Tuesday, December 15, 2015

Aftermath of Chennai Floods: Lessons Learnt!


Image result for human chain in chennai floodsNature is boon if you can adapt to its ways but the same nature is bane if you try to tame it!

Unprecedented growth in name of development can be dangerous. We, in India, learnt a lesson recently as floods in one of its metro cities, Chennai! People who planned the city forgot some rules of nature and the whole city paid the price. Among other reasons, one reason was construction on Marshlands and river banks. Marshlands and local water bodies are important to absorb water in case of rains. So when Chennai saw one of the heaviest rainfalls of the century, there was nothing to soak up the wrath of rains. Entire city along with its suburban areas was flooded. The loss was enormous!

Many lost their lives. And many more lost their means of livelihood. Almost everyone in and around the area was affected, psychologically! There were people injured, hungry and terrified, stranded in their own houses, waiting to be rescued. People lost the belongings for which they had worked really hard to buy. But one thing people did not lose was ‘faith in fellow human beings’!

Chennai floods, on one hand were a dent on the human greed but on the other hand they were reinforcement of solidarity among people all over India.

Once the emotional setback will be taken care of, the financial losses will be more visible.
It will take sometime before lives are restored to normal in Chennai and here are few lesson we all can learn from this tragedy.

1.  Know your Neighbors


Chennai stood strong because people helped fellow beings. When water raised and houses at lower floors were submerged, neighbors from upper floors accommodated the families in their homes. Even though everyone was stranded and resources were meager, they shared it. This warmth and hospitality has always been part of India’s social fabric. We are not vocal and expressive about our feelings but we always lend a helping hand whenever needed!

Such tragedies are reminder of why our ancestors valued ‘Relationships’ more than ‘Material achievements’. Let us not forget this in our busy lives and be connected with our neighborhood and neighbors.

2.  Keep cash at home


With ATMs at our disposal, we can easily hear ourselves saying ‘who keeps cash at home now a days’! But when disasters like floods and earthquakes happen, all institutions are affected. No matter how immortal we imagine them to be. And soon economy resort to its age old ways of functioning like cash and barter at least for sometime before normalcy is restored.

We may not need to keep a lot of cash but keeping cash for at least a one week’s need can be a helpful.

3.  Use Digi Locker


Many lost their important paper likes Marksheets, Passports, Pan-cards, insurance policies during this calamity. It is a difficult and time consuming task to procure all documents again.

Government of India has launched a facility called ‘DigiLocker’ dedicated to personal electronic space for storing the documents for residents of Indian citizens. It also provides facility for e-signing documents.

Sharing the link to learn more about it. www.digilocker.gov.in

4.  Take home insurance


Indians love to invest in real estate but not even one percent insure their homes forget the contents of home. We assume that mere buying a house is guarantee of safety for our investment and ourselves. These calamities prove us wrong. In Chennai, all kinds of houses from a jhuggi to a bungalow were waterlogged.  And we learn that building a concrete structure is not enough and these structure also need a layer of protection.

Taking home insurance is one answer. Also we can insure valuable contents as well.
Other insurances like Life insurance, car insurance and medical insurance should be taken and renewed timely.

5.  Be part of Social Media


Social media was the life line of Chennai during this disaster. Information were shared, communication cells were set up on social media. Those who were running out of battery and were unable to charge their phone were sharing their help request on social media particularly Facebook. People in different part of the country were helping by passing the information like who is stranded, who needs immediate help with the authorities and help centers as telephone lines were busy or not working.

Social media did serve its purpose of keeping everyone connected during such difficult times. It is a medium which can be used how so ever we want to use it. The same medium which is used to feed vanity of its users can be used for helping each other as well!

6.  Rent a Bank Locker


Indians revere Gold. It is perceived as a sound investment which can be cashed in hour of need. Also wearing gold jewelry is mark of prosperity in our society. Buying and wearing newer pieces of jewelry gives a sense of pride. In times of such a calamity when your wellbeing is at stake, it is easy to forget about your valuables which later on can result in substantial financial loss.

Bank Lockers can be helpful is this case. Instead of keeping all jewelry at home, we can decide what we want to wear for a month or so and keep rest in bank locker. Some additional visits to bank can take away the tension of safe keeping your valuables. Though banks do not take responsibility of the contents, they generally are more secured than home.

7.  Some more takeaways


Some more lessons were learnt like

  •             Remembering important phone numbers rather than being completely dependent on phone directory, which can become inaccessible in cases like discharged battery.

  •          Children in the family should be taught how and whom to approach for help if needed. If possible, societies can conduct workshops to teach ‘how to safeguard yourself and get help’ during such disasters.

