Let me make this point as clear as possible: This article is called How to Ruin Your Financial Life for a reason: If you follow the rules in it, you will ruin your financial life. If you do the opposite, sunny days lie ahead.

Without further ado, here are the rules. I’m positive that I’ve probably missed some ways in which you can ruin your financial life—maybe even some important ones—but let’s just get on with it. My motto, borrowed from the genius editor Jim Bellows, applies here in spades: “Begin at once, and do the best you can.”

20 Financial Pitfalls to Avoid (or How to Ruin Your Financial Life)

1. Forget about tomorrow

That’s right. It’s always today. Tomorrow will never come at all, so don’t make any plans for the future. Making plans is a lot of work, and thinking about the future is frightening. It’s a lot easier to just think about today.

Plans for the future involve calculations and variables and may require some form of self-discipline—yuck. Plus, there’s so much uncertainty about the future that sometimes you don’t really feel good when you think about it. So why think about it at all? It’s just a way to get prematurely gray. Instead, think about what fun you can have now, and how much enjoyment and spending you can cram into one day.

2. Know with certainty that there will never be any rainy days in your life

There’s a lot of talk among old people about saving for a rainy day. There could be a recession, or a new inflation or deflation, or a real-estate collapse, they’ll say. You could lose your job. It happened to them after all. That’s why, they’ll tell you, you need to put aside money for a “rainy day.”

The only problem with this admonition is that it doesn’t apply to you. There will be no rainy days in your life. And if you plan for them, then you will have penalized yourself by saving money, and not splurging on that vacation or new car you wanted.

Just go on with your life knowing that all is fundamentally well, and that the bad things that happened to other people in other eras will simply never happen to you. It’s that basic. You don’t need to make any plans for economic security because your life will never have any downs, only ups.

3. Don’t bother to learn anything at all about investing

Life is short—far too short to spend your free time reading some dusty old tome on investing your money. Who does that kind of thing anyway? Nerds and worrywarts, and goofy guys with Coke-bottle glasses and pens in their pockets. You’re far too cool to even think of poring over books with charts and graphs and explanations of why stocks are sometimes better than bonds, and bonds are sometimes better than stocks. Who needs that kind of stuff?

4. Don’t balance your checkbook or keep track of what you spend

Why should you? The bank will send you a little form if you’re overdrawn, won’t they? In the meantime, you’ll want to avoid that uncomfortable feeling of being hemmed in by lots of numbers and columns of figures, and instead, just do what’s fun and easy.

After all, you’re not a machine.You can’t be programmed to function like a human calculator. You need to be your own sweet, carefree self. Besides, if you keep track of how much you spend, it might depress you.

So please don’t do it.

5. Forget to pay your taxes

Why does the government need the money anyway? They already have trillions. And they have legions of employees and office buildings, and lots of aircraft carriers and submarines. They do not need your few measly pennies. They don’t care about you.
If the tax guys somehow track you down, demanding the money you owe them, then borrow a line from the immortal Steve Martin and say, “Hey, I forgot.” What can they do? It’s not like you’re an ax murderer. You simply “forgot” [wink, wink] to pay your taxes. If you have your taxes deducted from your pay check, take the maximum number of deductions you can. Then, when it comes close to April 15, just don’t file your income taxes at all, period. That way you get to keep all of that extra money that wasn’t withheld from your pay check. It’ll take years, maybe decades for the tax guys to catch up with you. And when they do, at most they’ll just smack your hand and give you a big frown.

An added bonus: If you do get involved with litigating against the government over back taxes, you’ll be amazed by how little tax lawyers charge. These attorneys will practically give away their services to you, and the fees and expenses can be comically low.

Try it. You’ll see. The tax guys really just want to be loved, same as you and me.

6. Truly believe that you’re only as valuable as what you own

Look, this is between you and me, right? It’s not as if anyone can read your mind and know what you’re thinking. So, just between us, even though you’re overweight, have a lousy job, and are miserable in your relationship, you know how to make yourself feel empowered, don’t you? You know how to build your self-esteem. You know that the way to feel like a superhero is to buy the right things so you can feel great about yourself.

You may have heard that happiness is an inside job. Baloney! Happiness comes from getting and spending. Happiness comes from piling up boxes and boxes of things you’ll never use. Tommy Hilfiger, Von Dutch, Kate Spade, Armani, Gucci, Hermès, Mercedes-Benz, Ritz Carlton—brands and labels are what matter, not self-esteem and a hard day’s work or having loyal friends.

You’re a nobody—in your own eyes and in the eyes of others—unless you buy and own every cool product and service out there…and don’t you forget it.

7. Repeat after me: “I am not responsible for my financial wellbeing”

Well, why should you take on that responsibility? That would involve [again] a good deal of self-restraint, self-discipline, and abstinence when it comes to buying everything you’ve always wanted. If you were responsible for your own finances, then you’d have to sit down with a calculator and a pad of paper and figure out what you could no longer afford. And that means that you might have to deny yourself on occasion.

Well, that’s just plain wrong and shouldn’t happen!

It’s never your fault what happens to you, and you shouldn’t have to discipline yourself—not now or ever. What kind of life would that be? A “fun” life? A life like you see in Vogue or Esquire? I don’t think so, do you?

Responsibility about money is for nerds and geeks. You’re a hippie, a free spirit, not an accountant. So do whatever you feel like doing, and let someone else worry about it.

8. If getting your finances together seems too difficult at any given time, turn everything over to a financial/ business manager who will have total control over your money

My advice is to find some trustworthy person who claims to be well versed in money management, go to her office with your check book and a power of attorney, and turn everything over to her. In this world, you can only trust a few select people with your money, but you’ll unerringly find the right one. A suggestion? Go for the one who charges the most. Don’t be happy with anyone who charges you less than 5 percent. Maybe even pay a few percentage points more for quality service.

