One person that I always wanted to meet in person, during my
teenage years was Jagjit Singh. Sadly that aspiration could never be fulfilled.
After I started to follow equity markets as a part of my job and my personal
investments, one gentleman got added to my To Meet list. Unfortunately, even
that can't happen now.
Rakesh
Jhunjhunwala, fondly called RJ.
Having
followed so many of his public speak-ups, there is one defining utterance of
him that showcases not only the depth of his knowledge & intellect but also
his attitude towards money, in a very simple manner.
"If my
wealth tomorrow decreases by 90%, there will not be any change in my lifestyle.
I will drink the same whisky, smoke the same cigar, travel in the same car, and
go on the same foreign holiday. I do not work for money anymore, I work because
I do not have anything else to do in life. "
Now there
can be a number of interpretations of this statement, like -
1.
RJ was very rich.
2.
He was not working for money, but for passion.
3.
He was a man of rich tastes in life
4.
He didn't have a life beyond work
The
interpretation that I got from his statement was -
"
If you live much below your means, i.e. your expenses are much lower than your
income/wealth, then YOU DO NOT HAVE TO WORK FOR MONEY"
RJ
was in news recently for meeting Prime Minister in an unironed shirt. When
asked about it he replied that "I paid bloody 650 Rs for getting it
ironed, it was still not in proper form, so what could I do"
Shows
that for him, outer appearance didn't matter, what mattered was 650 Rs !!
So particular about money in spite of being a billionaire.
India
as a country of jobs, income, and avenues to spend money has seen a drastic
change for the Millenials (those born after 1980) as opposed to those born
before that. While opportunities for jobs & income have increased many
times, avenues to spend money have increased even higher. From the days of
License Raj when the State controlled the consumption of goods and services, we
moved to the culture of shopping malls and easy credit. This wave of
consumerism brought a huge change in the attitude of Millenials towards money,
especially the spending aspect of it.
While
generations before us believed in one extreme -spending money to the minimum-
we resorted to another extreme, which was to spend like there is no tomorrow.
This obviously resulted in many bad outcomes - debt trap and over-dependence on
the job are two of the worst ones, in addition to umpteen physical and
psychological side effects like peer pressures, extreme food habits, etc.
So
let's explore the financial side effects of this wave.
A
very good friend of mine recently told me that his EMI obligations are more
than 70% of his salary. Ideally one cant avail more than 50%, but he pulled
some strings to get that much loan. The end result - he is not only in the debt
trap but also in Job Trap. He is not working for income, rather he is working
for paying EMIs. So how is his plight different from that of a farmer under the
debt trap of a sahukar - just difference in dressing and workplace.
RJ
started with a paltry sum of 5000 rupees only and he went on to build a
portfolio worth billions. It certainly was not only an outcome of his hard work
but also an outcome of a very strict financial discipline. Some of the rules that
I follow diligently in my journey towards wealth creation are -
·
Ensuring expenses happen after investment - Something that Warren
Buffet also suggests. So if my salary is 2 lakhs and I instead of investing
whatever is left after expenses, rather ensure that a certain amount lets say 1
lakh Rs. goes to SIP, that will bring a level of discipline to my expenses. So
SIP First and then Expenses
·
Revisiting expenses on regular basis - it becomes easier in
today's times of electronic money, where almost all expenses can be tracked
basis credit card statement
·
Limiting discretionary expenses like eating outside etc to a set
budget
·
Asset Allocation and Goal Planning - More on this in the coming
articles.
These rules
in addition to following principles like not over indulging into Home or Car
Loan , has brought a very high degree of financial independence in my life.
Such financial independence also increases my work satisfaction, because then I
don't have to work for money alone.
So
guys if you are really in awe of RJ, do work on his implicit message. Living
below your means. :D