  •          Knowing first aid and preliminary health care like CPR (Cardiopulmonary Resuscitation consists of mouth-to-mouth respiration and chest compression) can be helpful.



Monday, September 21, 2015

Want to be a Startup owner? Personal finance plays a key role


Question: What do you do for a living?


Answer:  I am an ‘entrepreneur’.

Conclusion: So you are Unemployed!

Negation and counter answer: NO! I am an entrepreneur!!

This epic conversation had held between Sean Parker and his girlfriend in the movie #The Social Network.

Many startup owners can identify with the conversation as it is difficult to ignore social backlash when you break the norms, particularly when you start your journey as an entrepreneur.

Being a jobseeker is a norm. Our education systems are inclined to provide the society with the educated seekers and hardly the creators. When you take risk and go against the flow doubt surrounds you, be it doubts by the family, friends or society but also the doubts generated from within! What if you fail? Which happens more often than expected. And no matter how evolved a society becomes, Failures remain unaccepted! 
But for the brave hearts called Entrepreneurs…So be it!  It is their conviction and belief in self and their ideas, which motivates them to ignore refuge of getting committed monetary benefits and taking defined risk.

Non committed monetary benefits and undefined risk is what defines an Startup! These are two very important reasons why many potential innovators and initiators are never able to muster the courage to start a startup. Often in such cases the pragmatic individual self takes over the dreamer self.  Everyone needs some committed income to take care of his basic needs. There are families to take care of, kids to be sent to school, parents to be looked after and a lifestyle to be maintained. Some committed income stream is needed for all of them. When and whenever such needs start bothering you, your risk taking capability is compromised.

So, Are the individuals who start their ventures immune to such needs? Is their dreamer self too strong to be ignored? Or have they figured out the answers to the above needs? Not surprising at all…the answer is obviously NO! They are bound to face these problems like everyone else…and the problems arise when they choose to or are forced to ignore these needs.

We cannot deny that startups are risky business. And no matter how positive and hopeful we may be willing to sound, according to several surveys, nine out of ten startups fail!

They may fail for various reasons and the failure of the venture severely affects their founders and their families. The impact could be both psychological and monetary.

So, should a person be afraid of the above scenario and refrain from founding a startup? Or is there a possibility of keeping your head above water in all situations? In both personal and professional aspects of an individual, one common factor is Finances…Money! Logically if one of the two aspects is taken care of, the battle is half won!

Where in professional aspects, finance is driven by mostly outside factors. In personal aspects, finance is driven by mostly inside factors. Here are some actions items to be take care of on personal finance front which can help ease the burden.

1.     Get your health checkup done


When you do not carry name of big brands to support you, getting even one single meeting from your prospective client or investor can be frustrating. Frustrations may loom large when you have employees dependent upon you. Journey in a startup can lead to emotional and physical upheavals when you need to work 7 days a week without being able to take a break.

It is hence important to know your physical limitation and condition beforehand. You should get full health checkup done before starting anything new. Some health conditions like high blood pressure may need immediate attention to avoid any consequent health ailments.

A middle aged person prone to heart diseases may want to have less aggressive business targets than a fresh out of college youngster with no such ailment.

2.     Pay yourself as per Market standards


The view taken while founding or joining a startup is ‘high risk, high gain’. Many a times, the founders believe in trading ‘low salary with higher stake in the company’. In the hope of selling their startup or liquidating their stocks at very high prices later. The reality can be entirely opposite or the dream of high rewards may come true later than you thought.

It is hence advisable to pay yourself as per market standards. This will save you from any monetary frustrations in the meanwhile. And also your ability to maintain your current lifestyle will elongate your ability to be patient with your venture.

A person who is the sole breadwinner of the family, may need regular income more than a person whose spouse is earning.

3.      Prepare your family for the change


Family is considered to be the first support system. An enthusiastic and emotional appeal to your parents or your spouse can get them onboard with your ideas. But the fact remains that your family will also face the challenges along with you. Your long working hours, lesser income and constant worry about making your startup work will leave them with an altered lifestyle and much lesser mind share from you than they are used to.

Thereby it becomes utmost important to talk to everyone in the family including kids with an open mind. You must appreciate that you may be motivated by your faith in your dream but they may not have any such motivation. Their personal dreams can be different than yours. You can get their support only if you are able to address their concerns well. The exercise is as important as getting an investor onboard.

A person with teenage kids may need to prepare them up for lesser time from papa/mummy or deferred purchases of latest gadgets than a person with grown up kids, who may understand the challenge better.

