The hush hush tone of Money Ki Baat

#15 We are still a reluctant society to discuss money freely. But it is imperative for us to acknowledge the incentive & become a financially more aware generation.

Discussion on money is usually in hush hush tones. It is not discussed openly within a family. Outside homes, there is a curtain of caution. There are a lot of social, cultural & economic strands to unpack to understand why we behave this way. In this article, we go deeper to make sense of this reluctance and to understand why it is pivotal for us to set off on this journey through some holistic fixes.

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Our lives are equations, driven by formulae of relationships- Family, relatives, friends, life partner, colleagues, social acquaintances. Relationships enter and exit our lives. Human relationships aren’t just restricted to people, they extend with things and activities as well : a job, a hobby, a favorite sport, cinema, politics. Amongst all the relationships, possibly one of the most complex one is our relationship with money.

My earliest conscious memory of congnizance of money is when I got a piggy bank (Gullak). The simple principle taught- money saved, is money earned. The gullak was a prized possession, possibly more precious than a toy. Toys represent manifested realities, but gullak was the guardian of anticipation and infinite possibilities. I imagined how one day it would give me the power to buy, whatever I desire. 

Another early memory is of visits to relatives’ place. A confession here - Despite being repeatedly told that greed is not good, I looked forward to the money that grandparents and relatives gave on visits during summer vacations and festivals. Of course, I followed the protocol : You refuse once, then you refuse again, mouth the mandatory  ‘ Iski kya zaroorat hai’, while silently extending one hand to receive the currency with gratitude. Then you laugh all the way to the bank, or gullak in this case.

We all would have our own set of similar core memories. But for this supposed critical relationship with money, our education and training on the subject is inadequate. In most middle class households, money is not discussed as a virtue. Money is defined as a survival tool, a cushion for a bad day, but definitely not an object of desire. 

The ‘money saved, is money earned’ principle was practiced during every visit to the bazaar.Every shopping trip was a team on a mission in a battleground. Parents entered the bazaar, armored with weapons of bargain, as if someone’s life depended on it. The joy of a few rupees saved often outshined the joy of the new possessions. This is the extra dhaniya or extra saada puri ( during pani puri session) syndrome : a matter of prestige for most Indian middle class households.

We are well tutored on the importance of saving and keeping the monthly budget under check. Why buy something when it can be prepared at home : setting the curd ; preparation of ghee,evening snacks, festive sweets ;ironing clothes ; fixing electrical faults. These were commonplace domestic chores and not outsourced activities.

But this doesn’t mean, we have cracked the code on personal finance. There is a hush hush undertone in building a structured learning curve on this topic. There is limited knowledge, but a highly accumulated ego. Our learning curve on detailed understanding of money literally starts when we start earning ourselves.

Many of us aren’t even cognizant of each component of a payslip, deductions on taxes, return on invested assets or buckets of our monthly expenses. A lot of us do not have clear long term financial goals. And we are too shy to ask for help.

Why is this apprehension to seek advice? Why is money a sacred topic discussed behind closed doors? Part of the answer lies in understanding the social, cultural and economic context behind this.

Social and Cultural Strands: 

‘Jitni chaadar, utne pair’ , ‘paise ped par nahi ugte‘ , ‘aamdani athanni, kharcha rupaiya’’ are aphorisms we have heard countless times. There must be vernacular variations of this, but the core message would be consistent - save and live within your means. We see a few common threads that broadly encompass societal approach towards money :

• Money is symbolic of power. Financial capital influences social capital. This leads to vulnerability. People shy away from an open discussion on it, as it might indicate how well-off a household is. This power dynamic makes people shy to discuss money, even with close friends and relatives. 

• There is an inbuilt element of patriarchy in money discussions.  In many households, men still drive financial decisions. Many working women rely on spouses or dads to make financial investment decisions. It is ironic that a woman who runs a well-oiled machinery of domestic budget ( akin to a business), is not involved in investment decisions. It becomes a man’s domain. This is the result of years of deep rooted conditioning in both genders. Men feel entitled, maybe sometimes compelled or pressurized, to be adept at this skill. Women, amidst battles of equal pay and social representation, maybe keep equality in economic investment, lower in the pecking order. But this is definitely a big problem. As per a study conducted by ClearTax in 2018, 90% women in India do not optimize their tax-saving benefits through investments.

Paytm had run a campaign explaining this through a social experiment.

• The feeling of falling prey to evil eye ( Nazar lagna). We embrace this superstition that our success attracts jealousy. This deep rooted superstition prevents us from discussing money related specifics with people.

• The notion that ‘too much wealth isn’t a virtue’. As a society, making money is not lionized as a concept. Salary negotiations, demand for equal pay, delayed payments for freelancers continue to be challenges for people, because we have never glorified the idea of making money. In fact, too much wealth is connoted with a compromised ethos. Cinema fuelled this imagination. Hero comes from a place of struggle, villain from a position of wealth and corrupted power. Their virtue was always under the scanner. 