Then, just send all your bills to her and have her pay them, let her withdraw money from your accounts for investments, and generally allow her to do everything but the heavy lifting. And don’t feel lazy for doing it. Many busy, important people like you have better things to do than worry about stuffy old money matters.

You may have heard those horror stories about financial managers who looted their clients mainly because these folks were too lazy to pay any attention to their financial statements. Pay no attention to any of this at all. It will never happen to you. There will never be a day of reckoning for trusting your future to someone whose interests might totally differ from yours and who might have the ethics of a snake.

9. Don’t think about retirement—it’s a l-o-o-n-n-g way off

The truth is [and you really need to remember this], that you’re young and vibrant no matter how old you might happen to be right now. You might be 20 or you might be 40 or you might be 60, but you’re still light years away from retirement. In fact, it’s so far down the road that you can’t even see it. And you know what? You never will be able to see it!

First, you won’t ever get old. Second, you won’t ever have to worry about money. And third, someone else will always take care of you. It’s all too boring to even think about it, so don’t. Plus, it’s really fun to be old and not have any money. It gives you the opportunity for fantasy and invention and trying new things…like poverty.

Retirement? Yawn. It just takes care of itself.

But what if someone has talked you into worrying about money? What if some fool has made you believe that you should invest in stocks or bonds? But let me give you a few words of advice if you’ve actually started to begin some kind of investment plan. This is important, so listen up…

10. Choose a broker based on his [or her] good looks, fashion sense, and gift of gab

That’s the way to choose a stockbroker! If your broker’s a looker, is nattily attired, and is in the finance business, he’s obviously made a ton of money for himself…and probably for his clients, too. That means he’ll make a lot of money for you as well, and then you’ll also find yourself hobnobbing at The Polo Club and The Yacht Club and those other places where he hangs out.

The world of finance is a tricky, complex world, so what you want is someone who’s smooth-talking and confident. Your broker has to be able to convince you that he can do great things with your money by putting it in junk bonds and other areas too arcane for you to know about personally.

But please don’t make the mistake of asking your broker [or potential broker]—just what kind of education he has. Similarly, it would be rude and tasteless to ask him to give you references from satisfied clients. All you need to see is that he’s wearing an Armani suit, a Rolex, and Gucci shoes—and then you can breathe a sigh of relief because you know that your hard-earned money will be in good hands.

11. Convince yourself that you can beat the market without knowing anything about it

What, after all, does someone like you even have to know about the market? The nerds and geeks may have graduate degrees. Some money managers may have decades of experience. Some pundits like Warren Buffett may have an abundance of both. But you have your innate gambler’s luck and feel—the only cards you’ll ever need. You can tell just by the way you get out of bed in the morning in which direction the market is headed. You don’t need a system or education or information gleaned from late hours of study—you have that feeling in your fingertips. Call it instinct, call it luck, or call it by its rightful name: genius. You can forecast the market by just the feeling in your bones.

Economics? Marketing? Research on business cycles or specific industries? Nonsense! Just by hearing a company’s name you can tell if it’s a winner or a loser.

Don’t be a slave to some musty old library or some ponderous old computer. Just plunk down your money right this minute based on pure intuition.

This is definitely the way to play the market, and your way is the best way.

12. Don’t keep records

No record keeping for you! That’s for librarians and bookkeepers and hermits. And anyway, since you’re never going to have a financial plan and are never going to need money for retirement, why would you need to keep records?

When that time comes when the tax guys ask for your records for the last five years, just tell them that you’re not a clerk and you don’t have no wicked records, man! They’ll understand.

Plus, if your broker makes a mistake and you don’t have the records to prove she’s wrong, so what? The tax guys will just take your word for it. Just have another cocktail and another buffalo chicken wing and soon you won’t even remember that it’s almost tax time—oh, but that’s right, you don’t pay taxes. Ah, life is good!

13. Don’t worry about buying stocks when there’s a bubble going on—you’ll always know when to sell out just before the bubble bursts

There are a lot of old-fashioned measurements that tell old fogeys when stocks are cheap and when they’re expensive by historic measurements. These are ways to calculate the ratio of the stock’s price with respect to its earnings and dividends. When these get really, really high—when stocks are flying—those measurements are really high, too, and some curmudgeons call those times “bubbles” and tell you to stay away from buying stocks then.

What nonsense that is! When stocks are high-flyin’, that’s when it’s most fun to be in the stock market! How much fun is it to invest when stocks barely move at all, or at most, a few percent a year? It’s BO-RING.

So, why listen to the old creeps who tell you to beware when the stock market is at those levels? Why even pay a moment’s attention? If, in fact, the bubble is bound to burst, you’ll know about it and get out in plenty of time.

Uh, how will you know? Well, hasn’t Warren Buffett said that in a bubble, everyone says they’ll leave the party at midnight, only there are no clocks in the room? Yes, but so what? You don’t invest based on clocks and old fuddy-duddy rules. You invest by the intuitive feelings in your fingertips, and those feelings will also tell you when—exactly when—to sell, take your profits, and go hand out at Cap d’ Antibes.

14. Make sure you never hold your financial adviser or broker accountable—you want him to be your friend

There are measurements that come out regularly in Barron’s, The Wall Street Journal, and many other fine financial publications about how well the stock market has done in the past six months, the past year, or the past five years. They track broad market indexes like the S&P 500 and the Dow Jones 30 Industrials.

