The Hindu Business Line : Apply money to your own unique path

A three-step formula often flogged as a sure-fire strategy is: ‘Study hard, get a good job, and be set for life’. Only, it doesn’t work for those with fire in the belly, like Scott Pape, who decided early on that money meant to him freedom – ‘freedom from the rat race’.

His message in ‘The Barefoot Investor’ ( www.wiley.com ) is simple: that you need money, not for its own sake, but for using it in a way that brings you the most pleasure. “What matters is that you learn to allocate your money away from stupid stuff that has little or no effect on your life, towards things that will make a real difference to you,” Pape reasons.

He delivers the ‘barefoot plan’ in five steps, beginning with ‘keep it real’. Cut through the lifestyle marketing propaganda and find your own unique path in life, says Pape. “Some of the coolest people I know couldn’t care less about keeping up with the Jones’s, they live their own life and focus on achieving the things that mean something to them, not what anyone else has dictated.”

Money is simply pieces of paper with no real value until you apply it to the things that are important to you, he observes. Set, therefore, your goals – short, medium, and long-term. Because everything that you do with your money – be it earning, investing or spending – should be centred on your goals.

You can then be the ‘one out of a hundred people’, with a definite plan about where you want to see your life in the future, rather than be a rambler of fuzzy goals, such as ‘I’d like to do some travelling’, or ‘maybe it’d be cool to get a better job’.

A book to guide you on the ‘barefoot’ journey.

Steer clear of crises

‘Starting crisis’ is only the first of seven crises that V.G. Patel discusses in ‘When the Going Gets Tough’ ( www.tatamcgrawhill.com ). To those who have started off, the second predicament can be a vexing one: cash. Two common mistakes, as the author mentions, are to mistake accounting profits for cash, and to neglect working out ‘carefully and realistically the cash requirements for expansion or starting a new project’.

Failure to generate adequate cash can have serious consequences on continuing profitability and solvency of the enterprise, warns Patel. To steer clear of cash crisis, you must constantly watch for ways to economise on cash, he suggests. Also: “Invest in a good accountant at the first opportunity. Constantly assess cash position and prepare cash flow statements every three months in advance. And monitor raw material stock, semi-finished goods, inventory of finished goods and outstanding recoveries.”

Suggested reading before the rough weather sets in.

Do we need the financiers?

Finance, central banks and global capital are the three chapters in ‘the arteries of capitalism’ part of ‘Economics’ edited by Simon Cox, second edition ( www.vivagroupindia.com ). “Theodore Roosevelt, an American president, once claimed that there was no moral difference between gambling on cards or horses and gambling on the stockmarket. Jacques Chirac, formerly the President of France, has denounced currency speculators as ‘the AIDS of the world economy’. Bankers are widely condemned either as greedy usurers or as incompetent fools,” begins the ‘finance’ essay.

“At best, the financial system is seen as a wasteful sideshow that relies on churning money earned in ‘real’ businesses and adds no economic value. At worst, it is portrayed as an irrational casino, in which 22-year-old traders are able to bankrupt economies. Might we be better off without all the financiers?”

Easy and erudite.
For the suffering salaried

Before accepting a remuneration package, it will be prudent to consider not only the totality of the package but the net take-home pay, counsels Raghu Palat in ‘Tax Planning for Salaried Employees’, sixteenth edition ( www.jaicobooks.com ). Participate in the structuring of the pay, when possible, especially in situations where the prospective employer tells you ‘that the total cost the organisation will bear on your account would be a certain figure’.

http://BookPeek.blogspot.com

In times of rising prices, the salaried employees always suffer the most, the author rues. “Others can pass the increases downward to their clients or consumers whereas the salaried employee, with his fixed income, has no one to pass it on to.
As increments seldom equal the increase in prices due to inflation, the effective purchasing power of money in the hands of the employee falls.”
It is therefore imperative, argues Palat, that the employee is aware of ‘the various forms of salary income that he may receive and the permissible deductions and reliefs that he is allowed whereby he can reduce his tax liabilities’.
Primer for the hassled.

More Stories on : Books | Book Value

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page