4.     Get sufficient insurance


Emergencies happen and take us by surprise. Being an entrepreneur will not change the fact that being a human being we are prone to accidents and fragility of life. Medical emergencies are not only emotional and physical setback but are also a financial set back.

It is imperative that you have sufficient risk mitigation plan in place. Depending upon your needs, you should take life insurance, medical insurance, accidental and disability insurance, critical illness insurance, home insurance, travel insurance etc. Also you may consider taking professional liability insurance or worker’s compensation insurance keeping the nature of your startup in mind.

A person who is the only earner in the family will need higher life insurance coverage than a person who has no dependents and thereby do not need life insurance.

5.     Check if you have enough savings


Even if a startup has great potential and can be a great investment for the potential investor and the founder, the money does not come easy. Any potential investor show interest in a startup when it is a running model (even if not profitable). It is very challenging to get funded for just an idea. To showcase a working model, initially you may be planning to use your own savings or borrow money in personal capacity. It usually takes couple of years before getting funds from an interested investor. Failing to plan for the scenario can get you in money troubles on personal front and you may unwillingly resort to work that is not aligned with your philosophy or work ethics.

Hence it becomes most important to plan and budget your expenditure in due course. You may be willing to compromise on your lifestyle and bring down discretionary expenditure but it may not be possible to bring down non-discretionary expenditure like house maintenance, school fees and monthly grocery etc. At least budget for 3-4 years of expenses from your savings along with some money to be kept aside for emergencies.

A person living in a rented apartment will have to the bear the continuous increase in rent than a person living in its own house.

6.     Pay off all loans

Loans are the monetary liability which you have to pay in any case. Change in income stream will not change the constant flow of EMIs. And they will be a constant burden on you and thereby will dent your courage to take risk of starting something of your own. Also, if you default, then a bad credit score will reflect badly. It may indicate your inability to manage finances well.

Therefore the best way is to clear off all your loans before taking a plunge into startup world. You may have home loan, car loan, personal loan or credit card debt. You should first and foremost use your savings to pay them off before committing any money for your professional venture.

A person who owns the house with all debt cleared off will have more mental peace than a person who has the constant burden of paying EMIs.

7.     Separate your personal assets and business funds


Startups are found on conviction. This conviction is the source of hope and the hope gives encouragement. The encouragement at times can be overwhelming. It can convince you to not only commit your time and attention but also your personal assets to the venture. If your conviction suffers a set back then you may be forced to liquidate your venture or declare bankruptcy. In that case if you have committed your own personal assets or parent’s assets, they will be attached during the process to pay off professional liabilities like employee’s salaries.

To avoid any such scenario, keep your personal assets and business funds separate. Your personal assets should only be used for your personal goals like education, marriage, retirement income for parents etc. as you may have originally planned.

A person with responsibility of aging parents will be more comfortable if there are enough funds and assets to take care of the retirement needs of his parents than a person who has done otherwise.

8.     Keep your exit options ready


Exits can be happy or sad. An exit from your venture may be for several reasons. The idea could not take off as planned, the venture did not get enough funds, the investors could not see enough value, the co-founders failed to align or your enthusiasm itself has died to continue the venture. In any case saying good bye can be emotionally and financially challenging. It can be a happy exit if you have at least made money from the venture but it can be a sad exit if you could not make money you hoped for.

Hence it is important to understand and explore the exit options as well. Getting a job can be one quick action which can get you stable income stream while exploring other options like starting all over again. Thus it becomes useful to keep in touch with the current job market and keep your skills updated.

The youngsters from the colleges that offer deferred placements are more inclined to take risk of starting a startup than the youngsters who do not have any such assurance.

To sum it up, Your ‘Comprehensive Financial Plan’ is as important as your ‘Business Plan’.
You may even like to showcase it to your potential investors to ensure them about your money management skills.
It is a battle ‘half won’ and the other ‘half’ will be won by your ‘Believe in yourself’!

Thursday, August 6, 2015

How to sort out Finances during Unplanned Pregnancy!

How to sort out the finances during 'Unplanned pregnancy'...my quotes in 'Child' magazine, india (August 2015 issue).
According to certified financial planner Shilpi Johri, Head and Financial Planner at Arthashastra Consulting, Gurgaon, “An unexpected pregnancy translates into unplanned expenditure on medical bills, hospital visits, frequent breaks from work, an attempt to garner a more physical and emotional support system, as well as prenatal and post-natal care for the mother and the baby.”


So the first and foremost thing you must do is cut down on various discretionary expenditure like eating out, taking frequent vacations, etc. “Make a list of the forthcoming expenditure and create a fixed deposit accordingly.
Also have your life and health insurances in place. Proper nominations will ensure that money will go to the rightful owner in case of any mishaps,” says Johri.