Please don’t make your financial adviser’s life difficult by comparing his picks and suggestions with this broad gauge. You only need to know that he’s your pal, that he takes your calls promptly, and basically, that’s it. If he’s a friend to you, talks to you, reassures you, and maybe occasionally takes you to lunch and picks up the tab, you know he’s your kind of guy. Don’t make him feel bad if other measurements are going up faster than your investments. He’s a nice family man with a good personality. That’s enough.

15. Start a business with inadequate capital—in a difficult field and in a difficult location—and expect to prosper

This essay could just as well be called “Open a Restaurant,” which is surely one of the best ways on earth to lose a ton of money, your spouse, and your peace of mind. But don’t let that thought worry you. No, forget what I just wrote. I was just kidding.

But, seriously, why don’t you open a restaurant in an area where millions of other people have started eateries that went out of business. Go ahead. It’ll be fine. Where everyone else—even people with experience—went down the tubes, you’ll succeed just because of your innate charisma.

So, start a restaurant—or any business where the failure rate is 90 percent or more—and you’ll be amazed to see how easy and fun it is and how much money you make. You won’t need to worry about burning through all your cash in a few months and being overwhelmed by debt. Nope, not you—‘cause you won’t make the same mistakes others made. You know better.

16. If taking charge of your financial life seems overwhelming now, just put it off for a few more years

There’s this old myth that says you should get movin’ right now on accomplishing your goals, because the more time you have to work on them, the more likely you are to attain them. And then there’s some old saw about how a journey is more likely to get finished if you start early in the morning.

What a load of bull! Didn’t the idiots who came up with those maxims realize how much fun it is to sleep late?

It takes a lot of mental effort to take charge of your finances. If it seems a bit burdensome right now, just wait a while until it seems like it would be less of a bother. Only when you’re really and truly up to it should you get yourself in gear to make plans for your financial future. Don’t worry about the time that passed while you were getting yourself organized. I’m sure it was good for something—if only for sleeping late, you movie star, you!

17. Believe that you can get rich quick—that you can get something for nothing

There are such things as free lunches! This one is so obvious that I don’t think I need to say much about it. It’s simply a statement of truth that a smart guy or gal like you was born knowing.

Basically, real riches appear overnight just by luck or chance or a bolt of inspiration. You don’t need to trade experience or labor or investments for wealth. If you’re on the right track, you’ll reap the financial rewards overnight…money will rain down on your house in torrents. Let me explain this a little further…

18. Know without a doubt that you don’t have to work hard—you only need to find an angle

Hard work gets you nowhere slowly. It’s for those without imagination. But you are different. You have that creative spark. You have that special magic that’s going to make you wake up one morning at 4 A.M., shout out, “Eureka!” and have the brainstorm that will bring you staggering wealth.

So don’t bother to work hard. Just take a lot of naps and wait for that flash of lightning to explode in your brain. The world is waiting breathlessly for you to come down from the mountaintop with your two tablets and your inspiration that will make the Ten Commandments seem comically insignificant.

Go for it. You just need that one clever angle.

19. Feel confident that you can borrow your way out of any problem

You know how I’ve been telling you over and over that you don’t need to save money? Well, some of you [who haven’t been listening very well] may have had a sneaking little thought enter your minds: What if I suddenly need money? How will I handle it if I don’t have any money saved up?

Good question, and it has a good answer: You borrow the money when you need it by getting a cash advance on your credit cards. Or go to a finance company and get a signature loan. And here’s a sneaky little tip: There are also special friends out there who will want to lend you money. Don’t even think about being too embarrassed to ask for a loan—or worrying about your buddies’ discomfort over being asked. Just ask for it—in fact, even demand it! What are friends for? They’ve probably been boring and practical enough to save, so what’s the point of saving if not to do nice things for other people? So, go for it.

And here’s another word of advice: When you get that borrowed money, don’t repay it. Think about it for a moment. How are you any better if you borrow a thousand bucks and then a few weeks later repay a thousand bucks? You’re in exactly the same position you were before. But if you borrow the thousand and then don’t repay it, or only repay a little of it, you’ve made a profit! It’s like it was a gift. So, borrow, allow your pals to feel good about helping you out, and then go on your merry way.

20. Don’t bother to provide for your spouse or your children

Don’t bother sacrificing one single thing for your kids or your spouse so that they’ll be better off or well provided for when you die. What will it mean to you? You’ll be dead anyway. Why should you have to sacrifice a trip or a new boat to buy insurance for your family? It’s all about you, you, you, anyway, and once you’re gone, the world ends, too. What possible concern could it be of yours that your spouse or kids might have to scrimp and save when you’re gone? They’re only your flesh and blood.

What about setting up accounts for your kids so they can pay for college or make a down payment on a home? No way. There are scholarships. There are student loans and jobs. Or they can go without college. It might do them good to go out and work right after high school. Why coddle them with money when you could have so much more fun coddling yourself?

So basically, just devote your life to thinking about your own wants and needs, and let the chips fall where they may.

Well, all right then. If you’ve read this far, it’s just possible that you have some idea what you’re doing wrong. Let me assure you that if you just keep on doing what you’re doing, things will only get worse. I’ve said it before and I’ll say it again: “If nothing changes, nothing changes.”

The post 20 Financial Pitfalls to Avoid appeared first on Complete Wellbeing.

The specifics are always unique. But this thread of shame shows up in stories and beliefs we all tell ourselves:

• “I’m just not good with money.”
• “I totally screwed up, made a mess, and now I can’t go back.”
• “I still feel strong sadness/guilt/anger/anxiety around such
  and such money experience or memory or pattern and I can’t move on.”
• “I should be better at this by now!”
• “I used to be so good with money, what happened?!”

