Dead or Alive!

Dinner time is that time of the day when the Bachwani family gathers around the dining table for a good meal and conversation. Every once in a while, we try to ask interesting questions of each other, giving every one at the table a chance to respond.

Here’s what happened one fine evening…

I asked the family: “Which Indian personality would you like to meet in person, if there were no constraints whatsoever?” Once we had all the answers, I expanded the question to include foreign persons, folks that are no longer alive (Indian or foreign), and finally, any fictional character.

It was a fascinating exercise in discovering our respective lenses and (current) priorities. And, I’m sure it will make for a great conversation, some day, when these answers are long forgotten…

Tiger (all of 8 years old!)

Indian alive – Zakir Hussain (Tabla maestro)
Foreigner alive – Ludacris (Rapper)
Indian dead – Mahatma Gandhi
Foreigner dead – None
Fictional character – Hulk, but without the anger!

Pumpkin (12 years)

Indian alive – Hrithik Roshan (Filmstar)
Foreigner alive – Taylor Swift (Pop Diva)
Indian dead – Mahatma Gandhi
Foreigner dead – Albert Einstein
Fictional character – Katniss Everdeen (The Hunger Games)

The Mrs.

Indian alive – Farhan Akhtar (Filmstar)
Foreigner alive – Barack Obama
Indian dead – Jawaharlal Nehru
Foreigner dead – William Shakespeare
Fictional character – Richie Rich!

Me

Indian alive – Raghuram Rajan (RBI Governor, Economist)
Foreigner alive – Chris Nolan (Hollywood Director)
Indian dead – Chanakya (Kingmaker, Strategist)
Foreigner dead – Richard Feynman (Nobel Laureate, Physicist)
Fictional character – Sherlock Holmes

There you have it.

5 Rules Every Child Should Know About Money

Money. It makes the world go round. But, for all its importance, our schools and colleges hardly cover it as a part of the core curriculum taught to our young ones. As a parent, I decided to fill that gap…

(I wrote this for my own two children, attempting to put down all that I have learned in more than two decades of studying Personal Finance. Feel free to share it with your folks, if you find it helpful…)

The Context

Money is important. Some folks prefer not to talk about it, while others seem to go on and on about it. Some will hide their wealth from others, while others will generously give to a stranger. Some will not have enough to afford the day’s meal, while others will have more than what is needed for ten lifetimes! It takes all kinds, and you will need to figure out where your equilibrium lies.

My advice would be to avoid extremes, and find some middle ground – it will make more sense to you as you grow older (and wiser). Don’t try too hard to get this part right. Focus on the rules that come next.

And remember, much of this will not make you popular among your friends and colleagues. In fact, you will find yourself in the minority. But, stay on the path, and you will live a full Life…

Rule #1 – Spend Less Than You Earn

Whatever Life you choose for yourself (yes, even if you decide to live “off grid”!), you are going to need some money to survive. If you’re not careful, you will find that you have more month left at the end of the salary (or any other source of income) than you would like.

There is a simple and effective way to remedy that situation – Spend less than you earn. Few have the discipline to follow this advice. The biggest obstacle in its path is our impulse to “own” every shiny, new object we desire in a moment. Do this often enough, and you can say goodbye to any real savings you hope to accumulate in your early years.

The antidote? Spend some time thinking about the impulse purchases that tend to rack up, and eliminate those to start with. It helps to delay the purchase for a week and assess if you still want it. (Often, you will find that the feeling has passed!)

An invaluable tip to decide what to really spend on, is to think of it in terms of the time you spend using it. Don’t scrimp on the stuff that matters, like a comfortable bed, or an ergonomic workstation. The more time you spend using something, the more you can justify the spends needed to get it done right.

Rule #2 – Focus On The Big Rocks

Remember that story about putting the big rocks in the bucket first, so you can fill in the smaller ones later?

Once you’ve managed to curb those needless, impulse purchases, focus on the biggest recurring expenses you have, and apply the 80-20 Pareto rule. You will find that two or three major heads contribute the most to your spends – Review and redo them for maximum impact.

