial goals. Naturally, here again your “FAITH” would have to get shifted to the financial advisor.

“PATIENCE”: For many people, even though they have “SHRADDHA” (Faith), they may want the results too quickly. Their goals may be far away – but they want those to be achieved today itself. Every one loves making money soon – but then wealth creation, just like nurturing a relationship, growing a tree, education takes time. During this process, one should develop the art of “PATIENCE” (Saburi).

With “FAITH” we can be confident / positive about the future & with “PATIENCE” we will be peaceful till the goals are reached / achieved.

So, remember Shirdi Sai Baba for these two wonderful qualities he wants us to embrace for a peaceful life & wealth creation – “SHRADDHA – Faith” & “SABURI – Patience.

Impermanence Nature of Wealth

This “KURAL” comes under Adhikaram 33 (Section) – “Nilayamai”, meaning Impermanence.

Philosophical Meaning: This Kural talks about the impermanence nature of money or wealth. Most of us think that once we accumulate a certain amount of wealth, it will bring about security / happiness in life. But once we reach that stage, the line gets further extended & we feel “A little More” is still required to bring that happiness and this continues forever…

Tiruvalluvar in one of the other Kural in the same Adhikaram states that to fix our happiness / security on such a impermanent & unstable thing as wealth is a foolish act. In one other Kural in the same Adhikaram, he states that one should involve himself in imperishable righteous deeds immediately with his accumulated wealth as the nature of wealth is always perishable & may become NOTHING in no time.

Practical Meaning: Wealth accumulates little by little over a period of time just the way people enter into a cinema hall at different times before the show begins. Once the show is over, the crowd disappears from the hall at one go immediately and the hall becomes empty soon. Similarly the accumulated wealth disappears instantaneously & melts away too. 

Inference: Given this impermanent nature of wealth, one should be careful in managing one’s wealth. To BECOME RICH in a way is easier when compared to STAYING RICH. We earn money & invest it to accumulate wealth over a period of many years. But then, if not planned properly, the accumulated wealth can vanish in a jiffy in the following situations:

  1. Unfortunate Death of the primary bread-winner of the family without Adequate Life Insurance & much worse with lot of debts to service.
  2. Loss of Employment caused by Permanent Disability due to an accident
  3. Health related expenses due to critical illness & not having adequate health insurance cover
  4. Greed in making more money by involving in speculative investments without proper knowledge about them & relying on false promises made by agents, distributors, brokers, bank officials, friends, relatives, etc.
  5. Unmindful spending to please others (or) to live like others to show off

If we carefully look at the above situations, we notice that all the above are nothing but GAMBLING. The first 3 items can be avoided by passing on the risk to an insurance company. The 4th & the 5th items can be avoided by pure self-restraint – having our own financial goals, consulting a trusted financial adviser and making sure a financial plan is charted for the same so that the money is well-budgeted for the goals first leaving the rest to be spent without any guilt.

Tirukural, one of the most revered Tamil literary work by Saint Tiruvalluvar & praised as "The universal Veda & the Universal Code of Conduct" is a master-piece manual to lead a happy, successful & satisfied life...
Picture Courtesy: merkol


Money Lessons from Lord Shiva

Personal Finance Lessons from Lord Shiva:

1) Shiva though being a supreme God, still chooses to lead a very simple life in a mountain. He has very few needs and even his marriage was conducted in a simple manner. This forms the basis of all financial planning.

2) Shiva is known for his indifference to the ups & downs of life. He practices detachment. Similarly one must be detached from both greed & fear to make investing a successful journey.

3) Lord Shiva make sure that Parvathi is involved in all important matters that he has given half of his body to Parvathi. Similarly one needs to involve their spouse in money management decisions for a happy life.

4) More importantly Shiva is an indirect controller of stock market in the form of Nandi (The bull). So if one wants higher returns from stock market he should pray to Lord Shiva 🙂

#happymahashivratri #mahashivaratri

Making Your Kids Financially Literate!

Arrival of a kid may be the most wonderful and joyful moment in any parent’s life. Along with joy this brings additional responsibility. Making your kid financial savvy forms an important part of modern day parenting.

Just as for any multi-storied building it is important to have strong base, it is important for your kid to gain knowledge about finance and investment right from his/her childhood days to be financially mature & informed. Right from automobile to electronics to real estate to FMCG companies, all are targeting this segment as children play very important role in buying decision of their parents. Just as it is important to inculcate good values and virtues, it is equally important to focus on financial literacy for your kids. Making them understand about money matters and finance can help them build strong investment base right from early stage of their life, allowing them to reap benefits later.

Different kids at different age groups need to trained in different way. Let us try to understand how money or finance related matters can be explained to kids in different age group.

