Affluence Triggers …

Most people believe that increase in income leads to affluence. Hence there is a constant endeavour to work hard, put in long hours, get that promotion and pay rise, change jobs thereafter to get another 20%-30% jump and the cycle repeats itself. Nobody in the world works like we Indians do and that is because there is just far too much competition. Your skills are not indispensable and there are many waiting to do your job standing in queue for you to make way. There is little we can do here.

Hence the focus is only to work hard & rise fast. And we think this will also make us wealthy in the process. We could not be more wrong!! There are ample examples where someone earning 6 lacs p.a. has more assets than someone earning 24 lacs p.a. What dictates affluence is not income but what you do with it and what you do in turn depends on your personal behavioural habits pertaining to financial management. As intelligent individuals there are 3 behavioural patterns that we exhibit viz.,

• Acquired behaviour
• Drive based or competitive behaviour
• Progressive behaviour

How these behaviours affect our innate need to own “money” and “create money” and “create more money” is what we shall understand and investigate.

The impact of Acquired behaviour:

Covert or internal behaviour stems from what we are, what we have learnt, what we have seen and what we have been advised and taught. It is controlled by our skills, knowledge & resources that we built over the years. The most important influencer of this behaviour is the environment in which we have lived, the beliefs and principles we learnt whilst we were in this environment. Over time the environment itself changes. Need for newer skills, resources and knowledge becomes acute and many of us still hold on to the principles of the past. There is a huge element of personal bias as well which largely stems from inadequate knowledge or perhaps complete lack of knowledge. For e.g. equity investments are like gambling, therefore risky and hence can eliminate our money. Most of our actions are based on our understanding, which at times may be rather shallow. It is strange however, that for everything important in life we want to consult the experts but when it comes to financial management we want to do it ourselves. May be we think financial management is not so important. This type of behaviour is financially ruinous.

The impact of Drive based behaviour:

This type of behaviour is driven by greed, competition, social standing and again the primary influencer is our environment. If we see others doing something profitable even we want to do it irrespective of whether we understand it or not. Another important influencer here is emotion.

“I also want it” – a very powerful emotion. Here are some more examples, ‘Even I own stocks’ or ‘Even I have a 1600cc mid-size car these days’ or ‘Even I went abroad this Diwali holiday’. All this becomes a matter of social acceptance. I too have to be a part of the action…. And we do this, perhaps because this is where we tend to find our own recognition. Let’s talk about stocks - If everyone around me these days is playing into stocks I should do it too and make some quick money. We forget that there is no short cut to making money – if we have to do it the legal way ofcourse. Let’s talk about lifestyle cost – The ‘me too…’ is a killer once again. We spend and over spend for our children and ourselves. Our lifestyle cost keeps increasing and with we think we can afford our new lifestyle comfortably on EMI’s. It is important to understand that social acceptance happens by what you are and not with what you own. When you speak your worth is known. It’s a matter of time before you realise that a Cartier watch and Mont Blanc pen are all worthless if you do not align your money to create long term sustained wealth. Such behaviour is naturally… financially ruinous….