A spiritual outlook towards money
04 November 2014
A commentator on prime business channels and columnist in business publications Mehrab Irani, general manager, Tata Investment Corporation, is an experienced hand in equity and fixed income markets. He is the author of financial thriller Mad Money Journey, a book acclaimed by Ratan Tata himself.
The book was launched launch amidst fanfare with veteran broker Rakesh Jhunjhunwala and funny man Cyrus Broacha attending the event.
A new genre of finance fiction, Mad Money Journey deals with the financial emancipation of an average Joe. It is a story filled with adventure, thrill, suspense and mystery that delves into the very soul of the relationship between people and money.
Today, when managing money and finances scare people from college students to a working professional, male or female, educated or uneducated, old or young, Irani presents finance in an entertaining way and is exploring convert the theme of the book into a movie., Irani tells Swetha Amit
Mad Money Journey borders on philosophical perspective and a practical view on money matters. What was the inspiration behind it?
We are all born as geniuses. Sadly, most of us die in mediocrity. We are all going to shed our earthly bodies someday and leave for another voyage – the journey of the soul. But then, does the journey of the soul begin when we actually die physically. Is the soul actually alive when we are here?
A child knows what it wants to accomplish in life. At that point, everything is clear and everything seems possible. As children, we are not afraid to dream and yearn for everything. But, as time passes, a mysterious force begins to convince us that it is not possible.
By repeating the same pattern again and again, are we moving towards the death of our soul?
Everybody has a 'personal calling'. This is the promise between God and man. It is the promise each one of us makes to God before embarking on our earthly journey. Whoever you are, you have a personal calling, a desire that originated in your soul. This is clearly your mission in life; the purpose of your very existence on this planet.
In this physical world, financial slavery is one of the prime reasons which prevent people from achieving the purpose of their soul. Take the example of a young teenager who is very good at cricket and wants to become a cricketer. May be his very purpose of embarking on this earthly journey is to play cricket and entertain others. However, the whole world, including his parents, teachers, elders advise "quit cricket and concentrate on studies" to become a doctor or engineer and live a ''safe secure life''.
In the name of this so called illusion of ''financial security'' the teenager is pushed into leaving aside dream and live a whole life of slavery. This is what pains me a lot. I wrote the book Mad Money Journey to free people from financial slavery so that they can then achieve their true higher purpose and fulfill the very reason of their existence on this planet.
Today, the world has become largely materialistic, where success is defined merely by bank balances and asset values. What according to you defines success?
Each and every soul has embarked on this earthly journey with a specific mission. Some have come to cure others, some to teach and guide others, and some to entertain, while some others have come to keep this world a clean and beautiful place.
Yes, bank balance and asset value do bring some kind of power and respect along but the problem with such power and respect is that they immediately fade away once the bank balance is eroded. Instead, everybody should concentrate on the true authentic power which they have in the form of a special talent or unique gift and then utilise it for the common benefit.
Take the example of a sweeper who is sweeping the road. That person is not just a sweeper but he is an artist who daily expresses his highest creativity on a canvas, which others call sweeping. He is doing his work with the same dedication as an artist would do so as to keep the road, the city, the community and the country clean. Because of him the environment is kept clean which in turn helps others in carrying on with their work.
Hence, the sweeper is not just a sweeper but a person contributing to nation-building. Therefore, according to me, true success means people recognising their true purpose, answering the calling of their soul, achieving higher self-actualisation goals and in the process making their invaluable contribution to humanity.
Lately there has been an increase in the number of suicides of wealthy businessmen in Mumbai. Despite possessing immense amount of wealth, they have been driven to this condition. What do you think could be the reason behind this?
Money in itself can never give happiness. Money is the single most-important factor coming between man and his dreams. Hence, the objective should be to earn money so as to achieve financial freedom which will then in turn help the person to pursue his / her higher self-actualisation goals.
However, unfortunately most of the people spend their time on earning money which they feel will give them true happiness and when it doesn't they then spend their time on earning more money thinking that will give them happiness which also doesn't and then they spend even more time on trying to earn even more money and the viscous cycle continues.
Remember that even if a person wins the rat race, he still remains a rat. Sometimes a rich person is actually so poor that besides money he does not have anything else. He is empty from within which many times leads him to depression, anxiety and many more mental, psychological and even physical problems which might eventually and unfortunately culminate into suicide. Therefore, money cannot and should never be made an end in itself but just a facilitator to fulfill one's higher self-actualization goals.
Your book emphasises not becoming slaves to money, but its master instead. How do you think this can be possible in a world where the quest to make more is the trend?
Money is a very good slave but an incredibly terrible master. And if one is a slave to something then he / she can never be its master. So, be the master of your own money. Instead of being a poor person who hates the rich, be a rich person who helps the poor.
