What to do with the extra money FM gave us - Save or Spend?

After a long time, our Finance Minister gave relief to all of us in the salaried class. By increasing the tax slabs and adding another 20k tax free investment in Infra Bonds, he gave 51000 extra money in hand (if your taxable income is 8 lakhs or more) and 6000 reduction in tax payable if you chose to invest 20k in infra bonds.

 

Splurge or Save will be the big question. I hope that I am correct in saying that my reader group has more or less reached a certain maturity level in our careers and that we are all cash positive and we expect to be on a growth path for few more years. My further discussion would be based on this assumption.

 

What to do with the extra income - splurge or save? Before you choose to decide on the correct answer, let me take the fizz out of the question by adding that there is no single correct answer. The plausible answer is "it depends."

 

One has to live in the current moment otherwise there is no life, you would either have memories or dreams. Memories and dreams are not totally unnecessary - you get cheered up when you recall a happy moment and will get motivated when you start thinking about a dream, in fact they are part of present but alas memories and dreams cannot feed us nor can they make things happen. You have to make things happen in present so that you can realise your dreams in future look back at these as past memories.

 

For me, Money is a kind of measurement. Measurement of various things - value, utility, energy, requirement, needs etc. Of these, utility is the most subjective one that impacts our view about money and all other earthly things. What is this utility, then? Utility is supposed to be the happiness (another subjective word) derived by the individual by doing a certain task, physical, mental or emotional and disutility is the unhappiness or discomfort.

 

Utility, as can be observed easily by any one of you independently, can be derived from various things - eating, sleeping, playing, watching a movie, possessing a rare thing, interacting with someone, caring or being cared by someone, reading a book or watching a nice movie, spending time with someone you like, mostly categorizable as satiating different types of hungers and certain abstract things such as meditation, prayer etc. Sometimes utility and disutility go hand in hand and in such situations we think about the net effect and decide whether to do it or not.

 

End of the day, all of us want our day to be a day in which we have gained some utility and thereby experience life positively. If, on a given day, all you experience is disutility, you would wish that you were better dead than alive. What I am arriving at is that on a daily basis we keep searching for utility like a bee searches for honey - searching has some disutility but finding what we want has greater utility, so we are ready to experience some disutility to gain utility later.

 

 

One of the first steps to make life better - is to identify the things that give us more and more utility. But as money is designed to represent the aspects that have common utility to all human beings, it generally can buy things that all human beings can recognize - you can have tasty food, travel to a exotic destination, but some entertainment, indulge in a pleasure hobby etc etc. And the utility money can buy is the easier one though it may not last long and since the disutility of doing the work to gain money and utility that is gained by spending such money are disconnected we never know if it was worth it (disutility of earning money vs the utility gained by spending money)

 

While we need the utility that can be bought by money to live, there are many other things not related to money but can be done if you are alive. My take is that we should keep using money to buy those things that we need to live - food, house, clothing etc but learn to see the real utility. Wearing a 2000 rs branded shirt may make you feel better and superior to a roadside pedestrian but if you look at the real utility, the value of things that 2000 rs can buy will look like a mountain compared to the branded shirt. You can spend 500 rs at a multiplex but if you make effort and plan and meet few friends for a sport, it will give you far more happiness. So learn to understand yourself and your utility for various things. One of the most important activities I have done as a human being is having good friends. Human being is supposed to be the most evolved being on Earth at least in my conscious and spending time with a mentally evolved human is the best thing I can do after my basic hungers are fulfilled. While fulfilling hunger is necessary you have understand the hunger first, why do you desire something so much is a difficult question to answer but you can keep trying.

 

When you save, you are postponing consumption of things that money can buy and it means fulfillment of someone elses utility. If you have got enough utility for the day, then your postponement of that little utility not cause disutility. Thus right amount of saving is a zero utility/disutility activity and knowing this "right amount" is critical.

 

To conclude, it is a good time to do a review because you have that little extra money in your hand (about 10%) without any additional effort. You are not sacrificing anything and therefore you need not feel bad and decisions that are taken when one is stable would be good decisions. Take a good decision

 

I hope I gave you some good utility in writing this mail and sharing my thoughts with such good friends is a great utility for me. If you want to discuss anything personally, feel free to get in touch with me.

Inovative ways for New Joinees Induction

I received a mail on Linkedin from a contact seeking suggestions for new and Innovative way for New Joinee Induction. He mentioned that they do the Following things:
1. Corporate Induction Presentation
2.Sharing with Company's each and every policies in details along with HR
3.Corporate Office/ Factory round.
4. Meeting with Key person (HOD's)

 

My reply, which I felt can be of of help to other HR Managers is as below:

 

One of the first things a new joinee needs is a friendly peer. Seek volunteers in different departments who would like to volunteer for such work and train them a bit on what to say and what not to and during induction introduce these guys a friendly peers and tell them that the new joinee can approach any one of them for any issue. Slowly they will develop good rapport with one or more old employees, which will help them transit smoothly into the system.