Kids in 3 to 5 Year Age Group:
Make them understand about basics of money. Very first thing which they need to understand is what is money and importance of money. Why money is needed to buy everything.

Kids in 6 to 10 Year Age Group:
Kids start going to school and start interacting with outside world. They get more involved with their friends at school. There are few very important lessons to be teach at this stage. Like making the kid understand difference between need and want, importance of savings, basic skills of negotiations etc.

Here you can prepare a chart and put all essential items like food and grocery purchase, milk, house rent, electricity, clothes, fuel, school fees etc in essential item circle called ‘Need’ section of the chart and other items like eating out, going to movie, buying toys etc in non essential item circle called ‘Want’.

Create 3 jars or boxes: 
One for income, one for spending and last one for saving. Ask the kid to move money from income jar to spending jar whenever he wants to spend and transfer balance to saving jar.


Ask the kid to put whatever he/she earns on birthday celebrations, festivals like Pongal and Diwali or through gifts in income jar. After spending on his/her books, stationary or any other miscellaneous items inculcate habit of transferring balance to saving jar. This will allow the kid to understand that we need to spend within our limits of income and positive balance should be left in income jar in an order to save.

Very important to make your kid understand about usage of ATM card. Importance of keeping the card and PIN safe and secured. Make him/her understand that ATM card is only one mode of withdrawing your own money from bank account. ATM machine is not giving you free money. Also open a savings bank account in kids name. There are many banks now a days which are offering junior account with basic banking facility like cheque book or ATM card.

Kid in 11 – 14 Year Age Group:
After making your kid financially aware about basic things related to money and concept of saving, now is the time to take things one level higher. At this age you can start discussing little more complicated but very important things with your kid.

You can start discussing with your kids about concepts of compounding. Importance of early start of investing in life to take maximum advantage of compounding.

Just as knowledge of compounding is important, knowledge of inflation is unavoidable. How inflation eats into the value of money and how it affects both investment as well as day to day life. Make the kid understand about why it is important for any investment to beat inflation to grow your money.

Usage of Credit Card:
Kids at this age are more exposed to internet and online world. Discuss about concepts of credit card, online payment and internet banking. Credit card is only mean to make transactions conveniently. Make your kid understand about not spending through credit card on something which you can not pay in cash later. One falls in debt trap if he/she spends beyond ones paying capacity. Discuss about high penalty and interest rates charged by credit card companies on late payment and how one’s credit score gets negatively affected.

Also discuss danger of providing personal data online and not sharing confidential information like passwords and fraud e mails in name of lottery winning, free holiday trips etc. Not to respond to these type of mails by providing account number / ATM Card, Credit Card number or PIN.

Kids in 15 – 18 Year Age Group:
This is the time when kids start preparing for their higher studies. Once the kid decides on type of course to pursue, you can ask the kid to calculate total cost involved for the course across different colleges which includes not only college fees but also study material cost, tuition fees, hostel expense if college is in different city as well as commutation cost. Kids can calculate the entire cost of the course across various colleges, compare and decide on his/her own. Also discuss about concept of education loan and pros and cons of taking education loan.

Adult Kids 18+ :
These are grown up kids either still studying or about to join work force in few years time. There are two very important lessons at this stage :

  • Importance of Insurance
  • Importance of Taxes

Explain concept of different kind of insurance like life insurance (term plan), health insurance, motor vehicle insurance etc. The best way to make the kid understand the concept is to take a term plan and medical insurance in kids name, involve him/her at every stage right from comparing different plans to premium payment to understanding policy document. Put responsibility of paying premium on your kid if he/she has already started earning.

Also importance of taxes while making any financial decision. Simple concept from filing income tax return, the importance of filing return and impact of taxes on investment return.

Educating your kid on financial matters is an ongoing process. Unfortunately our education system does not focus on practical aspect of finance world at primary or higher education level. The onus is on parents to educate their kids about financial matters so that they enter the professional world fully prepared.

Source: NJ Wealth

I want to be WEALTHY!

Need for more wealth is never ending. We want to be wealthy, free from stress, free from monthly rents, mortgages and wish to pursue our passion. But the irony is, only a few from the lot are able to achieve financial freedom. It’s not that we don’t work hard, we all do, but something is wrong somewhere and we don’t really handle it well. Why can’t we be wealthy in spite of the struggles that we go through each day even after years? We often wonder what is it that the wealthy do and we are not doing?

For becoming wealthy, you have to earn, save, invest, and thus multiply what you earn. We all know this, however there are some personality traits which are becoming boulders in our way to success. Today we will talk about some of these traits…


ProcrastinationWe fail because we do not start on time, we keep on waiting for the right time, not realizing that if we do not start, the probability of winning is zero. Most of us are in the ‘planning to invest’ stage since ages, but this planning never ends, and we seldom move on to the next stage of ‘executing’. We know that we have to invest to save tax, to meet our future goals, to build wealth, but there is something stopping us to actualize it. ‘“I’ll start a SIP this year”, and I say this each year’, is the problem.