How money shame surfaces

Money shame can surface in many ways, at different times in our lives. Here are some of the ways in which we can experience it:

• as old stories that are still tangled, waiting to be understood and honoured and forgiven
• in your lineage, perhaps kept alive through a family dynamic of guilt, painful silence, or twisted communication
• hidden in lost memories, triggered by sudden remembering or ah-ha’s or a gradual waking up
• right here and now in your money relationship, as you play out familiar patterns that feel “off” or unconscious or un-aligned
• in little [or big!] moments where you feel unsettled with how you’re showing up in your relationship to money—perhaps you feel queasy or headachy or sleepy, as your body is telling you that something’s not quite right here.

Your money shame could be hidden in lost memories, triggered by sudden remembering or ah-ha’s or a gradual waking up

Why does money shame exist?

While growing up, most of us were not taught skills and tools for understanding and relating to money. We simply were not instructed how to manage money or how to talk about it. The concept of money is a huge territory, where so much is happening: emotionally, psychologically, practically, spiritually and inter-personally. And, whether we admit it or not, whether we love it or loathe it, we all live in this territory, every single day: earning, spending, giving, receiving, losing, borrowing, lending, investing and exchanging money. But we simply weren’t taught how to make sense of any of this in a conscious, healing way.

It’s time to give ourselves the permission, tools, and support we need to bring money back from the taboo-lands and heal our money shame.

There’s a conscious money movement afoot, working to bring money out of the shadows and into the light. It’s bringing awareness, forgiveness, alignment and practical tools to the money conversation. And it’s growing every day.

Gather the courage to face the shame

We all have unique strengths and challenges and growing edges with money. Each of us has places to grow, steps to take, healing that’s ready to happen.

While growing up, we were not taught the skills and tools for understanding and relating to money

In my work, I have asked people what they’re currently working on in their money relationship, and their answers have ranged from healing old wounds to setting up accounting software to having conversations with their children. At a certain point, we wake up and realise that it’s time to face the shame, the unhealthy habits, and have those tough conversations. Many of us avoid this for a long, long time. Money tends to be the last frontier, even for the personal growth aficionados. But after the whispers, or the call, or the giant red flag screaming for attention, one day we decide it’s time to open. It’s time to be brave. It’s time roll up our sleeves and take a real look at our money relationships.

The good news is that once you face the shame, you may realise that it is not that big, hairy monster you imagined it was. You may realise that you’re more on top of things than you thought. Remember that we all have aspects of our money relationship that need ongoing growth and continued exploration. Want to hear some of mine?

• Each year I update my systems or add a new person to my money support team.
• Each year I understand more and forgive more.
• Each year I take new baby steps on this money journey.

When you make the decision to start working with your money shame, soon [sometimes immediately] you will start to see a teeny glimmer of possibility, a path into the other side of money shame.

Money tends to be the last frontier, even for the personal growth aficionados

Be gentle

Words to the wise: we need to add big doses of gentleness here. “Tough love” is not the mode of operation for healing emotional wounds. Shaming ourselves is an old pattern. Telling ourselves, again and again, that we are not doing it right, that we’re not good enough, and that we’re unforgivable is self-directed violence. It’s unhelpful. And, actually it’s flat-out inaccurate. We all make mistakes sometimes in life and in money.

Let’s be gentle with ourselves, especially in these tough moments. Let’s learn some creative ways to respond differently, more lovingly.

How can you attend to your money shame?

Let’s begin with a technique I consider my “trusty tool”, the Body Check In. It’s a simple, fast, and elegant way to work with money shame [or any challenging emotion] when it arises. Here’s the short run down of how to do a Body Check In:

• Pause. Listen. Notice body sensations, emotions, the state of your breath, and
  any thoughts that are passing through your mind.
• Gather data. Info. Clues. These are the keys that open your access deeper into your money relationship.
• Be open and curious. Let yourself get in there, into your body, into your Money Shame. Pull it apart.
• Name some of its tentacles.
• Add more doses of compassion and
  curiosity.
• Move it to the side. See it next to you: “Hello money story/money pattern/money shame. Who are you? What do you have to say?”
• Breathe. Add another dollop of compassion, and two more teaspoons of curiosity. Breathe.

Telling ourselves that we are not doing it right, that we’re not good enough, and that we’re unforgivable is self-directed violence

What to do next

Repeat, repeat, repeat. Do this exercise as many times as you can throughout the day. Do it when you find yourself in tough times or stressed out, or simply feeling “off.” You can do the Body Check In at the grocery store, in the parking lot, getting the mail, reviewing your income and expenses, or even when you are about to have a money conversation with someone.

The Body Check In is extraordinarily simple and extraordinarily difficult. It’s my favourite tool because of its simplicity, elegance, and profound power to uncover your money story and open you into so, so much more. And, it is utterly life changing plus supportive.

Finally, remember always that money shame is big and beautiful, tender and taboo, personal and universal—and bursting with potential. Everyone experiences it. However, you do not have to remain trapped inside these negative emotions or feelings about money. Through understanding and practice, you can break-free from the shame, and grow to have a meaningful relationship with money.

This was first published in the August 2015 issue of Complete Wellbeing.

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Here are a few traits of Dhoni that investors would do well to emulate.

Captain Cool

Dhoni is famously known as Captain Cool. There is an imperturbable quality about him. He doesn’t get worked up in tense match situations. These qualities of grace under pressure and not buckling under the weight of expectations have helped him achieve great heights in his career.

A calm temperament is a great asset in the field of investment as well. When the markets tank, most investors lose sleep as they see the value of their portfolios shrink. Warren Buffett has said that you should be greedy when others are fearful and fearful when others are greedy. In a bear market, investors should be able to coolly evaluate which high-quality stocks have become available at a bargain and snap them up. Instead, most of them are either unable to invest more in equities, or worse still, sell their equity holdings altogether.

