Take the call towards becoming rich

But chances are that you are busy paying your EMIs or that you have far too many commitments or that you have quite a lifestyle. All said the money is important. The idea is liquidity. You got to have money and that too fairly liquid. The reason for this is security. Such security brings peace of mind. It brings in a sense of confidence,a sense of surety that things are alright. It allows you to step back for a moment and think. Think about what you are doing and what you want to be doing. The objective is options. Options you could consider with free mind and free will. Here’s a little formula. Liquidity = Security and Security = Options. Hence Liquidity = Options. Let’s run with this hypothesis and let us call it as Hx.

Hx is true

Hx being true implies satisfaction. It straightaway places you pretty much at the top of that Maslow’s triangle. Whether a rainy day was to ever come by or if you came by that dream investment you have always been waiting for,either ways you are ready to make your move. Should you decide to quit employment and try something different you can take the plunge stress-free. Even if you have liabilities you know that you have ample protection. Your position is secured and options unlimited.

Hx is false

This implies constant disturbance. Your position is exposed and options are very limited. This is a situation where we keep running,so to say to make these formulae work for us. Our lives revolve around these formulae. The more we earn,the more are responsibilities to manage and more is the time commitment needed. As a result,the time to think about money does not exist. To a large extent we seem to be intoxicated with the idea that we are educated and therefore there will always be some job to do and there will always be company that will hire us and pay a good salary. While this may still hold true it is the intoxication that causes the disturbance of sorts. We are almost intoxicated with the fact that money will always continue to flow in and we can keep living pretty and happy.

The Moment of Truth.

At 40,whether you need Rs 40 lakh or Rs 20 lakh or Rs 80 lakh depending on the city you live in,is argumentative. The worrisome factor is that there is not much to speak of when you start counting assets per se. A rude shock comes by when the banker tells you that based on income you and your wife are together eligible to get a loan of as much as Rs 3 crore. But when you decide to actually buy a Rs 3 crore property you will have to first spend Rs 80 lakh of your own money. 20 lacs will be needed for stamp duty and registration and for making the down payment of 20 per cent i.e. your contribution another Rs 60 lakh will be called for. So you can buy a property of Rs 3 crore but do you have Rs 80 lakh of liquid cash? The Rs 3 crore property dream just evaporates. So then,are you really rich?

Here’s another perspective: If your lifestyle whatever it be; currently costs you say Rs one lakh a month,which is Rs 12 lakh per year,be sure this figure will double at about every 8 years. So lifestyle might cost Rs 24 lakh in 8 years and Rs 48 lakh in 16 years and about Rs 96 lakh in 24 years. Imagine the kind of money you will need when you are at about 60–65 years of age and when earning and physical working capacity is greatly reduced. Are you thinking bailout would come from provident fund,gratuity or superannuation? Please reconsider. Download some free calculators and verify.

Perhaps it all comes down to our behaviour,attitude and demeanour with respect to money. Putting away the earned money is priority number #1. Make an investment and let your money grow. Invest in a simple bank deposit if you do not understand anything else. But take that money out of your system. Move it out of the bank account. How long will you keep waiting or procrastinating? Take the call

— Author is Director,Transcend Consulting,kartik@transcend-india.com