Can "personal finance" ever be simple and uncomplicated?
27th April 2018

Have you ever wondered why ‘personal finance’ sounds so very complicated?

I’ll tell you.

We just love to complicate things.

There was a time when I fancied the process of complex financial planning. It made me feel super intelligent and powerful.

From keeping track of tips paid to waiters, to having targets for spending on vegetables and diapers I used to derive some sort of sadistic happiness micromanaging my clients’ cash flows.

At the other end of the spectrum, advisers try to set outrageous goals for their clients. In some cases encouraging them to quit their jobs, use up their reserves and go after their dreams (whether or not they are otherwise ready for it)!! Sadly, financial readiness does not guarantee success in all aspects of life.

And the story of the poor client goes something like this. He loves talking about big goals and what he would rather do in life etc. because it is all very stimulating. He is thrilled someone bothers to listen to him. He waits in anticipation for the magic plan that will solve all his problems.

What he gets is a long list of to-dos that totally overwhelms him. He feels insufficient, goes back to his ‘nothing will happen’ script and freezes out of action.

And 3-4 years later he is exactly where he was, just a tad more intelligent on what he should do and a bit guilty he didn’t act on what he knew. Opportunity lost with time.

Some of us try to do too many things for our clients.

“Any intelligent fool can make things bigger and more complex.  It takes a touch of genius and a lot of courage to move in the opposite direction” said Albert Einstein apparently.

I don’t know Albert that well. But one man I know and watch closely is this guy.


I am a big big fan.

When in one of the post-match conferences he was asked whether the Indian cricket team will win the World Cup, he mentioned something that was simply outstanding. He said, “I don’t think that far. I just look at hitting the next ball hard enough”.  From one of his interviews here.

And his records stand testimony to how this uncluttered mind creates magic.

He intuitively knows how to keep it simple. Ask him how he does that… he subjects us to a verbal diarrhoea that my little brain completely fails to process. He doesn’t know how he does that. Stop asking him anymore.

I am not as blessed to be intuitively simple, I learnt it the hard way and allow me to share a bit with you here.

With ‘personal finances’ most of us want a few basic things.

When you start off on your journey to build wealth you need to

  • Spend less than what you earn
  • Invest the difference

You don’t need a thing more than that.

This has been beautifully channelized by the life insurance agents for generations. Most of us have bought long term life insurance policies to save tax in our first year on the job, thereby forcibly acquiring the saving habit. And that lays the foundation for bigger, better things.

Once you get into the groove of saving the surpluses, all you need from your investments are

  • Reasonable returns (Returns that beat inflation)
  • Lower risk for similar returns (so you can be at peace)
  • Be able to take them out and use when you need to (so it is useful)

You will need an adviser to find you an investment that will do the above, get you invested and keep you there.

End of story.

In life, you may have to make some important money decisions

How to manage expenses within income, how much to spend on the holiday. There are topics for discussion over the dinner table within the family. Any outside help may do just the opposite.

In life, you may also have to make big money decisions.

Should you borrow or use the money in hand to buy a property? Should you pay off the loan or invest the bonus? Should you choose or reject a job offer with a significant financial impact?

And what you need when you make those decisions is - a calculator to run the numbers. And some common sense.

I will share more on the calculators in subsequent posts. You figure out the common sense part.

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And if you are flummoxed by the number of investment options and want to make sense of them all, be able to pick or reject an investment in quick time, read my free e-book on “What to look for in an investment”. Click for it on the right of this page.

Till then, take care.

Aditya Shinde
15 September 2017
All is ok, but why all taxes are imposed on common man without any economic discrimination, why should poor & rich person in same get slab,do u think common man show his electricity bills, praperty tax, water tax & etc, as input tax? Actually it is favour to govt administration & business simplifications, this is not a favour to common the basic nessacity commodities like packed food items taxes are raised. Is it good to public?
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