You will need to figure out which trade-offs are acceptable to you and your family. For example, your rent or EMI payments may figure among the top three expense items – Can you afford to shift to a smaller place or find a house further away to reduce this cost head?

Making changes will not be easy or without inconvenience. But, if you are constantly playing catch-up with your income/expenses, the rewards will be worth the effort.

Once you make a real dent in your “big rocks”, you should find yourself in a comfortable position to start accumulating some savings each month. Aim to save at least 10% (each month) in your first year, 20% next year, and so on, until you hit 40-50% in the first 4-5 years. You can tweak this later as your lifestage and priorities change.

Rule #3 – Understand Rent vs Buy

You’re part of the new millennium, and fortunate enough to be born in a world with possibilities. Don’t take advice from old foggies who lived in a different time. Be open minded to the new world order.

There is absolutely no need to Buy something (even if you plan to use it again and again), if there is a Rent option available that makes more economic sense.

Take the example of Music – my generation grew up on cassette tapes and CDs, and your’s on streaming music and the Internet. Buying the album you want will mean locking yourself into a format (that may not last your lifetime – think laser discs!), storing it (will you have enough space?), and accessing it with physical constraints (will it play on all your devices? on demand?). Buying a subscription to a streaming service, on the other hand, frees you up from all of those limitations.

In your lifetime, I predict you will be able to Rent/Lease stuff that we could never dream of – hugs, time spent with dogs awaiting adoption, the experience of growing an orchard. Choose “Rent”, whenever it makes more sense to do so.

Rule #4 – Safeguard Against “Risk”

Before you begin making investments, you must learn about the concept of Risk – in Life and with regard to your money.

Understand how “Insurance” works, and begin by buying the most-inexpensive term cover you can buy, for a cover that is at least 10-20x of your annual earnings. Then, get adequate medical coverage to protect against health-related contingencies. You can always add to this basket, as you learn more about your priorities and what’s right for you.

Once you’ve got adequate cover, understand what puts your investments at risk (inflation? unoptimized tax structures? taking on debt? lending your money to folks who will not be able to repay you?), and how to safeguard against them. Knowledge is the key, here. The more you understand Risk, the better equipped you will be to deal with its consequences.

Rule #5 – Learn To Invest

Savings will not keep up with Inflation. So, you must learn to invest. No, don’t rely on the so-called “professional experts” for the basics – their incentives are not aligned to your objectives. In matters of Health and Wealth, you must have the foundation knowledge necessary to get the essentials right. After all, it is your life. No one will care about it as much as you do.

Learn about the concept of Financial Freedom. Read stuff on Personal Finance. Examine the choices your friends and colleagues make – there is a lot to learn from others’ behavior, including what not to do. Know about the tax laws that apply to your earnings and investments. Understand the basics of how the economy works (yes, even if you don’t decide to major in the subject!).

Also, know that there is a lot of misguided advice out there – on the Internet as well as in Print. Figure out which folks make more sense than others. Figure out how to differentiate the noise from the music. It is not rocket science. You are an intelligent being. You can do it. And, once you get the hang of it, keep the momentum going. After all, learning is a continuous process…

Bonus Tip: Avoid Debt like a Death Trap – unless it is to build an “asset” (i.e. something that appreciates in value over time). For all other things, buy only what you can afford to buy without borrowing money. Unfortunately, that means saying no to that BMW you can “easily” afford on a 7-year lease plan. Remember, some of the wealthiest folks on this planet live far below their means. Borrow funds only if you can put them to work and build something that increases in value, instead.

Tidbits: June 2016

Gotcha!

Ever so often, I make it a point to scan the daily news and share some topics of current affairs with the kids, so that they may learn about their world (and, hopefully, avoid other’s mistakes from being repeated).

Off late, the newspapers were full of stories on how Vijay Mallya was absconding from the country. So, Mallya was the topic of discussion, that fateful morning…

Papa: Do you know about Vijay Mallya, the owner and CEO of Kingfisher Airlines?

Papa: Well, he borrowed a lot of money from various banks, and has left the country without repaying those loans. That is why the newspapers are full of stories on him and on how he should be made to pay.

Tiger: How much money did he borrow?

Papa: He owes the State Bank of India nearly 9,000 crores, and SBI has now filed a case against him in court to get that payment back.