A calm temperament is a great asset in the field of investment as well

Persistence

The game of investment requires similar tenacity. If most of your investments are in equities—as they need to be if you wish to build wealth over the long term for goals like retirement, children’s education and marriage—then the ride is not going to be smooth. Equities typically do well for one spell and then underperform thereafter. Sometimes the bear market can be prolonged. But the long-term course of equities is upward. Only investors who have the strength of character to stick to their asset allocation and persist with their systematic investment plans [SIPs] when the markets are doing badly will build wealth over the long term.

On the other hand, those who hop from one asset class to another, i.e., from the one that is doing badly to the one that is doing well, will always end up buying assets when they are expensive and selling them when they are cheap. This is the exact antithesis of the approach you need to adopt to build wealth.

Not buckling under the weight of expectations has helped dhoni achieve great achieve heights in his career

Calculated bets

Dhoni does take risks but they are well-calculated ones. He does not have a reckless, all-or-nothing approach. This is reflected in the composition of the teams that he fields. Depending on the sort of pitch that the team will play on, he may take an extra spinner or an extra pace bowler. But he rarely goes with an all-pace or all-spin attack.

An investor too should make calculated bets. Warren Buffett and his partner Charlie Munger often give the analogy that they have mastered the art of vaulting over small obstacles rather than very high ones. Mohnish Pabrai of Pabrai Funds also says that investors should make bets only when the odds are overwhelmingly in their favour.

As for an investor who follows the asset allocation approach, the strategic allocation of his portfolio should be determined by the nature of his goals. Within that he may make some tactical variations. For instance, a typical investor may have an 8 – 12 per cent or 5 – 10 per cent strategic allocation to gold in a long-term portfolio. He may tactically shift his weightage depending on the performance of the asset class, moving to the upper end of that range when the asset class is performing badly [buy low] and to the lower end when it is performing well [sell high].

Dhoni does take risks but they are well-calculated ones. He does not have a reckless, all-or-nothing approach

The Finisher

Dhoni is known to be one of the finest finishers in one-day cricket. Given his position lower down the batting order, he often comes in to bat in the wake of a collapse in the middle order. He has the art of being able to pace his innings well. For the greater part of his innings, he will steal singles and twos and hit the odd boundary. But he rarely goes for fireworks at the start of his innings. It’s only towards the end that he breaks the shackles and accelerates with towering hits.

The ordinary investor, too, needs to pace his investments well. But here things work in the opposite manner. When you are young and are many years away from your goal, you have the liberty to take higher risks. You can put a larger part of your corpus in risky assets like equities. The reason: even if the markets fall and stay down for a long time, you don’t need to worry as time is your ally. In a year or two, the equity market will recover and resume its upward journey.

As you get closer to your goal—say when you are five years away from retirement—you need to reduce the risk in your investment and move a larger portion to fixed-income assets, so that a downturn in the equity market does not affect your retirement plans.

When you are young and are many years away from your goal, you have the liberty to take higher risks

Know your limitations

Dhoni has stuck to his primary role of wicket—keeping throughout his career. Despite being regarded as a good batsman—he has an average of above 50 in his one—day career and nearly 40 in his Test career—he has stuck to the lower middle order and has not promoted himself up the order. This is the sign of a man who knows his strengths and weaknesses and works well within his limitations.

Investments too require you to have an acute awareness of one’s strengths and weaknesses. Buffett advises all stock market investors to invest within their circle of competence. He says that they should not invest in sectors or industries that they know very little about.

Often, investors over-estimate their abilities, oversimplify the investing process and adopt a do-it-yourself [DIY] approach. Investing is difficult and they would do well by having a competent financial advisor. Remember, it’s for a reason that even the best sportspersons have coaches.

A version of this article was first published in the November 2015 issue of Complete Wellbeing.

The post What you can learn about investing from captain cool MS Dhoni appeared first on Complete Wellbeing.

Sounds familiar? Then this article is for you.

Earning a living is no walk in the park, what with trying to keep the nose to the grindstone, shoulders to the wheel, eye on the ball and ears to the ground. One rarely has the time, energy and inclination to worry about when, where and how to invest. Plus, this tax saving thing is so tedious and boring. Some money ‘has’ to be invested to get you a tax deduction. Bottom line—less TDS [tax deduction at source] and more income for the rest of the year. That’s all Priya was concerned with, then why bother with the planning and details, right? Wrong.

Because the cheque written today has got enormous ramifications on your finances tomorrow. So you better know what you are doing.

Make the effort

Assuming you are serious about your job, you must be spending the better part of your day giving it your blood, sweat and tears. In return, you are paid a salary. Even for the self-employed, it is no different. This income helps you to spend and save money for the future. So just because something seems tedious and boring, it shouldn’t be used as an excuse to be careless about money. Especially when it is neither tedious nor boring, but actually simple and straightforward. And the ten minutes that you spend reading this article is all it really takes. So do make the effort and it will pay you rich dividends—pun intended.

Understand the basics

First of all, let’s understand that the maximum amount of tax deduction allowed is Rs 1,00,000. Out of this, take out the total amount of provident fund [PF] deducted from your salary during the year. Of course, for the self-employed, this figure would be nil. Those who have taken a housing loan should also reduce the principal portion of the EMI [equated monthly installment]. Now the balance left needs to be invested.

For example in Priya’s case, the PF was Rs 60,000 for the year and she lived with her parents. So she needed to invest Rs 40,000 [Rs 1,00,000 – Rs 60,000] more to reach the limit. Now, she can invest this Rs 40,000 in a variety of instruments such as bank deposits, life insurance, NSC, PPF, ELSS [tax saving mutual funds] and Post Office deposits. Space constraints preclude a detailed discussion of the pros and cons of each one of these instruments. So, I will spare you the ‘tedium’ and ‘boredom’ and directly get to the point.

