When we talk about earning money the growing tendency is to earn as much as possible and as quickly as possible. Thos of us who embark on such greedy ventures invariably fail miserably and end up on the losing side. The reasons are not far to seek. When we plan sincerely as we have discussed early on and decide how much money we need and when we need then our journey towards the goal is steady and safe.Even if we fail here and there we reach the goal with determination and smart work. But when we tend to deviate and want to become rich in a very impracticable time span then we tend to look out for advice from the so called self- proclaimed experts. We should always remember that what others dish out is their story of success or failure under may be a different set of conditions.In our anxiety to run a faster race, we follow these paid advise very religiously and incur huge losses. Financial decisions should be based on our conditions, capacities and needbased.
I have been talking to you about money, savings , and planning in my previous posts. Now earning is a very important part and the earlier it starts in our life the smoother, easier will our life sail through as we progress. Now earning money is not that difficult as it is imagined by many of us.With the services sector growing much faster than the labor intensive areas like agriculture , textiles and other industries there are plenty of opportunities to make money even at an early stage. But there is a stumbling block which prevents us from venturing into any activity which can bring money into our life. Every one irrespective of our education, capability want white collar 10-5 jobs and feel inferior if we have to do something less than that though many a time those ordinary small time ventures fetch you much more money than your salary and over a period of time they become crorepatis whereas you the salary earner struggle to become even a millionaire.In the area where I live there are about a dozen housing projects coming up within a radius of 2 kilometers. There are at least a dozen workers in each of these building sites. I notice a boy supplies tea both in the morning and evening to all these sites.gradually he has expanded his supply to include morning breakfast and evening snacks.All these are supplied at a very competitive price which the workforce can afford.No wonder that this boy must be making a decent profit to take care of his livelihood. The most important point is that the seed of entrepreneurship has been sown in him and who knows he may grow into a very large hotelier in the future providing employment to much more. Many of us have domestic help in our houses.These poor ladies come to work may be there is no menfolk to take care of them or those available while away their time. We can take the initiative to call these people , tell them about what is happening in the outside world and ignite a spark which will catch up and make them useful earning members.If need be we can also contribute a small starting capital which we can get back in small installments once they catch up.LET US BE THE CATALYST in lighting a small lamp in the society.
In my last post, I made a sample accounting and ended with showing income-expenses as savings.(income minus expenses to savings). Seemingly correct process but if you look a little deeper there is a potential flaw in this process.In our early days, we have seen our parents handing over the income to the womenfolk in the houses be it our grandmother or our mother and the first thing the woman will do was to drop some money in the small mud pot or any other vessel and then keep the money in the pooja room before taking out for expenses.The small amount of money that she dropped in the mud pot was not to be taken lightly as many a time we have seen whenever the menfolk ran out of money the lady used to break the pot and give the amount saved in that to him.mind you it was always substantial and saved the blushes for the man. Coming to our modern life it is equally important that the first expenditure we make from the salary is also towards savings. As a rule of thumb, they say at least ten percent of the salary goes towards savings.Be it a bank RD or rmutual fund SIPor any other form of savings one is comfortable with. The family should resolve that there is no compromise on this. Now rewrite the equation
Salary-savings =expenses. This is a very simple but important equation based on which our journey will continue.
In the last post, I wrote about maintaining proper accounts for our income and expenses and to treat this process with all sincerity. The reason being when we talk to people about this process of account writing the response we find is very disturbing. Some of us resolve to start account writing as a new year pledge and continue this till 31st March..thereafter the interest fades and gradually in the second quarter it is fully discontinued.So also many others have started the process just continue in a haphazard manner and for some months and give the process a decent burial. We should avoid such kind of half hearted attempts and once started should continue this for ever.
First of all the process of account writing must be enjoyed and done willingly. All the members of the family can join this and make it a fun filled exercise. For example, the children can be asked to total the day”s expenses, the spouse can suggest areas where the avoidable expenses can be reduced . There should not be any obsession with the process of writing accounts.If on any day a small amount could not be accounted for due to forgetfulness or any other factor such amount can be treated as sundry expenses and forget then and there instead of harping on the same and irritating the concerned family member. The expenses can be broadly classified under 5/6 important groups like groceries, vegetables, Education, Power, and communication etc and small expenses not falling under any of the bigger groups may be treated as sundry expenses.At the end of the month, both income and expenses must be tallied. This process will let you know where the goes and whether income is spent in productive ways.
A typical account properly written may look like this:
Total income : Rs 37,000.
Total expenses Rs.33,800.
Savings :Rs 3,200.
If any of you can notice a very important correction to be made in the spending process of this account writer please comment.