Another innovative thing you can do is to conduct a small competition among the new joinees. Give them a target such as making a presentation about the company to an investor or a customer and give them a list of people they can meet to get information.

Regarding policies and processes, give them a challenge of coming up with the most difficult questions they can think of about the policies and create a repository of the same as FAQs. Everytime someone comes up with a new one that is not covered earlier, reward them with something. That way they will go through the policies thoroughly and will also act as feedback to the company. Later let them go through questions raised by previous new joinees.

Dear Shri Manmohan Singh

Dear Sir,

I am writing this letter to bring a message from my fellow Indians to your attention. It is mainly related to what they have been expecting since they voted Congress (and you) back to power with much clear majority. Last time they were not so sure but looking at what you managed to achieve even with left problems, they decided to relieve you of that problem and keeping in mind the global crisis they felt you are the best choice to do something progressive as you earlier did (or appeared to) in 1991.

We have already taken note of Sonia Gandhi and Rahul Gandhi's sacrifice of position. We know that Sonia Gandhi would never like to be in a position of direct power and that she is doing whatever she is doing so as to create a good situation for Rahul to succeed. There is time for this to happen and the Indian population will wait for that. But meanwhile we are expecting little more than just holding the seat for Rahul from you. In the last 8-9 months we have noticed that you had allowed ministers to be chosen not on merit but on a spoils-sharing agreement within Congress and with other parties. But then you are still the Prime Minister.

We have given you enough time to test the pitch and play defensive for quite a bit of time and if you are thinking you can play out the next 4 years like Dhoni tried to and failed to in the test against South Africa, let us know immediately. It is better to act retired hurt and sit in the pavilion rather than being out there and wasting precious time. As the Prime Minister of a country with 1.2 billion Indians, every minute you waste is equivalent to 33 lifetimes and I request you to keep this in mind whenever you chose to waste a minute.

More important message I would like to bring from my co-countrymen is that we have expectations other than those Sonia Gandhi, Congress, allies of Congress etc have from you. We want to lead a peaceful, harmonious, simple life. Majority of we Indians aspire for few simple things and are ready to live with many imperfections.

First of all, we need to have good food. It is good that Agriculture's contribution has shrunk to less than 20% from a high of 60% earlier but the food still forms the major portion of our consumption, at least 40% to 80% of daily spending by an average Indian would be on food. If you now see the way food prices are growing, whether it is the making of Mr. Pawar or it is because middle class Indians started eating more as former US President Bush said, it is becoming increasingly difficult to have two square meals without feeling sad about the amount of money that has been spent on them. How can a average Indian come out the poverty or below average life cycle if he is constantly grappling with the challenge of increasing food prices. All his increase in productivity, innovation, hard work is getting sucked by the spiraling food prices. Please think about this. As the Prime Minister, you have access to all the intelligent brains of the country in various bureaucratic, political and academic positions, brains that were nurtured over a long period of time and brains that keep writing excellent theories for newspapers and if you can put the best brains together, we are sure that you can come up with a pareto solution, which will address one of the basic responsibilities of modern society - opportunity to live.

Second, please stop thinking in terms of stock market rallies or dips and the macro GDP numbers for sometime. If you ensure that all the entrepreneurs are facilitated to achieve their goals in fair means, they will push the GDP enough. Simplify the regulations and taxation and ensure that you don't have provisions through large fish can escape but the small are caught. Treat everyone equitably. Tax income of every individual and organization and ask no more. Don't entertain smart Chidambarams, who come up ideas such as tax a honest man who wants to withdraw his money from the bank. Be fair and try to see if you can keep Gandhi's words in mind while doing this. Mr. Gandhi, if I remember rightly, said that an individual should earn only as much as he needs in his lifetime. Every individual needs food throughout this life, needs a shelter over his head, would like to educate his children, would like to have some entertainment in the form of TV, music, cinema, arts and other cultural activities, would like to help his fellow human beings in need of it. Few may want other goals, let them do it but don't let them lock in the resources in the form of money to such extent that other human beings are starving as they have no opportunity to earn their bread for the day.

Lastly, it would be great if you can keep asking representatives from different sections, representatives who truly represent their section not those who claim to be representing, what is that one thing if changed would impact them in a positive way, not from financial dimension but from societal and economical dimension. Ask the young kids from different regions, ask the bread-earners, ask the bread-makers, ask the mothers, ask the honest, ask the corrupt, ask the responsible, ask the laggards, ask the MBAs, ask illiterates, ask the roadsider, what I mean to say is develop a feeler network. The objective of our democratic society is not to achieve a high GDP growth or a certain level of per capita income or to ensure that the stock market goes up or to ensure that the interests of few are served, it is to eliminate the "might is right" and other similar brutal forces and help human and other living beings leadn a civilised and collaborative life in which there is always a give and take between living and non-living beings.

May be I wrote a little too lengthy letter but I am sure you would have got the message. Please think about this and do something about it. We have high hopes from you.

Regards
A Indian Citizen

Where do we stand?

Just saw this article on Economist. Wonder do we (India) gain a position in such graph.