Do we really understand money?

Do we really understand money?

Do we really understand money?

Most of us think we understand Money

There's nothing further from the truth than our belief that we understand money.

A friend spent Rs 2 cr. educating his son abroad. Sending him abroad for higher education was satisfying both the needs of the son and the parents. The son imagined a life of freedom in the large University campuses with their sprawling lawns. In the meanwhile the parents were seeing their social status graph rise because almost all their close friends had their children studying abroad. The son came back to India after his education and took up a job that paid him a salary of Rs 20 lac per annum. Yes unfortunately there is no premium left for the "foreign return" tag. After a few months of working, the son left the job because he wasn't settling well with his boss. Then after a few months of sitting at home, he got another job that paid him Rs 15 lac which he had to join because how long could he perhaps be sitting at home. Had both father and son understood money a little better, this wouldn't have been the outcome.

The Rs 2 cr. that was spent for his higher education could have alternately bought him something else. It could have bought him a lifetime cash flow of Rs 20 lac (his first salary). This is called Financial Freedom

By choosing to buy education abroad, he lost the opportunity to buy Financial Freedom. This is known as Opportunity Cost. Every time we buy something, we let go the opportunity of buying something else. The ability to assess opportunities and make right choices is the key to success. In the other hand making incorrect choices can gift us a lifetime set back. As parents, one needs to be sensitive to the changing dynamics of job security and job opportunities. As uncertainty shrouds the job market & as the entrepreneurial economy is coming of age, Financial Freedom has become a serious choice one should consider before loosening up the purse strings. The short term joy of spending on one choice may come at a cost of providing a lifetime of financial freedom that becomes the foundation to build an enterprise. A few years of paid independence can be responsible for a lifetime of dependence. The understanding of opportunity cost is actually the understanding of money. Both money and more importantly time are limited resources, and how well we deploy these limited resources defines what we become in life. Even the wealthy need to realise that while they may have the money to shower upon their kids, they do not have the power to manufacture time for them. Loss of Time is a huge Opportunity lost forever.

Our Choices and not our money defines our destiny and makes us what we become

Disclaimer : This Article is only for information Purpose and should not be treated as Financial Advice.