The story about an Employee, an Organization and Money

When the very affable, 32 year old Priyanka snapped at Suryanarayan, the HR head, when the young 23 year old Arjun put in his papers, when the 48 year old accountant Paresh was rushed to the hospital with a mild heart attack – all these events happening during the normal working day, Suryanarayan did not see a pattern.

Prima facie there seemed to be no pattern to the three separate incidents. However, there was a connection.

Priyanka was going through a tough divorce. The bum she married was at last leaving her. But he was unemployed, and the house belonged to him. She had a job, a kid, and no house. Her parents were partially dependant on her. She was getting no alimony, there was no balance in the bank, and she was a financial mess.

Arjun had committed himself to some EMIs hoping for a decent raise. He was now paying off an education loan, a car loan, a vacation loan and an occasional credit card spend. Seeing the pattern of the past 2 years, he ‘assumed’ his raise would be Rs. 4,000 per month. It turned out to be Rs. 1,700 per month. Arjun was devastated. His immediate reaction was to find a new job. He had no clue where, how or when that new job would happen. He had no option of going back to the nest. His parents had smartly shifted to a smaller house to a the boomerangs. They did not want the kids coming back and eating into their nest egg. Very un-Indian thought Arjun, but that was the rule. Arjun was a financial mess.

Paresh was a very meticulous man and had nicely saved a lot of money. It was in safe avenues – post office, PPF, voluntary PF, National Savings Certificates and so on. He had a decent house, handed down by his father, and was financially well off. Well sort of. His spouse and three children were a source of joy only for the first few years of their lives. They had made him an ATM (automated teller machine) and made impossible demands on him. His eldest son had flunked college, trained as a cameraman spending Paresh’s money, had got married, and was unemployable. Paresh used all his resources but his two sons, one daughter, wife and an ailing mother had sapped him. He was underinsured, severely stretched, had no medical insurance. Paresh was a financial disaster.

When Surya saw the cases in detail and when the common thread running through them struck him, he asked himself a classic HR question:

When does the company step into the personal financial lives of its people?

He had no clear answer.

On a Thursday evening, finding his CEO (Chief Executive Officer) in a good mood, Surya brought up the question of the company’s role in the financial lives of its people. The CEO told Surya “Remember Gaurav Shah, our operations guy who joined a BPO? Last week he died of a heart attack. He was all of 38.”

The CEO was very clear that personal financial learning, stress busting, yoga and things that the employee needed should come from the employee’s own time and cost. He went on to add “Surya, we hire good, smart, aggressive guys who can bring business. If they are so smart, let them take care of themselves”. Surya felt a little defeated.

He thought to himself, “If 99% of my staff here is working for money, and I am willing to teach them how to talk, how to hold a fork and spoon, which hair oil to use when in USA, then how come I am not teaching them money management?”

He had no idea. One on hand, the CEO was right. As an organization, we provide employees with a regular income. Our role ends there. How they choose to use that income is their calling. They ought to take up responsibility for prudent financial management. But on the other hand, the incidents left a dent in the company’s HR policy. After all, whatever the reasons, high employee turnover was not healthy.

But by now it was 9 pm. He had to head home. Another 1-hour journey. But as he hit the car he thanked himself for one good decision. He now had a driver.

He sat down in the back seat and chuckled at his designation. He also remembered what his CEO told him “Do not ask me whether I have a heart. I don’t know. Ask my shareholders. They are Americans. Their lives and their dollars are measured by quarters…Q1, Q2, Q3, Q4. They look not beyond the short term”

His eyes closed. Jagjit Singh poured out his heart on the 5 track CD player. Tomorrow was another day.

Article courtsey MoneyControl.com

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Who Packed Your Parachute

Charles Plumb, a US Naval Academy graduate, was a jet pilot in Vietnam. After 75 combat missions, his plane was destroyed by a surface-to-air missile. Plumb parachuted into safe hands. He survived the ordeal and now lectures on lessons learned from that experience.
One day, when Plumb and his wife were sitting in a restaurant, a man at another table came up and said, "You're Plumb! You flew jet fighters in Vietnam from the aircraft carrier Kitty Hawk. You were shot down!"
"How in the world did you know that?" asked Plumb.
"I packed your parachute," the man replied.
Plumb gasped in surprise and gratitude. The man grabbed his hand and said, "I guess it worked!"
Plumb assured him, "It sure did. If your chute hadn't worked, I wouldn't be here today."
Plumb couldn't sleep that night, thinking about that man. Plumb kept wondering what the man might have looked like in a Navy uniform. He wondered how many times he might have seen him and not even said good morning, how are you or anything, because you see, he was a fighter pilot and the man was just a sailor. Plumb thought of the many hours that sailor had spent in the bowels of the ship, carefully weaving the shrouds and folding the silks of each chute, holding in his hands each time the fate of someone he did not know.

Now Plumb asks his audience, "Who is packing your parachute?" Everyone has someone who provides what they need to make it through the day. Plumb also points out that he needed many kinds of parachutes when his plane was shot down. As you go through your week, month, and even New Year, recognize the people who have packed your parachute and enabled you to get where you are today!

Sometimes in the daily challenges that life gives us, we miss what is really important. We may fail to say hello, please, thank you, congratulate someone on something wonderful that has happened to them, give a compliment, or just do something nice for no reason.

[Received in a n email]

The secret to becoming rich!

Came across this article on finacial independence on rediff.com. Reproducing here:
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Financial independence: what does this term mean? And how does one decide that one is financially independent?

