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!

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.

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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.

Inflation:
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…

wealthy

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

6 Simple Truths About Money

Becoming RICH & more importantly staying RICH is actually NOT a complicated one. If we follow the below 6 simple steps, any one can become rich over a period of time. While practicing this, care should be taken to ensure that enough time is given to accumulate riches – Wealth, like growing a tree, building relationships & education TAKES TIME. Our hastiness makes sure that we don’t become rich at all – and even if we become one – we would either not have become peacefully rich or we would be still be unhappy despite our riches.

  1. Put 10 Coins in a Box daily & pick up 9 coins daily – Soon the box will be over-flowing. This rule emphasize on the simple formula: Income – Savings = Expenses & not Income – Expenses = Savings.
  2. Money Pick only 9 coins. This rule emphasize on the discipline factor. Many a times we start something & we don’t continue it till the goal is reached for whatsoever reasons.
  3. Allow the coins in the box to go out & bring along with them a few more coinsThis rule talks about investments & not keep the money idle.
  4. Let the coins go out to only places of repute; lest they can never come back. This rule emphasizes on the fact that Gold & greed never stay together – in an urgency to make quick money we should not invest in things which promises quick money or in quick time.
  5. Insure the source of these 9 coins – this is very important & should ideally be the 1st rule. Insurance forms the foundation for any financial planning & if that is not taken into account – it is more like building a 10-storied building with no foundation.
  6. Aspire & find ways to earn more than 10 coins. Be happy with your current work – but never settle for less. Focus your energy in becoming a better person every single day in all aspects of life – after all life is not only about getting materialistically rich.