Use the power of money for common benefit. Working for money is a sad way of trading one's time, which is limited, for money, which is available in abundance. People spend their time earning money, which they don't value, take loans that they can't repay, buy things they don't need, just to impress people who don't matter.
Money is important to me as far as it is able to provide me with financial emancipation. If a person just keeps accumulating wealth without actually understanding the real meaning of money, then it's a very sad way to spend a life.
Time is a limited resource which we have to utilise very judiciously to earn money, which is anyway available in abundance in the world. Today we see there is only one Sachin Tendulkar, one Amitabh Bachchan and one Narendra Modi while each one of us has the talents and capacity to become someone like them. God has given each one of us some special gift, a unique talent, it's up to each one to recognise their gift, develop their talents and then utilise it for the common benefit – money should only act as a facilitator of it. Money should never be an end; it should be the means to achieve the end.
Often too much money tends to generate evils like greed, gambling and drinking, which leads to a person gradually becoming bankrupt. How should a person maintain a level head while getting a bang for the buck?
Money is a drug. And, it is perhaps the biggest and the most powerful of all drugs. People who are born rich often don't know what it is like being poor since they are always high on the drug of money. Rich children, if not given proper training and knowledge about money, are most likely to destroy their ancestral wealth. You are bound to have heard numerous stories of how children of rich people have destroyed their wealth.
It is a fact, in very rare instances does wealth continue after the third generation because future generations are not able to handle this potent drug called –'money addiction'.
Similarly, a poor person who suddenly gets a windfall like a lottery or a large inheritance is more likely to squander it away and get into debt because of the ''high'' of the new money. Such people will do stupid things with their newly-acquired wealth, they then get deeper and deeper into debt and instead of solving their problems, money itself becomes a problem for them - a drug that they are unable to handle.
The only way to properly handle this powerful drug of money is by acquiring sound financial knowledge - the understanding on how money functions. Earning money is meaningless unless the person is able to manage the ''money high''.
Your book provides a sound logic on how investments in land or club-membership are not considered wise. Yet people choose to invest heavily in them. What do you think is the reason for this?
Whatever the text books might teach us, according to me an asset is something that puts money in my pocket while a liability is something that takes away money from my pocket. There are various things that are classified as assets in the traditional accounting context but according to me they are cash-guzzling liabilities.
Take the example of a car – it immediately loses around 20 per cent of its value once we drive away from the showroom, then we have to incur expenses on fuel, maintenance, driver's salary etc. Hence, a car is a luxury item and certainly not an asset. The same might go for a holiday home, club membership, land, etc.
Just because the price of something might increase because a ''greater fool'' is ready to pay you a higher price does not turn a cash guzzling liability into an asset. Learning to distinguish assets from a liabilities will go a long way in helping you allocate your money properly to achieve financial freedom.
You emphasise that more than earning money; one should know how to manage it. In such a scenario, how does one deal with the financial predators who tend to rob people off their hard earned money?
The world is moving forward technologically but people are moving backwards financially. We may have all modern facilities like online banking and investing, credit and debit cards, access to financial information, easy loan facilities but our financial knowledge is diminishing.
Today, we see young educated people earning very good incomes but are not able to protect their money from financial predators. They pay everybody like the government, banks, electricity bills, telephone bills, children school fees, etc, but forget to pay themselves via a surplus budget.
They don't know when to cut spending and when to spend in order to get rich. They have no protection in the form of financial insurance, are not aware of the difference between saving and investing, buy liabilities mistaking them to be assets with negative leverage, which puts them in the web of unnecessary avoidable recurring expenses that then sadly makes them ''slaves of money'' for life – wage slave of the employer, tax slave of the government and loan slave of the bank.
If they truly aspire to achieve financial independence then they need to develop the right attitude towards money – not only at the time of earning but even at the time of protecting it. Once someone earns money there are lots of people out there to steal money from their pocket.
I am not talking about the thieves or dacoits over here but those entities which legally and systematically take away money from us at every step of our dealing with money. For example, government is the biggest financial predator of all. It legally takes away money from our pocket in the form of taxes - not only at the time of earning money but even at the time of saving, spending, investing or taking insurance.
There are also other financial predators like bankers, brokers, corporate retailers, legal eagles, love predators etc. We have to learn how to protect ourselves and our money from these legal financial predators.
The race to make money is like running a marathon, where budgeting for resources is essential in the long run. However many fail to realise the consequences of not budgeting and find themselves short of resources soon. What would be your advice to them?
Today we pay everybody - the government as income tax, the banker as loan EMI, childrens' school fees, doctors' medical bills and even our milkman. But, we forget to pay our own selves. When we draw the monthly expense statement then do we write our own name on the payment side?
Do we plan to pay our own selves? Do we budget for our own selves from our own earned income? And unless we budget for ourselves, unless we learn to pay ourselves then whatever may be the size of our income, it will come in one hand and go out from the other hand without landing in our own pocket.