Band WagonMy neighbor is rich, I’ll do what he is doing; This is a common problem – each one is different in terms of their life stages, their goals, income-expense patterns, passion, expectations out of money, etc. So just mimicking a friend will lead us no where.

Lack of well framed goalsWe want to achieve a lot, but if someone asks us what do you want to do in life, or how do you see yourself ten years down the line. Most of us would have vague answers, since our goals are not clear. We don’t know what we want to achieve and what we are working for. And no matter how much we struggle, working without a mission is like a ship without a helm. You’ll never reach the shore if you don’t have a direction in life. You should have well framed goals and the time horizon to achieve them, before investing for those goals.

IndecisiveAnother major pit on our path to success is our inability to take decisions and to abide by them. At first, we are not able to decide whether to invest or not, then when to invest, and finally where to invest. And if at all we invest, we easily lose conviction in our decision and keep on changing our investment pattern, we sell what we have and buy something which our friend suggested. The cycle repeats in many forms and we end up wasting the time and efforts involved in making each investment. Result, we don’t end up anywhere.

Personal lifeNot having a happy married or family life, can be one of the biggest contributors to misery. It destroys your goals, your self confidence, your plans and your inner peace. In order to be wealthy, you have to start from your home and you have to maintain harmony and understanding in your relationships and invest time, care, love and concern in people around you.

Lack of patienceWe all want to make money and make it quick. Unfortunately, financial success is all about patience and time. Once you invest, you have to be patient and see it rise and fall, until it reaches a point where it serves your purpose. Often a fall in the investment pulls the rug from under our feet, and this state of panic leads to wrong investment decisions. We have to control our emotions when the times are bad and wait till the clouds roll by.

Some people just don’t want to take riskSome people are adventurous, and invest in high risk high return products, and at times lose the principal as well. And there are some, who do not want to risk their money at all, even if their age and financial position allows them to take some risk, they won’t. And both extremes, do not make money. Risk and reward go hand in hand, you have to take risk, to build your wealth, but it should be calculated on the basis of financial backgrounds, goals and risk appetite.

Standard of livingWe tend to imbibe the standard of living of our acquaintances. We buy things which we do not require and we cannot afford, in order to maintain a lifestyle and social status. A Levi’s jeans is equally good as a Diesel jeans and both serve the purpose, the reason spend Rs 16,000 on a Diesel jeans in the snob appeal it presents. If we cut down the expenses which are not necessary or stop paying a premium, not for quality but for brand value, we’ll be able to save a lot. And these accumulated savings, if invested wisely, will add to our better future.

The investors who are willing to overcome these personality traits will move towards their goal of becoming wealthy sooner than those who don’t.

Source: NJ Wealth

Interesting Thumb Rules (Part-2)

* The 10% Savings Rule – Minimum Savings to be done for the future

Most experts believe that the savings rate should be a minimum of 10% of your gross household income. A better goal is to aim higher. Another popular rule is to start saving 10% for meeting basic needs, 15% for comfort and 20% for freedom when you are young.

* 3 Month Emergency Fund Rule – To meet out any unforeseen emergency expenses

The idea is to have at least 3 months and going up to 6 months, of living expenses as emergency fund in addition to your savings for other goals. This of course depends on the nature of our work, risks and possibilities of finding new source of income soon.

* The 6 Times Life Cover Rule – Adequacy of Life Insurance Cover

This rule simply says that your life insurance policy should be at least 6 times of your total household income so that the family’s continuance of income is maintained even in the absence of the bread-winner of the family.

* The 20% Down-payment, Two Times Home Loan Rule:

This rule says that while buying a home, we should put down 20% as down-payment and avoid taking a loan over 2 times of our total household income. If we cannot afford the 20% down-payment rule, it probably means that we cannot afford that home itself.

* 20 times Income Rule For Retirement Kitty – How much Corpus is enough for Peaceful Retirement?

How much retirement kitty you will need is a big question. There are many calculations available but this simple rule says that it is 20 times of your gross total income at the time of retirement.

* Pay Highest Interest Rate Debt first:

This rule points out which loan has to be repaid on priority first – it is the one that carries the highest rate of interest. Usually, the order would be credit card first, then bank overdraft, personal loan, vehicle loan and lastly home loans – preferably home loans can be left to continue till the end of the tenure.

* Don’t Take An Education Loan More Than The Expected First Year Salary: 

With rising education costs, this one rule can help decide whether to pursue an education course on loan or not. Following this rule will help avoid the struggle to repay loan after the education is completed.

Source: NJ Publications