moneyview | Personal Finance | December 12, 2015

My Personal Finance Story: 5 Money Myths Which Got Busted When I Quit My Corporate Job

 

money myths

About two years ago, I quit the Corporate world to do something on my own. It turned out to be an awesome move, because along with the freedom to do things my way, I learned that many notions I had about money were myths. And while I am no expert on how to manage money yet, I have a better perspective about what it will take to secure my (eventual) family’s future.

Here are some money myths debunked. I would love to know what you think.

1. It’s bad to talk about money

Talking about money makes most Indian families queasy, to the extent that it is a taboo. We are taught that the only way to earn money is to study hard and get a good job. I grew up learning no different.But when I started interacting with young businessmen, what stood out was their remarkable understanding of how money works. One boy is just in Std. XII, yet he knows how his father’s pharmacy business works, where they spend, and how the latest reforms have benefitted them. Another friend has been making money from home by investing in the stock market for years. A third is a balance-sheet wizard. When I asked how they developed this skill, everyone had the same answer: their parents talked about money ever since they could remember.

If we portray money as a scarce and bad commodity, children grow up with the same perspective. But if children listen to talks about ways to make money and donating to charity during their mouldable years, their entrepreneurial spirit is stoked. My dad (a businessman) tried the same when I was a kid. Unfortunately, my mother and I were too timid to understand. How I wish I could turn back the hands of time.

2. It is not difficult to earn money

My ex-bosses and colleagues would often say, “If I have to make money, I can do it easily.” And I believed them. I thought that the same would apply to me when I left the Corporate world. The truth could not have been farther. Is it difficult to earn money today? You bet. In this cut-throat world, many people are already doing what you want to. The sole differentiator between you and your competition today is trust. Unless someone trusts you, they will not part with their money. You see, people trust their money more than they trust others. This trust takes a lifetime to build, and can be destroyed in seconds.

Trust me, it’s really difficult to make money. Nobody will pay you what you ask for, if you cannot improve their lives in some way. So if you want to make money, first build trust by giving your audience benefits that your competition cannot.

3. It’s more important to save money

There is no doubt that saving money is important. But what’s more important is earning money. See, saving money will not protect you from inflation and additional expenses which you did not account for. If you focus solely on ways to save money, your bank balance will dwindle until eventually, you will have to run on fumes. Not good.Instead, pay equal attention to making money. Look at ways to expand your income, regardless of whether you are an employee or an entrepreneur.

For instance, I had to pay someone for the services he rendered. Rather than dipping into my savings, I took up a quick job, completed it swiftly in my spare time, and used those earnings to pay the person. Impact on savings: Zero.

4. Buy when the savings are high

We try to maximize the use of coupon codes or sales while buying online. But guess what. People who manage their money really well are doing one thing different – They are not buying! Seeing a ‘sale’ or ‘winning’ a coupon code doesn’t mean that you must ‘take advantage’ of it. What matters is buying what you need, not what you want. By nature, man is an irrational animal. What you want, you almost certainly don’t need. And when you need something, you are left with little money because it was spent on stuff you could do without.

I would do the same until about a year ago. Then I simply stopped opening emails of e-commerce sites. Now those emails go directly to the Promotions folder of my mailbox, and I’m a happier man at the end of the month.

5. Put your eggs in one basket

About ten years ago, my dad cracked a large deal. My mother told him to put some money in an FD and take us on a foreign tour with the rest. Instead, he invested in real estate. Mom wasn’t happy, and neither was I. I wanted to see Germany. But dad said, “Paisa paise ko kheechta hai.”It took me ten years to truly understand what he meant. If we put all our eggs in one basket, it will develop a hole over time. In matters of money, like in life, if we rely completely on just one strategy, it mostly will blow up in our faces. Instead, money should be invested in other places and the returns should be used to enjoy life. Capital gains (from property, mutual funds, stocks etc.), dividends, rent and IPR are some examples.

I am not equipped to buy real estate today, but am keen on investing in something which yields returns. I invest carefully in the stock market and want to build online courses. Those returns will not pay off immediately, but should improve my quality of life in years to come.

We are not taught about the value of money when we are children, which is a pity. As we grow older, we start looking at money as a necessary evil rather than understanding that it is simply a means to a larger goal – enjoying life. I hope that this post spurs you to put your money to good use, which will let you live a relatively less stressed life in future.

A content marketing consultant by profession, Vishal has helped many businesses generate revenue through their online presence. He believes that if you are looking at things the way everyone else is, you are missing out on something awesome.

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17 thoughts on “My Personal Finance Story: 5 Money Myths Which Got Busted When I Quit My Corporate Job”

  1. Myths busted indeed! You have to focus on earning more than saving…that caught my attention! I also agree that speaking openly about money is taboo in most households with people in service, while business oriented families are more open about it. Very practical tips that one can use very easily. Your advice on mindless shopping just because of some discount coupons….also rings bells 🙂

    1. Thanks Kala. These points ingrained into our system were not originally part of our culture. With the right mindset, we can imitate the wealthy and create more wealth for ourselves, even if it is not as much as the Ambanis and the Buffetts.

  2. Very simply put. The whole idea of entrepreneurship scares a lot of people including me. This article is definitely food for thought. Forwarding it to my friends who are in the midst of doing their own startups.

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