One of the basic money rules everyone should follow is this: Never work for money, but let money work for you, says Mehrab Irani, general manager-investments at Tata Investment Corporation Ltd.
In an interview with NDTV Profit about his book 10 Commandments for Financial Freedom, Mr. Irani explains the importance of learning to handle the "problem of excess money" - when you have money and don't know what to do with it.
Here's the text of the interview:
Your book is called the 10 Commandments for Financial Freedom. What is it about?
This book gives you 10 financial commandments, the 10 principles of money which will help you permanently solve your financial problems. The 10 financial commandments given in this book deal with all aspects of money and personal finance, including earning, protecting, budgeting, saving, spending, leveraging, investing, insuring, etc. with the aim of providing you a complete perspective on sustainable long-term wealth creation.
This book will not teach you how to earn money, although it will tell you the most efficient ways of doing so. It will deal with how to protect your money from legal financial predators, budget for yourself, save, preserve and take care of it, intelligently save while spending, distinguish between different money options and leverage, insure properly and invest in such a way that your money grows to reach a stage where you stop working for money and, instead, your money, as well as other people's money, starts working for you.
Why should someone read this book?
Let me make it clear that this is not a textbook on finance, investments or money. True, the book often uses some of the terms used in a finance textbook, but it defines and uses them totally differently. The meaning and context in which the words are used in this book will probably not be found anywhere else. This book boldly challenges -- and often upturns -- conventional wisdom. It reveals things about money which you may never even have thought of before. Above all, it gives you the roadmap to be financially free, forever.
Since you call "excess money" as a problem which is difficult for a common man to digest, can you further elaborate on the problem of excess money?
If you have excess money than you possibly know how to spend in your entire lifespan and are still crazy after money, then obviously you are a very unhappy person living an extremely poor life with only money. I am not covering those folks over here. By excess money, I mean those people who have money but don't know what to do with the money, how to take care of it, how to spend, budget, protect from the financial predators, invest, grow or insure it. They have money but not the knowledge about money, which can be a very dangerous situation. They might be those people who have got money through inheritance, lottery ticket or gambling, or could be some sports personality or movie star. It's about those who earn fast and surplus money without gaining any knowledge on money.
You mention about "rules of money" in your book. What do you mean by it?
The book explains many rules of money. For example, one of the important rules of money is: don't work for money, let your money work for you. Accept one fact that nobody can really become rich and stay wealthy by just working for money.
If you keep working for money throughout your life then in simple terms you would just be doing that throughout your life, i.e., keep working for money. And if you keep working for something then how would you finally be the master of that that thing. Puzzled? Suppose you are a salaried employee working for your company. Whom do you make rich, yourself or your company? Of course, your company. Your just get a salary, that's all. Still don't understand it? See the overall total aggregate salaries of all the workers in a typical company as a percentage of its profits. It will be less than 10 per cent. What does it mean? You get less than 10 per cent while your company owner gets the remaining 90 per cent. And the irony of the fact is that you are working for money (salary) while his money is working for himself through assets in the business. Therefore, you can only expect to remain poor and get poorer if you keep working for money throughout your life.
Never accept a job for the salary, you might actually finish poorer at the end of it. And don't forget one thing. If you are working for money then from January to April, i.e., four out of 12 months you are working for the government by paying almost one-third of your gross salary to the government in taxes. Hence, protect yourself from the different legal financial predators by playing the money game in your favor. To encapsulate, be smart with your money by making your and other people's money work for you and not vice-versa.