The other day I received a few text messages in a Whatsapp group about how certain things and phrases in English are translated in Kashmiri language. The one that drew my attention was
English: What do u call a Mason, Driver, Painter, Carpenter, Barber etc
Kashmiri: Woasta, Woasta, Woasta, Woasta, Woasta.
The point I want to infer from the above message is that as individuals (read Kashmiris) we take pride in being “Jack of all trades” and almost every individual considers himself to be a Half – Pharmacist, Engineer, Architect, Plumber, Electrician and so on. The same holds true for finance and economics as well. In years of being asked by people about their personal finances, I never cease to be amazed by the abysmal level of knowledge that they have about this subject. People who have worked successfully at their professions for decades and have deep skills and competence at their chosen vocation, have no idea about how investments, insurance and even banking works. One typical pattern is of successful people having earned many crores of rupees in their work and going on investing it all in real estate. Now, as they near the end of their working life, some of them are coming to a realisation that if at all there was any logic in this kind of financial management, it certainly isn’t there now.
One is tempted to ask, ‘Why does this happen?’ But that’s the wrong question to ask and more than a little patronising. Instead, the question to ask is, ‘Why shouldn’t it happen?’ Why should we expect people – even educated people – to have a proper idea about how the world of personal finance works. How would they come to know how all this stuff works? Who do we think would tell them, or teach them? The uncomfortable answer to these questions is that personal finance is not part of any education that anyone receives in school or college and nor is there any trustworthy way to acquire such knowledge. Sure, people can turn to the media, as readers of this column are doing. However, that is a sort of a chicken-or-egg situation. To seek out, filter and evaluate the learning and information that is available in the media, one must already have a basic level of knowledge. However, a complete lack of knowledge is the problem to begin with. In effect, the only sources of knowledge that seek out and actively try to carry the message to the audience are the sellers of financial products themselves. However, this education is actually just a sales message and is a cure worse than the disease. Practically speaking, it’s almost a rule that the more lucrative a financial product is for its sellers, the worse it is for its users. A study has shown how financial literacy was negatively correlated with the quality of personal financial management. The reason is that most of what passes for financial literacy is actually happy talk about what wonderful financial products are available, with little attention paid to the actual fundamentals which would enable people to take their own decisions.
Typically, young people get to know about money only in the ways they deal with it. They get it from their parents and they spend it. They see their parents swipe cards at shops and ATMs and that’s all. Of course, things like these should ideally be taught by parents. However, that’s another chicken-and-egg situation because our starting point was that the parents don’t know anything much either. There may actually be only one solution to this problem, which is the universal inclusion of personal finance as a topic in formal education. Far from reaching close to retirement age without any real idea of how money actually works, money-related education should begin at the secondary school level. It should be given in small practical doses and continued throughout school and college. In theory, the education that students get, prepares them for working professionally and then earn money. It just makes sense that there should be some small element in that education that’s focused on taking care of that money. Of course, it goes without saying that the chances of this actually happening in any meaningful way are slim. Practically speaking, the capability of our education system to actually create any desirable outcomes is probably receding rather than advancing. Even so, the sooner there is a general realization that something like this is needed, the greater the chance of something being achieved.
On a lighter note, I am reminded of having read about an incident around a few years back. On-board a luxury cruise ship through the Western Mediterranean, a couple having dinner noticed an elderly lady sitting alone along the rail of the grand stairway in the main dining room. They also noticed that all the staff, ship officers, waiters etc – all seemed very familiar with this lady. The couple asked their waiter who the lady was, expecting to be told she owned the liner, but he said he only knew that she had been on-board, the last four cruises, back to back. A few days later, the couple quite curious to know the reason for her being on cruise back to back enquired from the lady whose reply was almost shocking, “It’s much cheaper than a Nursing home” – the average cost per night on the cruise ship is much less (booking done in advance) and with average 6 meals (of fantastic food, not institutional food) per day, you tend to get facilities like free laundry, toiletries, swimming pools etc along with un-matched entertainment. As a matter of fact, the message I want to put across here is that the goal isn’t more money, the goal is living life on your own terms.
And on a personal front I am one step away from being rich, all I need now is, money.
(The author is a freelance Financial Advisor.)
cgc.srinagar@gmail.com