Even if both partners work, “I advise them to plan their expenditure as per the income of one person and to consider the other person’s income as bonus,” adds Johri. This is because a partner may or may not take leave from work, and may or may not get back to work.


“Communication is also key. 
A lot of times, couples have very superficial discussions and do not open up about their true feelings simply to avoid altercations. They themselves can be confused about what they really want. In addition, in India, there is an added psychological pressure to please the parents. However, it is crucial that there is absolute honesty about finances,” concludes Johri

Thursday, July 9, 2015

Greek Crisis…Lesson we can learn!



Image result for people suffering in greek crisis
Image courtesy: caconnectindia.com
People of Greece have voted against any more humiliating bailout proposals. 
Kudos to their decision! This may mean their exit from Eurozone and longer struggle to get back on their feet as a debt free country. Next few days are very important as they will decide the future of this debt ridden country. Whatever may be the result, the sufferings of its people may not end soon.

In the midst of every crisis, from wars to financial meltdown, are the People! It is always the common man who suffer. People loose their means of livelihood, youngsters cannot find jobs and sick cannot get enough medical treatment and when the crisis deepens, people leave their motherland and their homes in search of better living conditions elsewhere. In case of Greek Crisis, along with all of the above problems, there is one more severe problem…Greeks are not allowed to withdraw their own cash beyond a certain limit! We can only imagine their difficulties.

There have been several analysis of How and Why Greece has landed in such a situation. Analysts say Tax evasion and corruption clubbed with Greek Government’s people pleasing policies forced its government to borrow money from other countries. One of such people pleasing policies is their ‘Pension System’.

Greece has an envious Pension System! Anyone above 50 can retire and be assured of getting pension from the government. People were getting better deal after the retirement than if they have stayed at work. Consequently, non-working population handsomely outnumbered working population. No one cared about the source of funds for such policies until it hit them back! As long as it benefitted everyone, no one was worried about the situation being illogical.

When something unnatural and illogical happens, shouldn’t we raise eyebrows and question it? Unfortunately we accept it as a way of life as long as it benefits us. It seems that we suffer from selective myopia and only see immediate gains. Also we have short memories and always forget our lessons (we forgot the lessons from Subprime crisis, where everyone was encouraged to live beyond its means and buy houses which they could not afford).

If we look around, two things are happening which defy logic to me. First is ‘The eagerness to achieve all material possessions as early as possible’ and second is ‘to retire early’! The question is: Is it the first one triggering the second or is it the attraction of the second one inspiring the first?

During the course of my Financial Planning practice, 4 out of every 5 clients want both. Everyone wants to have more number of possessions like cars, properties. They want to splurge on lifestyle enhancement. Also they want to retire early to enjoy post retirement life and sometimes to do the things they could not pursue because of work pressure.

In both the cases one word should catch our attention, it is…’Early’! In Greece also, people wanted to enjoy life Early. Their Government supported them. But this may not be the case with a lot of us. Our governments may not be able and willing to support us so we will have to fulfill our wishes with our own hard work. Which means we have to speed up the process of earning, means longer hours of work or looking for risky investment options which can give us higher than ordinary returns. In nutshell we need more money that too quickly to fund our increasing wish list quickly.

There is nothing inappropriate in enjoying and splurging in life as long as we are able to do it within our means, which means our physical and mental means! But it is an unnatural desire if it is forcing a person to work beyond its capacity and there by leading him/her to emotional and physical health crisis (every other person complains of being stressed and fatigued).

Similarly there is nothing sinful in hoping to retire early and relax. But we must remember that early retirement means more number of non-working years. It means that after retirement we will be living off on income we generated during our working years. For example, If a person’s working life starts at 24 and he decides to retire at 54 and he is alive till 94 (enhanced life expectancy world-wide) then he is earning for 30 years to feed himself for 70 years! Also in those 30 years he will go through several major landmark of life cycle as well like marriage, kids, settlement of kids, aging parents, living a lifestyle they always dream of along with professional up and downs. We can well imagine the pressure we are unknowingly putting on us.

Greece enjoyed too much too early, their system collapsed. Likewise if we wish to enjoy too much too early, our emotional, physical and financial system may collapse!
The only answer is ‘Take it easy’!

Saturday, March 21, 2015

Personal Finance Workshop, Delhi, 15th March 2015

It was wonderful interacting with 70+ audience during 'Investors meet' conducted by AIWF in Delhi on 15th March. The response was overwhelming about the concept of 'Financial Landscape'. It was encouraging to see how everyone could relate to the some or other aspects of the topic. Many have shared with me that they have started 'looking at their personal finance in totality'!!




