‘If you don’t get serious about your money, you will never have serious money’ – Grant Cardone
Money is perhaps one of the most loved subjects to talk about. I haven’t yet come across any soul who does not profess his/her love for money. Anyone who says money is not important should spend only a single day without it.
It is all about money, honey. It always will. Money really matters.
In this Personal Finance blog, we shall explore the mental make-up one needs to have to make and preserve money.
Let’s dig in.
‘Rule No. 1: Never lose Money; Rule No 2: Never Forget Rule No. 1.’ – Warren Buffet
Who hasn’t heard of the famous ad that catapulted the ‘Nirma’ brand to unfathomable heights right under the nose of Global Giants like HUL in the detergent powder space.
Behind the scenes of this success story lies the ingenious mind and hard work of Mr.Karsanbhai Patel who manufactured detergent in the courtyard of his house and sold it from door to door.
Little did he know the heights that he would reach through his blood and sweat.
With a lot of guts and toil, glory was achieved.
At the other side of the scale lay the story of the king of good times, Mr.Vijay Mallya.
Having bequeathed the liquor business from his Father at a young age of 28, he transformed it into a multi-billion-dollar enterprise.
One wrong decision to enter the airline space spelt doom for him.
Unable to pay the loans which he owed to the banks, he fled India to seek refuge in the United Kingdom.
It is one skill to earn Moolah but totally different to retain it.
There is no doubt that the Finance Industry is perhaps the only Industry wherein the role of Human Behavior counts more than the Financial Acumen.
One may understand the Financial terminologies at its fingertips, however, when it comes to making money and preserving it, it is the attitude that rules at roast.
Think about this, only an experienced and knowledgeable Civil Engineer would be in a position to construct architecture which lasts for generations.
Albeit, this is hardly ever true for a Finance Expert whose emotional quotient matters higher than Intelligence Quotient and knowledge.
“There are rules to luck, not everything is chance for the wise; luck can be helped by skill.” – Balthasar Gracian
Microsoft founder has himself professed that he was at the right place and at the right time when the high school he was in had a computer. Not to take anything away from him, the probability of this happening was one-in-a-million.
And as they say, rest is history.
Most folks are aware of this. However, not many have an inkling of the misfortune of one Kent Evans, who was Bill Gates class-mate and close friend. He was considered to be brighter than Bill Gates.
An ill-fated accident claimed his life in a climbing incident. Once again, the likelihood of this happening is only one-in-a-million.
Kismet does have its place in building a fortune.
However, it is highly underrated and is not brought out as the reason for success since it does make an Individual seem dejected.
Putting hard work and risk behind the Kismet seems petty to say the least.
‘The line between Bold and Recklessness can be thin’
The importance of taking calculated risk cannot be stressed more in all walks of life and Finance is no exception to this rule.
The perfect story to feature here would be that of Elon Musk.
With a troubled childhood, Elon spent most of his time immersed in books.
Having gained vast knowledge and with an acumen to sense human needs, he created and sold Paypal for $1.5 Billion and made millions out of it.
For a 20 something, this was huge and a perfect opportunity to spend the rest of his life in luxury.
However, with Elon things were different.
He put in the entire sum in building Space X and Tesla Motor.
And the rest they say is history.
‘Doing well with money has a little to do with how smart you are and a lot to do with how you behave.’
Like in other areas of Life, the initial exposure that one experiences have a major influence on Finance related matters.
The obvious clout that one goes through is the Family’s background and attitude towards money.
How one perceives risk shall vary to the extremes if one is born in a wealthy Family viz-a-viz a poor one.
Apart from this, the phase the Market is in when one touches base with it also has a bearing.
If a young gun experiences a Bull run in the Market, he/she will more likely turn out to be a serial investor than the one who experiences a bear run.
The ever evolving Market dynamics changes at the rate of knots.
The Investment avenue that our past generation had was far less than the one which we have today.
Likewise, the future generation shall have a far greater investment destination than todays.
‘The world is filled with people who look modest but are actually wealthy and people who look rich who live at the razor’s edge of insolvency’.
Here is the narration of Kolkata born Harward Educated, Rajat Gupta.
Born in poverty, through sheer hard work he reached great heights and went on to become the CEO of McKinsey. His Net worth was once $100 million.
In spite of having more than one can dream of, he was hungry for more.
With an aim to earn quick bucks, he used Insider trading to earn a handsome $17 Mln.
Needless to say, he was caught and convicted.
In a senseless act of avarice, all the fame and reputation which he earned over decades went to dust.
It is quintessential to be satisfied with how much ever you have.
Having capitalist mindset is a never ending game.
Whatever one has is REALLY enough.
‘Too many people spend money they earned, to buy things they don’t want, to impress people that they don’t like’ – Will Rogers
Being deep-rooted and humble is extremely essential to preserve wealth.
Generation Z (born between 1997 and 2012) seem to be lacking in these essential qualities.
Living pay-check to pay-check is the name of the game with little attention on building wealth let alone preserving it.
It is good to spend a part of the income on luxuries but reckless to spend it all.
Fear plays an important part in the process of preserving wealth. The Fear of losing what one has earned keeps one on its toes.
Note: The blogpost has been inspired by the book ‘The Psychology of Money’ by Morgan Housel
Also Read: My Journey As An Equity Investor