Sunday, March 7, 2021

PSYCHOLOGY OF MONEY (Part I)

 


Dear Friends,
 
do you know in USA, lower - income class people every year spends $400 & as per Indian currency  Rs.  30000/- on lottery - ticket and no savings remain at the end of the year.  No $ 400 remains in case of emergency. 

Now you would suggest them to save inspite of spending their money on lottery tickets. But as per their thinking, their life would change by lottery only,  means by their luck, and they think they will not become rich by doing hard work.  They think,  being rich means being lucky.  Basically,  their lottery tickets motivates them and helps to achieve their dreams.  Friends now you'll will say how irrational thinking is this.  Bcoz,  we know that chances of winning a lottery is 00.0000000000001%, so less. And to spend our whole life in purchasing lottery tickets is so insane,  only one person will win & become rich and the rest will survive in poor.  Interesting is that,  if you explain,  or give advice they would treat you a fool.  And they will abuse you and make you feel bad and hurted.  We are not logical,  we are psycho - logical.  Because friends, they think they are taking decisions rightly,  but after many years,  when they see their current position,  they think that if they would had done  something,  then it would have happened. 

But friends,  when things come to financial decisions,  whether lower - class income people or India's middle - class or world's rich person,  we normally take decisions emotionally like fear,  greed & we should compare our decisions with it logically and rightly.  This is because,  & hence,  we learn some things after few years,  when it should be learnt early before.  So friends,  today we are going to share some lessons that are related to psychology & mind - set and take wrongly decisions accidentally. And can improve in early - stages of life & become financially - free. 

Lesson No.  1

TRUE WEALTH IS WHAT YOU DON'T SEE

On one side there is luxurious car,  big house,  on Insta vacation's photos we can see and on the other side,  the house's or car's loan EMI,  the office's work stress and due to stress daily home - fights,  things we can't  see.  We see,  that's not the full picture,  but knowingly - unknowingly these things make us to think irrationally.  Whenever,  we see the rich man with luxurious car or has gone on vacation,  we wish we would had a car or had gone on vacation. What a beautiful Life is this.  But we don't think whether their life is actually jolly or not.  We pick only flash and bright things from their life.  And friends,  we should remember, the reason for buying such a car,  is to own respect from other people,  but the picture is not so.  Actually, people praise his car's beauty,  richness and not his.  And yes,  anytime if a luxurious car passes by our - side we say " What a beautiful car !" & not say " What a man he is! ". So people's mind perception remains as rich means there should be something to show,  tangible but in reality,  actual wealth is that we can live a freedomfull life. Because, very big and important thing is time, which we can't purchase through money. If you have world's whole wealth,  but no time to enjoy,  but full time busy in office work,  which feels you not enjoyable & boring,  so what's big thing to become rich. 

So,  to spend money so that people can see is the most simple way to become poor & hard way to become rich.  So,  if you see a car of a person of Rs.  50 lakhs , you can't find whether that person is actually wealthy or not.  But, we can find that his wealth has declined by Rs.  50000/-. :-)

Lesson No. 2

YOU PAY A PRICE FOR EVERYTHING 

Dear friends,  assume you want to buy a car and it's price is Rs. 12 Lakhs,  so you have 3 Options.  

1) Pay Rs.  12 Lakhs. 

2) Choose a cheaper model car. 

3) Rob other person's car. 

Friends, 99% people will not choose to rob a car because they know that they will get a car but they have to pay a price for such thing.  So the benefits we can see clearly is small & the expenses are large. Currently,  we can't see.  But,  if any person steals a car,  we say that the person has taken wrong decision,  even if the person gets punishment or not.  We can see that vision which the person can't see.  So 99% people would not Opt to rob the car.  We can purchase small and simple second hand car,  because we know nothing is for free.  In the same way,  if we want to become rich,  we want to grow our money,  we have 2 options.  

1) Invest in such a sense,  that would reap benefits in long term such as Index funds or Direct funds.  But we will have to learn and we will not pay it's price in Dollars or Rupees,  but will pay in doubts,  uncertainties after learning. After that,  our future will be bright. 

2) Our money to be kept in safe place,  where huge Returns we will not earn,  but will remain safe (Bank F. D's,  Gold,  etc.  ), where we will ensure safety but will not gain much profit and that will be the price.  And so you pay price for less returns.  And such thing is that maximum people choose second option.  And so,  this is as similar as stealing a car.  We spend lots of money for going on a vacation,  eating out, buying a house,  decorating a house,  but we don't spend money on investing on us. Because, on investing upon ourselves, is not visible. And these people feel things very important are like house, car, F.D. Interest. So, In our boring investments like stock-markets or Index Funds, we can't see our future. So people don't choose such an option. Like to a person robbing a car, valuable price is not seen.

Growth is driven by compounding which always takes time but destruction is driven by single points of failure which can happen in seconds. 

Means our Money grows slowly, step - by - step , but destruction takes place suddenly.

Lesson No.3

Dear Friends, there are many ways of being rich, but to be poor is the only way i.e. not to manage money properly and to spend more and more. Staying rich is more difficult than being rich. If a person doesn't have money, then there is no need to control it, becoz he doesn't have money, but if a person has lots of money , then he should learn to keep self-control. So, to become rich & staying rich, requires different mind-set. But if in the early stage of life itself, you invest and become rich, then chances are there that this practice will only keep you rich. So, today world's 90% and more rich people are self-made and 70% and more of lottery-winners have become again poor after 10 years. So, you should always keep a survival mind-set.

Hence the moral of the story is To survive the money and be self - controlled inorder to succeed .











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