• Religions also teach being measured with money. The varna system ( a topic for another post on how problematic it is), kept brahmins at top. They have the wealth of knowledge, but live a modest life, sometimes even on the alms of others. Similarly charity is glorified in every religion.Charity is treated as a moral duty of every being. The question is not on intent, but on posturing. The discussion on money is usually as a tool to survive and in case of abundance, a tool to help society.  No wonder few of the wealthiest bodies in the country are religious institutions - absolving people of their sins, one donation at a time.

Economic strands : 

• There is intimidation with financial jargon. Learning this feels like learning a new language for the first time in your 20s. The instincts aren’t intuitive. Of course, it doesn't help that the sector operates on complex lingo, maybe by design. Financial instruments are designed with caveats and buried under such complex language, that people get intimidated and engage superficially. 

• The above reason is a big part of why for the longest time, our financial  decisions mirror the recommendations of parents. But we forget that the economic reality of their time, on which they developed their preferences was far different from current reality.

Sample this one snippet from Business Today about evolution of income taxes ( pre-liberalization)

So now, let’s think of someone who is a responsible tax paying citizen in the 1970s. Their income was heavily taxed ( with limited deduction options), private banks hardly existed ( most of them became big post liberalization), Sensex hadn’t come yet. 

Unemployment rate was high. Inflation was high. Country had seen 3 wars between 1962-71. There were droughts in East India. Food & nutrition were bigger challenges, thus a larger priority. Private jobs were limited. Thus, safety and security were prime drivers of survival. It was coveted to get into a Government job, for the safety it offered. The song from the Gulzar movie titled ‘ Haal chaal theek thaak hai’ perfectly summarizes the times.

Banking system wasn’t efficient or as widespread. Gold would have been a highly liquid asset, due to the high presence of saahukars. The safety mindset would mean- save for survival and the only  investment to be made should be in tangible, visible assets that could be passed to the next generation. Thus, real estate and gold became popular.  

So if someone started earning, saving and investing in 1960s or 70s, this was the economic reality of the time.

But our economic reality has leapfrogged since then. Banks are mega institutions, Equity market is far more streamlined, conventional lenders aren’t as prominent, post liberalization jobs and consumerism have both jettisoned. Thus, it is extremely important to make our asset allocation more relevant to the times. The point is not to say that people did not evolve with time, it's just to establish that reliance on only the previous generation’s posturing,  this may not be the wisest choice. The material requirements, consumerism, career ambition, approach to spending - all these change massively between generations. Investment style also needs to evolve. 

Why is it important to know better?

Economics is the most applied subject, having the maximum intersection with our lives. There is a reason every morning newspaper carries an economics section. It is not a hobby, it is a pivotal nucleus to our existence. So we need to be on a journey of economic and financial literacy to know better : to attain true financial freedom. People work very hard to earn, put in a lot of sacrifices.It would be a pity to see the ROI of this effort go in vain, due to inadequate knowledge or communication.

The most important reason is social. One of the biggest drivers of women empowerment in the country ( and across the world) has been attaining financial freedom. The self-reliance offers great personal assurance, freeing them of fear or uncertainty of the future due to financial  dependence. But, true financial freedom would be attained on not just working to earn money, but making money work for you. It’s always good to take counsel, but equally important to engage in financial decision making for self and the family. 

How do we set on this journey?

1. Possibly a longer term fix, but definitely a more structural one is to integrate Economics as a detailed part of our education. Irrespective of the specialization, one continues to have modules of economics as an imperative subject ( like languages). This works on two fronts : it will help build a more rational mindset to make sense of the world around us, financial or otherwise. Also because economics is the study of human behavior, it can decipher and hopefully solve a lot of social issues as well.

2. There is no substitute for communication on this topic. We have to normalize openness. I am baffled at how long it took me to ask questions, discuss approaches along with specifics on financial decisions, even with the closest of friends. It is still a work in progress for me, but definitely such a critical component of this journey. Communication on money is the first step to a humble acknowledgement of not knowing everything on the topic. Speaking to contemporaries creates a pertinent ecosystem to build a strong knowledge base.

3. We live in times of finance influencers. There are many Youtube, Instagram channels and influencers who decode the complex world. While this can be a great starting point to orient, but should not be the go-to option to make decisions. It is great to have a sound financial advisor, who works closely with you. The first step they push you towards is defining your long term goals. This is not an easy task, but is the perfect starting point.

4. Outsourcing alone is not enough. Active engagement is what sets us on a meaningful journey. Working closely with a financial advisor may mean regular cadence of evaluation, asking hundreds of questions if needed without pretense and creating a long term environment of trust.

5. It is not a one gender prerogative. Collaborate on knowledge, skills and decisions. It is the responsibility of both partners to actively engage, irrespective of single income household or double income.

Money does not mean happiness. Money won’t buy it either. But what it gets you is the financial freedom to make a choice. So sit back, relax and consciously take off on this journey of money Ki baat. And like any journey, here are a couple of songs for the playlist to listen to along this journey.