Wednesday, February 18, 2015

Online Shopping… Are we becoming Lazy Spendthrifts?

image courtesy: www.app.emaze.com
Not so long ago we knew people who were either Lazy or Spendthrifts… but logically no one could have been both! Because then you were needed to literally ‘get out of bed’ to spend money. So if you were lazy then you could not be spendthrift and vice verse. But this used to happen in good old days of shopping ‘Outings’. The past few years have changed it all for us. Today if you want, you can be both Lazy as well as Spendthrift…and we must thank ‘Online shopping’ for providing this opportunity to us!
The whole experience of online shopping is enticing. You are offered wide variety of goods at relatively cheaper prices than physical stores. You can make quick comparison of prices and read product reviews to refine your purchase. And often there are wonderful discounts to lure you. With no sales person to disturb you with undesirable suggestions, your shopping experience can be no less than meditation at times. Home deliveries are make it all more fascinating. And the comfort of being at home is the icing on this cake. Several payment modes including online transfers make it even more attractive. Deferring the payment by choosing Cash on delivery can be quite encouraging for some.
It has changed the whole shopping experience for us. You are no longer required to get ready and drive to the neighborhood malls. No need to stand in long waiting lines for the trial rooms and the billing counters. Online shopping is a very personalized experience. You do not have to bother waiting for your family members and friends to finish their shopping, which was earlier quite discouraging for some to go out and shop. Just couple of clicks and your wish is fulfilled. You can afford to be both lazy and spendthrift!
Too much of everything is bad! Being lazy and being spendthrift, both are hazardous to us. The temptation of being lazy is not good for our physical health and temptation of being spendthrift is not good for our financial health.
Apart from the above problems, online shopping has one more vice...it can be very addictive! At times it can make you buy things you may not find suitable and regret later or worse it can even make you buy things you may not need at all!!
If you are also the one encountering such problems and comforts of online shopping often provokes the impulsive buyer in you then chances are that you will soon be added to the list of Lazy spendthrift addicts!
Here are some points looking into the financial aspect of how to save yourself from becoming a lazy spendthrift.
Shop on Weekends only:
Most of us are on the internet for most of the day. It is difficult not to drift away from our regular work out of boredom. Browsing through websites of various genre can be relaxing and entertaining.But however you entertain yourself, stay away from online shopping websites as a discipline until absolutely necessary. Just ask yourself at least once 'can it wait?' and if your answer is 'yes' then make it a weekend affair only. Shopping or browsing such websites on weekends can be entertaining as well as a respite to our hectic weekday schedules.
Make a weekly Purchase List:
The good old 'make a list' method can be helpful to get out of this habit. Instead of making the list for whole month break it down into weekly list. This will help you enjoy purchasing 'something' every week and will satisfy the shopper in you. Also having a ready list will remind you of the necessary purchases and will force you to stay focused.
Compare Prices:
Make it a habit of comparing prices…Always. Competitive pricing and raining discounts are boon of online shopping. Also you are no longer required to hop physically from shop to another to get the best price. Instead you can do it all easily at home. To encourage you further, there are always some e-shopping websites announcing sale to attract customers.So instead of hurrying up with your shopping, make use of the facility. Do not let go of the chance of getting discounts on similar products and there by chance of saving some money.
Keep your Financial Plan open:
Along with detailed analysis of your various physical, financial, professional and personal situations in life, your financial plan will also have the list of your goals, liabilities, savings and investments. Looking at some of them may be enough to scare you and remind you to keep away from unnecessary buying. Since you are no longer getting out of your house, it means that the financial plan is well with in your reach. It can be done very easily during the online shopping…just keep the file of your Financial Plan open!
Choose Cash on delivery:
It is the toughest habit to inculcate because we hardly keep any cash at home now a days, thanks to cards and online transfers. But if you are suffering from chronic problem of impulsive buying, switch the payment mode to cash on delivery. You will encounter two problems, withdrawing cash and the limit of cash being kept at home. Lesser the cash in hand, lesser will be your amount of bill.
Do not let your kids make online purchase:
If you have kids at home, do not let them handle the purchase unsupervised. Very likely they will not have a list of what to buy and may be interested in buying anything they may deem fit for themselves.They will hardly bother about comparing prices. And worst of all they will promptly choose cash on delivery. Be vigilant and do not let your smart tech savvy kid outsmart you just because you forgot to pay attention.
Last but not the least ‘Self- discipline’ is the key to win over this bane of the boon of online shopping!
Share your experiences and give everyone a chance to learn from it!