Tiger: But, that’s not fair. What about the “interest”?!

Imagine that!

Here, I was trying to simplify the story for his benefit, instead of talking about how the principal plus interest amounted to nearly 9,000 crores. And, this 8-year-old was sharp enough to spot that if someone has borrowed X amount, he owes the bank X plus the interest on the borrowed amount.

If this is the future of India, we are in good hands, wouldn’t you say?

 

Tea Time

The wife and I were having a bit of a tiff on who makes better tea between the two of us. On a whim, I asked my 12-year-old daughter to intervene…

Papa: Pumpkin, will you help us settle a heated debate? Who makes better tea – mama or me?

Pumpkin: How do we do that?

Papa: Well, mama and I will both make a cup of tea each, and you can taste and tell us which cup tastes better. Agreed?

(She pauses to process it, before replying…)

Pumpkin: OK, but I have one condition. I will judge it based on which cup of tea tastes better, not who I like more!

What more could one ask for?

Tidbits: Feb 2016

Lottery Winnings

I wanted the kids to have the experience of buying a lottery and trying out their luck. So, one day, while walking through the streets of town, we picked up a few tickets for the Sunday lottery, and gave the kids a quick run-down on how it works. While they were not so pleased about the concept of losing nearly a third to government taxes, it was a lot of fun for the entire family to divide up potential winnings in the ratio of our respective ages, and imagine what each would do with their “share”.

Next, came the day of results.

After a number of Google searches, I finally managed to locate the badly-designed website of the State lottery and navigate to the results page. My 8-year-old son happened to be in the house at the time, so I pulled him alongside to see the action…

Papa: Now, watch while we check on the results of the lottery tickets we bought last week.

Tiger: Ok, I want to see that!

Papa: Here goes… (checking one by one and not finding any of the numbers in the winning list).

Papa: Hmmm, looks like none of the tickets we chose have won anything.

Tiger: What do you mean?!

Papa: I mean, we checked each number, and we did not win anything.

Tiger: What kind of lottery is that? What do we DO to win?!

The poor li’l boy just couldn’t fathom a process where we don’t do a thing to influence the outcome, and still lose.

Lesson learnt, wouldn’t you say?

Tidbits: April 2015

It’s been a while since I posted something new on the “dad” blog. There is a lot to catch you up on, so here goes…

Food Fiesta

One evening, at a McDonald’s outlet, Tiger wanted some Chicken McNuggets. He was almost through eating it when…

Tiger: Papa, I know that the chicken I’m eating is a woman!

Papa: Really? What do you mean?

Tiger: I mean it’s a hen chicken – a girl.

Papa: How do you know that?

Tiger: See, it says right here on the packing. Made from juicy chicken breast. So, it must be a girl chicken, na?

Another day, at a dinner outing, we were waiting for our food to arrive at the table, when I noticed something smoking at the next table. In an effort to keep the kids entertained, I mentioned it to them…

Papa: Look, at the table next to our’s. They’ve ordered a dish that is smoking!

Tiger: Why is that?

Papa: They may have ordered something that sizzles or is served in a hot pot, so smoke comes out for a while.

Tiger: I feel bad for the dish.

Papa: Why? No need to feel bad…

Tiger: Because it will get cancer. Smoking causes cancer, no?

Customer Service

I was having a lunch conversation with my kids and I took the opportunity to vent a little. Instead of addressing customer service problems every day, I’ve been trying to bunch them up and address all of them at a go. One of these days, I had just finished talking to several service providers and was feeling frustrated with the progress I’d made.

Papa: Kids, do you know what I’ve been doing the past few hours?

Tiger: What?

Papa: I’ve fired ICICI, I’ve fired Airtel, I’ve fired Kotak, I’ve fired Vodafone and I’ve fired the Insurance agent.

Tiger: (Pregnant pause, then cheeky smile…)

Papa: What?

Tiger: Papa, you’re going to need a Fire Engine soon!

Can you beat that?!

Tidbits: June 2014

Team Work

One fine morning, Tiger came up to me wanting to know what our evening plan was. Here’s what happened next…

Tiger: Papa, what are we doing today evening?

