Sunday, February 3, 2013

Generation Gap

When I started blogging, I had one doubt. "Will any one read my blogs?". I have seen many financial blogs, which have thousands of readers, but those are written by financial experts and read by financial snobs. People read those blogs to find out which stock to buy, or which mutual fund to buy. On the other hand my blogs target financially illiterate people. And that is the big challenge. They are financially illiterate because they don't read any financial articles or blogs. It is like writing against smoking. People, who really smoke, not going to read those. So, my doubt was who is going to read my blog?

Then I thought at least my friends will read it. As I am writing it, out of curiosity they will visit my blog. So, I was expecting very few visitors to my blog. 

However, today when I see so much visitors, I am really happy. This is many fold what I expected. Really happy and would like to thank all my readers for your encouragement.

With that introduction I want to share my thoughts today. I was reading a blog on other day, which says many youngsters (hear the 20+ working professionals) are forced by their parents to avail big consumer loans for cars, home, etc even in the beginning of their career. When I thought about it further, three incidents came to my mind. Which I will narrate below.

Incident 1

My friend got Rs 5 Lakhs by a property sale. He wanted to invest that money in a bank Fixed Deposit. He is not really looking for the returns, but he wants to keep it as an emergency fund. Fixed deposits are very easy to break, so come any emergencies like job loss or medical emergency, he can use that money.

But things changed when his parents came to know about this. His parents wanted him to change his car, and go for an expensive car. Obviously, his wife joined with his parents, and finally he had to surrender to the combined pressure. He purchased a new car.

Incident 2

My friend was planning to get married. When he did a ballpark estimate of the marriage expense, he found that it will run into nearly Rs 10 Lakhs. He was not really happy to spend that much hard earned money. He talked with his parents about an idea of a register marriage. He will marry his fiancee in a register office, and only very near relatives and close friends will be invited. He estimated Rs 50,000 cost for this kind of marriage. If you can just ignore what others think, you can save Rs 9.5 Lakhs.

The idea was immediately rejected by his parents. But he was not ready to give up. After great deal of emotional blackmailing, his parents conditionally agreed this. He can go for such a marriage with one condition. The brides party should agree this.

He immediately called up his future in-laws. Again the idea was immediately rejected. The brides father kindly offered him to sponsor all the expenses of their marriage. But a firm no for other kind of marriage.

Finally, my friend has to go for a traditional marriage. They married and lived happily ever after, but Rs 9.5 Lakhs less richer.

Incident 3

Some one told me this incident, but I don't remember who. Here also the hero is a young man. He wanted to start a business. His father is ready to spend Rs 20 Lakhs for him, but not to start business. His father is ready to spend this money as bribe to get a job for his son. A job with Rs 10,000 as salary. Here also the son has to surrender to his father's wish. He goes to a 9 to 6 job nowadays. Let alone starting the business, should he invested the money in one of those micro financing companies, who pays 1% monthly interest, he should have been receiving Rs 20,000 monthly without leaving his home. Anyway, he believes his employer invests like that and paying him half his earnings.

What is the learning from these incidents? who thought wisely in these incidents? Younger generation or older generation? I am sure every one will not agree to me, but I think thoughts of younger generation are more prudent. If you think owning car, a bash marriage and a permanent job are important than your financial security and financial freedom, you will disagree with me.

Why do the older generation forces us to go for consumerism?  Of course, they do love us, and don't want to do any harm to us. Then why? To understand this, you need to follow the thought process. Our previous generation enjoyed the job security. Medical expenses and children's education were cheap on those days. So, they don't care that much about a personal emergency fund. To add to this, they got good returns for their investments, whether it is real estate, gold, or even from Provident Fund. They had a guaranteed retirement benefit.

But not all honey and milk for them too. It was hard to get a loan during those days. Credit cards were not heard of. Now we can get car loans, home loans even without visiting a bank branch. They may think why don't we make use of it?

What's the learning from these incidents? I am not saying immediately to reject any financial suggestions from your parents. There are many wise parents as well. But whenever you get a financial advice, no matter it is from your parents, friends or neighbors, please do understand this advice is based on their experience and their situation. Please judge it carefully, and make sure it suits you as well. 

Love your parents.

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