Simply invest

Instead of depending upon your colleague, ignore everything else and simply invest in a combination of ELSS and PPF. If you are relatively young and just starting out, put 70 per cent into ELSS and 30 per cent into PPF. As you advance, lower the proportion in ELSS funds and increase the proportion of PPF eventually reaching a 30 per cent ELSS and 70 per cent PPF combination. Of course, since each person’s situation is different, taking the advice of a financial planner [as against an agent] would be better than this kind of template investing—however, it would beat the last minute frenzy any day.

Now that the tax saving is taken care of, lets go a step ahead. Beyond a point tax saving is simply not possible. So don’t fret about saving tax, worry about optimising post tax income. How do you do it?

Perhaps by making a small modification to the usual mindset. Normally, the amount we save out of our incomes is what we call savings. In other words, Income minus Expenses equals to Savings. Now, for the almost presumptuous suggestion. How about Income minus Savings equals to Expenses? It’s the same equation, but redrawing it is infinitely more efficient as far as our finances are concerned.

Start small

So starting next month, pre-decide how much you want to save out of your income and the balancing figure should automatically make up your expenses. Take care not to set too ambitious a target, or you will end up just strait-jacketing yourself and give up soon. So start small and make the adjustments as you go along. This strategy introduces an element of financial discipline and ensures that you don’t feel too much of a pinch.

Be an early bird

This holds good for anyone with an income. You need not wait till the last minute and take decisions in a hurry. The early bird gets the worm. You can be that early bird by investing in tax-saving avenues at the very beginning of the financial year, even on April 1. Doing so has a two fold advantage. Firstly, your tax saving investments will earn returns from the beginning of the financial year [April-March]. Secondly, you will not have to worry about paying a lump sum [which you may not have] at one go at the last minute.

There is no compulsion to invest for tax only towards the end of the year. A much more efficient strategy is to invest throughout the year in a staggered manner such that by the time the financial year comes to an end, you can take full advantage of the tax saving opportunity. And don’t worry about how much or little you save each month. As Benjamin Franklin has so succinctly put, “A penny saved is a dollar earned!”

This was first published in the January 2009 issue of Complete Wellbeing

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Everyone who works with our company is constantly refining their abilities to create money, not simply waiting for a paycheck. We are more than a business; we are also a school. The people who work with us are training to be generalists in business and can swap places with anyone throughout our organisation. We are constantly training everyone associated with us to be generalists in business. And although we have a few strict rules and policies, everyone is encouraged to experiment, to make mistakes, correct them and report their findings at our meetings. Our business is always growing. All of us are continuously learning and changing. It is definitely not a boring place to work in, believe me! Here’s something else I’d like to point out: there is no such thing as a crazy idea in our organisation. In fact, if someone isn’t experimenting with some crazy new idea and making mistakes, we encourage them to do so.

Co-dependent behaviour

Co-dependency is a term psychologists use to describe a person who is attracted to people who are addicted to a substance or some kind of destructive behaviour. To keep it simple, let’s say that you are the co-dependent and you are always finding yourself attracted to alcoholics. You may complain a lot about your alcoholic partner’s behaviour. You may criticise them and even beg them to change. But the truth is that you are just as addicted to this kind of partner as your partner is addicted to their drinking. In fact, if you are a true co-dependent, you would probably lose interest in your alcoholic partner the moment he or she got help and stopped drinking. And pretty soon you’d go out looking for another alcoholic to hook up with.

The co-dependents live in this closed circle of hating how they live but going back to the same pattern again and again. They believe that life is a constant struggle for survival, and of course it is, as long as they keep going back to their stuck, self-destructive patterns.

If you are a true co-dependent, you would probably lose interest in your alcoholic partner the moment he or she got help and stopped drinking

For most people, the employer-employee relationship is a co-dependent one. It is based on an addiction to survival thinking. The very thing employees and employers find most attractive is also the source of their downfall. In this case the paycheck is the addiction. Not that we don’t need money. We do. Back when we had an agrarian society we might have been able to trade potatoes for rent. But can you imagine trying to send the utility company five bushels of potatoes to pay your electric bill, or sending the bank three pigs every month to pay your mortgage?

Of course not.

Survival needs money

The point is that in the past 100 years, money has become almost as necessary for survival as air, water and food. In today’s world, money is synonymous with survival, and when survival is at stake, people get desperate. Out of fear they get hooked up with the easiest and fastest and most secure way to get those dollars in their pockets. They stop taking risks and they stop learning and they stop developing their own potential.

Despite the fact that money has taken such an important place in our society, our educational system still fails to address it directly. Like a stubborn co-dependent who won’t look at what he could do to free himself of his addiction to alcoholic people, the educational system refuses to look at what it might do to teach the actual principles of money, the ethics of money, and how money really works.

Despite the fact that money has taken such an important place in our society, our educational system still fails to address it directly

Sometimes it seems to me that our entire society is avoiding the subject. Even when we do talk about it, in school or on television programmes, we discuss it in sterile and lofty theoretical terms not put it in everyday terms that ordinary people can understand. And our educational system, which should be taking responsibility for teaching about money, continues to treat it as corrupting and evil. Don’t get me wrong. Money can corrupt. But the system seems to use that as an excuse to ignore that money is a cultural necessity in today’s world and can do a lot of good. To say that money is corrupting and evil in a world which runs on money makes about as much sense as saying that pigs or potatoes are corrupting in an agrarian society.