Papa: Why? Why do you want to know?

Tiger: Because I have an appointment today.

Papa: Really? What kind of an appointment?!

Tiger: Today is the Beginner’s Festival, so I need to be with my team.

Papa: What’s that? Tell me more.

Tiger: The ‘Beginner’s Festival’ is a day of the month when newcomers can apply to join my team. It only happens once a month. And it was my idea!

Papa: How did you come up with this idea?!

Tiger: Papa, I am the commander of two teams… One in the the garden and one in the building. You know, like the judge is the same on Britain’s got Talent and The Voice. I am like that!

Now, you know!

 

Another incident happened when, one weekend, we decided to take the kids out for a spontaneous drive. We got into the car, and I asked every one where they would like to go. Mama suggested we head to the pastry shop at the Renaissance (a five star hotel nearby).

Almost on cue, Tiger started singing: “Mama’s thinking pri-cey!”

 

Tidbits: Apr 2014

Art of Story Telling

One lazy Sunday afternoon, out of the blue, I found Tiger (now a little over six years old), writing in his book even after his study time was over. When I asked him what he was upto, he answered that he was writing a story! This is how it went…

One day Motu found some ladoos in the fridge.

Mama I want ladoos said Motu.

Not now. First have lunch said his mother.

How cool is that?! 

 

Growing Up

Off late, it seemed like Pumpkin (now a little over ten) was growing faster than ever, and looking taller too. So I decided to talk to her about it. Here's what happened next.

Papa: Pumpkin, you're growing too fast. Why don't you slow down a bit?

Pumpkin: What do you mean, papa? 

Papa: I mean that you should slow down a little and not grow up so fast.

Pumpkin: No, papa. I will not slow down. I will grow as fast as my birthdays come each year.

Now, you know!

 

Tidbits: Dec 2013

Art imitating Life

Today's newspaper carried a story of a painting by Gaitonde selling at an auction for more than Rs. 23 crores (i.e. 230 Mn). I thought I'd use the opportunity to teach my kids a little about the Art world. Here's what happened next…

Papa: Did you see that? A painting by an artist called Gaitonde has been sold for more than 23 crores?!

Pumpkin: Show me, show me. What? That painting?! It doesn't look all that special.

Tiger: Show me, show me. How much is a crore?

The next few minutes were spent explaining how an auction broadly works and how much is a crore.

Tiger: How can anyone have that much money?

Tiger: The man who bought it must have had to take from his wife and his kids' piggy banks also!

Now, you know.

 

The Big Race

Earlier this month, both the kids had their Annual Sports Day. While Pumpkin was participating in the march past, Tiger was all excited about his race. When the time came for his event, the wife and I were ready and waiting – me with the camera trying to capture the race in all its video glory.

For the life of us, both me and the mrs. kept a sharp lookout to spot Tiger in all that mayhem, and could not find him at all. At the end of the race we discovered that he actually won the first prize in that race!

When it was all over, he hurried up to us and excitedly asked us if we saw him. We both confessed that we tried really hard, but just could not spot him in the race and were actually worried if he had fallen ill or had hurt himself.

With a mischievous gleam in his eye, he said: That's because I ran so fast you couldn't even see me!

Tidbits: Sep 2013

Slow and Steady

One fine morning, at breakfast, Tiger decided to bring out the virtues of the malted chocolate drink he has every day.

Tiger: Papa, do you know what Bournvita does?

Papa: No, what does it do?

Tiger: Bournvita gives you energy. It makes you run faster!

Papa: Really? It makes everyone go faster?

Tiger: (slight pause) Except if you're a tortoise. Then it can't help much.

 

Laws of Physics

One day, over dinner, the conversation revolved around every one's weight. Here's what happened next.

Tiger: Papa, I need to tell you something funny.

Papa: What is it?

Tiger: I think there is something funny about my legs.

Papa: What is it?

Tiger: Just one of my legs weighs 20 kilos, and both together also weigh 20 kilos!

Papa: How is that possible? Show me what you're doing.

Tiger takes me to the weighing scale, stands on it with one leg, and then stands on it with both and shows me what he meant.

Now, you know.