To find the answer, I would refer you to the book -- Rich Dad Poor Dad, written by Robert T Kiyosaki. In the book, the authors mention that sources of money can be divided into four quadrants. One is employment, the second is entrepreneurial- or self-employment, the third is investments, and the fourth is business.

What one must know is that assets create income and liabilities deplete income. Hence, what is a liability for you such as a loan taken from a bank is income for the bank.

Paying interest through your nose is something that will bleed your finances. So no matter how attractive that home theatre bike or car, think less emotionally (right brain) and more rationally. Claim your own mind first and then venture out to purchase anything.

Remember that this world is full of people whose sole occupation is to make you open your purse or whip out that credit card. Okay, so all this makes the world go round, but let it be at someone else's cost!

You are financially independent when your lifestyle is sustained by passive income, that is income which comes to you automatically without you having to work in any way for earning it. How could this happen?

Let us take something like my pension from the State Bank of India. It was given to me when I retired from SBI and it will come to me month after month as long as I live. Or dividend that comes to me because I invested in some company's shares. Or interest from fixed deposits that is mine because the bank does the work to allow me to earn from the money that I invested with them.

The objective of saving money or investing it must be to build up adequate quantity of such income to become independent of working, for yourself or for somebody else. At the end of it all, you have to choose how you want to live your life.

Would you like to live like the stereotypical pensioner who appears to be perennially cribbing about prices going up and incomes not going up as fast, about how wants have increased and how there is never enough money, et cetera? Or would you like to maintain your lifestyle even after retirement?

This is a no-brainer. I am sure you would all like to be in the second category.

Secret of creating wealth and financial independence

There is only one way to create wealth and be financially independent. And that is to choose an asset over a liability.

Does that mean that you scrimp and save and deny yourself a decent lifestyle? No! Just take a conscious decision to keep aside a certain part of your gross every month, for life. This itself will give you great financial power.

During your early employment years, this can be a larger percentage and in the years to follow after marriage and children, this could be a lesser percentage. However, please try your best to ensure that this does not dip below 10 per cent of your gross.

Young people are now paid better than when I started out, but then they also have more avenues for spending money. The desire to spend is fuelled by glossy advertisements and the availability of a plethora of consumer goods and durables. The second is a misnomer! That TV that you purchased yesterday has been replaced by a better one that came in today and is 15% cheaper, too.

Luckily, thus far, Indians in general are a little more level-headed than others and this sometimes has manufacturers tearing their hair in frustration. We tend to keep consumer durables for longer periods and repair those that go out of order till it is impossible to do so or the cost of repair is almost the same as buying a new one.

Hence, difficult as it is, pay yourself first or in other words invest in your security and that of your family first. Sorry to repeat this message, but this has to become a part of your nature. Short-term gain can create long-term pain! Make a habit of saving some part of your income and creating security for yourself and your family.

Let 15 to 20% of your savings and assets be in life insurance. Even if you feel that apne na koi aage na koi peechhe (even if you do not have any responsibilities), put some money in life insurance as this will take care of future obligations and in any case will provide some money for a rainy day.

Further, the younger you are the less premium you pay. You are therefore building up security at a cheaper cost. If you are employed there is some compulsory saving element in the form of superannuation fund or provident fund.

Apart from this, start on a simple recurring deposit plan. Go get the best return. The post offices in India offer good rates of return, as does Public Provident Fund (PPF). Some disadvantage in these plans is low liquidity. However, this is desirable for creating a long-term asset that will grow anyway.

The thumb rule is to put only as much money in these that you can salt away without feeling the pinch! PPF has several advantages such as tax benefit and a decent rate of return. Further, the interest is compounded which -- as you will see in my later articles -- allows faster accumulation of capital. Put aside 10% of your savings in these instruments.

Create liquidity in the form of bank deposits and recurring deposits: ideally 25% of your savings every month. This leaves around 45% to 50% of your savings to invest in other assets.

For the rest of your savings, you can buy mutual funds, shares or anything else of choice. Choose something that allows you some liquidity and yet appreciates quicker than the more conservative investments. Be warned, however, that risk and return are positively correlated. Higher the risk, the higher the return. If you have time to watch the stock markets and track your portfolio, invest directly in shares of your choice.

However, if you do not have this luxury, choose a mutual fund with a good record and put your money in a systematic investment plan. This allows you to put aside a small sum of money, say Rs 1,000 or more a month and invest in the stock market indirectly. You have to pay a price for this in terms of fund management fee and so on.

However, this is an option for those who do not wish to get into the markets on their own. With demat accounts available everywhere and online trading through your bank account, it is possible to buy even one share of say Infosys or Reliance or SBI and so on.

Build a diverse portfolio of blue chips and put money in hot tips only to the extent you can afford to lose it all! If there is a windfall gain good for you!

To sum up:

• Financial independence means that your lifestyle is sustainable without any dependence on a job or any other work on your part.
• Assets create income and liabilities deplete income. Choose assets over liabilities as far as possible
• Invest 10% or more of your gross income to create financial independence for yourself. This has to be a triumph of mind over temptation!
• Of your savings, put 15 to 20% in life insurance, 10% in post office instruments or PPF, 25% in creating liquidity such as Recurring Deposits or Fixed Deposits and the rest in either mutual funds or shares. Prefer blue chips over 'hot tips' and if you have to put money in a hot tip share, ensure that you put only what you can afford to lose!

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Reference: Rediff.com