Job security is a myth

Our social system continues to promote the ethic that everything will turn out okay if you just study hard and work hard, if you will just do as you are told, don’t make waves, don’t make mistakes and memorise what you are told. God forbid that you would somehow learn to think on your own or take any real initiative. Our system encourages us to specialise, and to then go out and find a good and secure job.

Maybe a hundred years ago all this looked like a pretty good idea. But today there is no such thing as a secure job. In our rapidly changing world, the myth of job security is kept alive only by schools and businesses, both of whom know better, or should. Similarly, the idea of working your way to the top is obsolete. Too many times, we find ourselves climbing career ladders and getting almost to the top, before we discover that we’ve leaned them against the wrong walls and those walls are coming down.

Let me put it as simply as I can. Security is possible but it can’t be found in a particular job any more. The only way we can have security is through our own knowledge. We need to know how money works in our lives. We need to know how to be flexible and make changes when it is necessary. We need to know how to learn new skills and adapt quickly no matter what happens. In short, we need to learn how to be generalists first and specialists second, not the other way around as our present system teaches us.

Maybe a hundred years ago all this looked like a pretty good idea. But today there is no such thing as a secure job

Business schools are at fault too

When I say let’s learn about money, I’m not saying let’s learn to manipulate and exploit each other for the sake of amassing bigger and bigger fortunes. That’s just another form of addictive behaviour that in the long run isn’t going to help make any of us any happier or any more secure. Let me give you an example:

In the mid-70s, business schools began teaching MBA students to be take-over artists and so-called financial wizards. Instead of teaching them to be visionary business people who could create new goods and services to expand our economy, they were taught to exploit the system, which ended up actually shrinking our economy and creating problems for all of us. A lot of these take-over artists ended up in jail and the American people ended up with a multi-billion-dollar debt to payoff the damage that they did. This is co-dependency and addiction carried to its worst extreme!

Business schools are still teaching MBA students to make money with money, thus creating money managers instead of courageous business leaders. Getting bigger salaries and bonuses has thus become more important than the idea I am most interested in promoting here, that we can actually make an important contribution to our world even as we are getting rich. We can get rich and make a contribution only if we get out of our co-dependent relationship with money and really learn how it works!

Business schools are still teaching MBA students to make money with money, thus creating money managers instead of courageous business leaders

Think of the kind of world we could have if instead of teaching people financial co-dependency we began showing them how to create new products and services that the world needs. Why, we would be breathing new life into the entrepreneurial spirit that once made our country great, a spirit which at the moment seems to be dying a slow death.

Trained to be obsolete

Our greatest ally in all this could be our educational system. But, as everyone knows, that system is in deep trouble. Educators know it, parents know it and students know it. The system’s failure to respond to change is causing a revolt. In every major city public education is sliding into a state of anarchy, where nobody is really in charge. Students know they are being trained to be obsolete. They know that information necessary for their own survival is not being taught in schools. Most of them realise that the idea of working for one company all your life is ludicrous. In spite of this we grow up having the idea drummed into our minds that we should decide on a job or career specialisation in our teenage years. But just stop and think about it for a moment. How many of us have ended up training for jobs in companies or industries that weren’t even around by the time we graduated? We’re not talking about a handful of people here, we’re talking about millions.

Is it any wonder students often rebel not only against their schools but against society? They aren’t stupid, they’re bored. They look around them and they can see that what the society is offering through the schools really isn’t all that relevant. So they cut classes, drop out or simply have little interest. Most students make their way through our educational system for one reason, to get a diploma. They view a diploma as a way to open the next door. Sadly, all too many of them eventually discover that the years spent getting the diploma were a waste of time, with little gained. The doors they thought were there never materialise, and when they do they don’t necessarily open up just because you’ve got a diploma in your hand. And it’s not just high schools that are suffering in this way. Statistics show that there are more unemployed college graduates than ever before in history.

How many of us have ended up training for jobs in companies or industries that weren’t even around by the time we graduated

Shattered dreams

I meet all too many people who are sitting around wondering what happened to their lives. Their dreams aren’t even beginning to come true. Their incomes have hit a plateau and they know that at the rate things are going they will soon find themselves in their retirement years, dependent upon government assistance just to make ends meet. They see just a handful of other people gaining financial well being. As for themselves, they continue to work harder and harder while falling farther and farther behind. What happened to the promise of the good life? they ask themselves. After all, they followed all the rules society taught them—being good, doing as they were told, studying hard, working hard. What could have gone wrong? Well, what went wrong is that they learned, all right, but they learned the wrong lessons.

Unfortunately, most hard-working, promising students have been turned into co-dependent wimps by the time they graduate from high school or college. All they know is how to work hard and do as they are told, in spite of the fact that the job is no longer secure or doesn’t pay enough to keep up with the wildly escalating cost of living.

The only way to keep up with change is with knowledge. Our true wealth is found only in what we know. So many people I encounter in my work are still poor and struggling because they haven’t made enough mistakes in their lives. They have continued to hang onto the co-dependent relationships they were taught in school and that you should avoid making mistakes at all costs. And that belief keeps them imprisoned in their own ignorance more than any other single thing we are ever taught.

The only way to keep up with change is with knowledge. Our true wealth is found only in what we know

Instead of growing people who put their energy into avoiding mistakes, they become paycheck-addicts. Then reality strikes, usually around the age of 35. Suddenly they realise they either hate their jobs or are losing them because the skills they’ve developed have become obsolete. With the world crashing down around their ears, they simply don’t know where to turn. They don’t have any alternatives because they don’t even understand their own co-dependence or what it is doing to their lives.