We will never be able to achieve financial freedom. Yes, achieving financial freedom is like running a marathon race wherein we have to regularly nourish our own selves and conserve our energy and budgeting is that function which helps us to conserve our money and nourish our own bank balance. Without proper conservation of energy a marathon race cannot be won and sans a proper budgeting, it's almost a clinch that one would not be able to reach financial nirvana.
According to the theme of your book, life's lessons are learnt from the most unconventional people and in unexpected circumstances. Do you think that happens in reality as well?
Actually, the fault lies not with the teachers or parents but with our education system, which is based on the system of elimination. It focuses not on advancing the stronger ones but on holding back the weaker ones.
It makes them believe that there is not enough for everyone to win. It is an attitude born out of the fear of scarcity – it makes future generations fear everything as they start believing that the world is full of scarcity and for them to win, somebody else has to lose. Instead of teaching them to work in harmony, the education system actually creates rivalry, jealousy and hatred amongst children.
Rather than developing the very best in each and every person, the system has conveniently pitted people against each other in this wild game of education where there is nothing but the survival of the fittest. It is a game in which winners just get the degree but many times eventually lose the game of life because the greatest teacher of all is life itself.
However, life is mysterious and nobody knows what its curriculum is. It's only when the student is ready, the master automatically appears and many a times from a non-expected place and in the least expected form.
What are your future plans? Do you plan more books?
I always like to connect with other people. Books are the primary medium. Apart from that, there are talks and speeches, TV and radio shows, press and media as well as movies. I myself learn while connecting with people. And connecting with people helps me to understand humans better and then produce want is the real need. And I want to connect with the masses. That is why I write articles in the press, appear on various TV shows and now I am writing books.
However, after a certain point, books have a limit of penetration since there are some people who would simply never want to read. Hence, to connect with those people I am exploring other mediums like movies and TV shows. I expect to talk with people to explore the idea of converting Mad Money Journey into a movie.
I am also planning to do a TV show on money and finance which will be very different from the rest. It will be a thrilling yet an emotional show, which will explore and connect people with their dreams and show them how money and finance is preventing them from achieving their highest self in life. The show will not just teach to earn money; it will also help to fulfill dreams.
|Book excerpt from Mad Money Journey |
The climb was no cakewalk, but in my rush to be done with the ordeal, I raced ahead and had soon outpaced Richard. I ended up suffering severe muscle cramps. I started breathing heavily, my heart was pounding, I was drenched in sweat and I was dying of thirst. My head reeled and I collapsed on the rocks.
I came to my senses soon after Richard sprinkled some water on my face.
''What happened, my friend?'' he said hauling me to my feet. I was mortified, and could sense that he had found a teaching moment.
''Your mistake was that you tried to run too quickly without estimating the overall distance, the stamina and time required. You used all your reserve energy immediately without budgeting for the future.
Whether running the race of life or money, you have to save fuel for the future. If you use all your resources today, then what about tomorrow? So always budget for yourself and remember to create a positive budget.''
Saying these prophetic words, he once again broke into a sprint. I joined him, but this time I remembered to monitor my speed and energy levels. It was only now that I noticed our surroundings-the occasional fieldworkers, the birds squawking as they swooped through the trees and the sounds of small animals scurrying through the bushes.
After covering about half the distance, we took a short rest, and then continued jogging at a steady pace, saving our energy and budgeting for the future.
When we finally reached the top of the Great Rift Valley, my shirt was clinging to my back and my pants were glued to my legs. But the view from there was truly worth the trouble.
''So, what did you learn from the experience of running fast and fainting?'' Richard asked mysteriously.
''I must do proper budgeting,'' I replied without even fully comprehending the meaning of the term 'Budgeting'.
''A budget is simply a planned allocation of available resources. There can be two types of budget, surplus and deficit, and the choice is entirely yours as to which to select. When income exceeds expenses, you have a surplus budget, while when expenses exceed income, you have a deficit budget.
A budget surplus is essentially an excess of income over spending, be it a government, corporation or individual, over a particular period of time. The important words to note here are 'excess of income over spending'. Therefore, a budget deficit doesn't necessarily mean living below your means. It simply means expanding your means so that your expenses fit into it, leaving you with a surplus.''
He continued with his education, ''a budget surplus should be a priority. It should be a compulsory expense that you have to incur for yourself the same way as you pay your taxes to the government, loan instalments to the bank, telephone and electricity bills or your children's school fees.
Remember, my friend, that earning money is only the first step to becoming wealthy. But that alone isn't enough, you must also understand how the principles of money work in this modern information and currency age, and budgeting is an integral part of it.''
Richard concluded his mini-lesson by saying, ''budgeting is nothing but paying your own self.''
Standing there at 7000 feet above sea level, I was not sure what was more beautiful, the striking view or the wisdom I had just received from Richard. Whatever it was, I understood one thing, and that was to pay myself via a budget surplus.