But what about the boss? Unfortunately, this scenario also fits the heads of most companies. A company of co-dependent wimps never develops much real strength. In the end, the business loses profits and employees from the bottom to the top are left wondering why they were laid off or why they didn’t get raises when, after all, they played by all the rules for success that they were ever taught. Employees, as well as business owners, are finding themselves in this position, too, asking why, wanting to break out of their self-destructive co-dependencies and addictions but not knowing how to do it. Indeed, most companies which are suffering in this way can’t even imagine an alternative.

A new business model

Today, we’re beginning to see a new kind of business coming onto the scene. These successful new companies are either employee-owned or the employees pay to work for the company. I know it sounds absurd for employees to pay to work for a company, but it is already happening and seems to be a trend of the future.

The most successful new real estate companies are either employee-owned or the employees pay a fee every month to belong to the company. The old method of a real estate sales agent splitting a commission with the owner of the company, for example, is being phased out.

Today [in the United States], a real estate agent pays a fee to a company that advertises her or his services throughout the country, or at least through the area the person is working in. The individual salesperson is in business for him- or herself, however, getting the use of the company logo and benefitting from the widespread advertising. But the salespeople are responsible for renting an office, getting their own listings, working with their own customers, and processing their own papers. They pay their own phone bills, their own license fees, and even pay for their own for-sale signs.

Do you see the point I’m getting at here, that they are not just pay-check junkies, they’re not sitting on a stationary bike cranking away at the pedals? They are out there on the road, not just pedalling but steering, balancing and watching for traffic. They have responsibilities in every phase of the process that allows them to make a living.

With these new business structures the less successful salespeople are being phased out. It is a business of perform or perish. No more will the realtor-in-charge provide a desk and services in hopes that the salesperson can sell. The result is that employees are carrying the company rather than the other way around. And it’s working!

This trend of employees paying to work for a company is an idea that every business needs to look at. People want to make their own decisions instead of being dependent on a boss who controls the amount of security they have or the amount of money they make. Our company does it. Not only do my profits grow along with my employees’ earnings, but the people themselves bloom.

This trend of employees paying to work for a company is an idea that every business needs to look at

Our educational system, however, is still teaching people to ask, “Where is my paycheck?” Today, all of us are paying for an educational system geared to training people to be mindless robots who end up working themselves into a corner of economic co-dependence and obsolescence, with no personal wealth of any kind, neither viable skills and knowledge, nor money. They remain addicted to the steady paycheck because they don’t know how money is generated.

How we all pay for our inadequate educational system

1. Business and government leaders who cannot think. Our business schools create MBAs who are creative in accounting so that a business can look good on paper even when profits and growth are diminishing. They offer training in the art of finance and acquisition, which when put into actual practice causes stock prices to jump and then crash. An MBA degree is often a ticket to the top, allowing people to avoid essential work experience. These new leaders lose touch with employees as people, and business becomes an accounting job. The company’s ‘’bottom line” becomes the sole concern and people are treated as little more than troublesome but necessary resources.

2. Exploitation of Resources. Western business only believes in what it can see, touch, smell and taste. It thinks only in terms of tangible objects such as land, oil, gold, trees, crops, machinery, etc. Western society teaches only about the visible. It almost ignores the invisible, those less tangible aspects of our lives such as morale, motivation, self-esteem, trust, the spirit of a group when they are working well together. It has yet to develop a way to teach people how to make use of the invisible world, which is infinitely greater than the visible world.

3. A nation of co-dependent wimps. More and more people blame the government for their problems. And increasing numbers of people spend all their spare time submitting their resumes to other companies, always in search of a better job and benefit package. I overheard a woman in a restaurant gloating to her friend that she had quit her job with a company that was going broke and had gotten a job with the state government for more pay, a better benefits package and less work. On top of that, she was happy because she said it was almost impossible to get fired from the government, so she could just coast along and still have greater job security. And we wonder why our tax burden goes up while less and less gets done! Everyone seems to be looking for a job with more pay and less work.

4. An education that fails those who need it most. Since we punish those who don’t do well in school, they often drop through the cracks and are ignored by the system. When you tell them to get a job that will only keep them at or below the poverty level, the sense of self-worth diminishes. And when a person’s sense of self-worth goes down, the desire and ability to work decreases too. Through this system we literally create hundreds of thousands of welfare-dependent families and people who have no hope for a better life. Under these circumstances, crime increases. As Jesse Jackson commented during the Los Angeles riots in 1992, in an environment of terrible poverty and hopelessness, going to jail is actually an improvement over the life they know. They’ve got nothing to lose and everything to gain by committing a crime.

You see, when you start looking at all the factors, you begin to see that every-one would have a lot to gain if we were to teach everybody about money and how it works.

Henry Ford’s real wealth

There’s a little story about Henry Ford that I like to relate when I’m telling people about money and the value of the invisible. As you know, Ford was a multi-millionaire at a time when a million dollars was still a lot of money. Someone once asked him what he would do if he lost everything. Without a pause, he replied, “I’d have it all back in less than five years.” How could he have done that? He could have done it because he knew that his real wealth wasn’t counted in how many dollars he had in the bank, or even in the number of factories or the amount of real estate he owned. His real wealth was in what he had between his ears: the intangible, the invisible, the knowledge he had about what money is really all about. For all their emphasis on knowledge, our schools most neglect this kind of resource.

henry ford’s real wealth was in what he had between his ears

Until our educational system stops punishing people for making mistakes, and until the creation of money is made a part of the school curriculum, people will continue to live lives as co-dependent wimps. They stop growing and stop thinking until the only question they know how to ask is, “Where is my paycheck?”

Adapted from Be Rich & Happy by Robert Kiyosaki; Published in India by Jaico Books; Reproduced with permission. 

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