Posts By: Arun Chattopadhyay
Goal setting for life is important. Without having a well-defined goal, we cannot be successful. Our parents, teachers, and well-wishers always remind us to have a goal in life. “A life without a goal is like a ship without a rudder in the sea”, they always say.
Up to that point, they are right. They should let us understand the value of goal setting in life and allow us to chart our own missions of life. But they won’t leave us. They would then tell us what to become and how to become “that”. So our entire regiment of guardians and well-wishers would spend hours telling us how to reach our goals.
“You should choose ‘Science’ as your stream from standard 9. There’s no future for Arts or Commerce students” – told my dad’s friend.
“You must study well to score high in your school leaving examination, otherwise you won’t get admission to any decent college” – my parents warned me.
“You should not go for employment in the private sector. Government jobs may not pay better than the private sector. But they offer job security and good retirement benefits.” – My maternal uncle told me when I joined a private company after my college.
And there I was..
Nobody ever asked me what “I” wanted. Since my childhood, the airplanes used to attract me. Those amazing machines used to glide like birds in the sky, carrying people, to faraway places. Each time I saw those, I wished I could fly in an airplane. Later I discovered, my love was not airplanes. But my wanderlust–the strong desire to travel and see new places, was driving my desire. It was the freedom associated with travel that was pulling me.
See this picture. I achieved my goal of finding a “decent” job with a decent salary. I was working for a British multinational company in India as a technical supervisor. It was the lowest rung of their management hierarchy. I got married, had a lovely baby, my son. Life would have been nice, had my “wanderlust” infected soul remained silent.
From Goal setting to the Theme setting
After 7 years of working in the factory, I could realize that if I continued with this job, I would settle in my life. But that would also mean, I won’t be able to see around the world ever, the way I wanted, in this lifetime. I shared my mind with my wife. I didn’t expect her to allow me to rock the family boat, but she understood and gave me her permission to change course. I’m thankful to her for her understanding and support.
After weeks of thinking over, the direction became little clear. The best career for me would be in the marketing of textiles. There was a challenge. I did not understand marketing, let alone having specialized knowledge of sales and marketing of textiles.
I looked at my goal again. This time, it was not one goal, but a basket of goals, that I called a ‘Theme’, instead of a single Goal. My desired life theme looked like this:
- Join a large textile company in their front-line sales team. Take a pay cut if needed
- Work hard and learn their marketing process
- Increase network in the textile industry in India
- Learn outsourcing and textile export procedures
- Learn how international marketing of textiles and apparels works
- Join a textile export company in India and spearhead their overseas business
- Show the world to the family members
- Let my son have his own theme of life. Not to force our own opinions on him
- Gather deep knowledge about businesses from the view of CEOs and owners
I took the leap. Joined as an Area Sales Representative with another large textile company in India. It offered a lower salary than what I was earning. But I liked the role. I could travel and visit the markets. The company had a good training system for its sales teams. I absorbed every lesson their training sessions provided.
I moved out of India and worked overseas for 5 years in two international garment manufacturing companies. After returning to India, one of my ex-employers offered me a role in export sales management. I had an opportunity to spearhead the company’s entire international sales and marketing of apparel fabric. I accepted the position.
Life’s not like a fairy tale. Their company headquarters in England decided to close the textile fabric business after four years of my joining. They decided to focus only on their core business of sewing thread. I had no interest in moving to the sewing thread industry, so I had to move on.
In life, not all things are under our control. That’s my experience. Everything is moving all the time. But that is why I see life as exciting. It never ceases to surprise us. The only thing we have control is making a decision at each stage. It did not take me much time to find another job with a textile fabric manufacturing company.
By that time, I had traveled around 26 countries. I had a deep knowledge about the textile and garment businesses worldwide. In the next 10 years, I worked for a few more Indian textile companies in senior management positions. The going was not smooth all the way, but each turn of events gave me new knowledge, new wisdom.
I wanted to share with you, my real life experience about Goal Setting. You might have noticed, I had to change my immediate goals at different points in my life. My purpose was to work towards fulfilling my theme, not the wishes of others. It was not a linear journey at all..
Nothing stays at one place – everything is changing.
When planning, people often ignore that the world is a dynamic entity.
What worked last year may not work today. Computer programmers or website designers are in demand. Soon, those bits of knowledge will be obsolete. Driverless vehicles will replace today’s vehicles soon. We know that going after any single goal may not give us the success we desire in the long run.
Is there any better way to plan the future?
I can’t see the future. But I can see the trends. I also know what I want. If I blend what I want with the trends, then I can plan better. Creating a life that would fulfill my desire and make me more fulfilled and happy is important. Earning a lot of money by sacrificing health or family life and becoming sick and old can’t be a wise idea. Are there ways to eat the cake of life and have it, too? Life is not something as simple as a cake. So enjoying it when I’m alive, and not regret it before I die, is possible. In fact, that is the only way to be successful and happy at the same time.
But how can you set the goal of life by mixing it with the trends?
Introspect. Your inner self, what we call intuition, is much wiser than you may think. What do you want from the bottom of your soul? A happy family, own house, a couple of real estates, seeing the world, going for an ocean cruise once a year, some passive incomes that can take care of your future needs well enough after you retire, having great health and adequate health insurance for your family and parents? This is not a single goal, but a bouquet of goals covering various areas of life. I call it a THEME of life. Sounds a tall order? It’s not if you stop having a tunnel vision towards only money and fail to have a larger outlook. Money is very important. But there are smarter ways to create money than working your backside off all the time and forget that you have a right to enjoy life as well.
Extra income can make things faster to create your theme of life.
As a starter, your expenses are in several accounts. Why should you have only one stream of income? Ask yourself to find an answer.
Can you see the trend? In the future, the employment market will favor people having skills in very high technologies only. Your current skills may be obsolete soon unless you upgrade yourself fast enough. You may not be willing or capable to change yourself beyond a limit. But you can keep your eyes open to take the right decisions at the right time.
To have more than one stream of income, you should be open to earn side incomes besides your main job. You can work part-time in the beginning, working on a business that solves critical problems of people. The more acute the problem is, the more will be your chance of success. Such a business can easily replace your income of a full-time job within a matter of 2 to 3 years.
Invest money in businesses of the future. Investing in traditional term deposits in banks, endowment based investments in life insurance, postal saving etc. can earn some money for you, but those would be a meager pension-like income. Some of the businesses to look at today are Cancer diagnostics; high-tech educational institutions; 5G or 6G telecommunication companies; pharmaceutical companies producing medicines for HIV, cancer, infertility, Nano-chemicals to treat diseases. The list is endless.
Don’t run after every shiny object. Become better every day in what you are doing today. You need to be better than others in any one field. Invest in yourself. Brand yourself on that single field and you can use that knowledge in your part-time business. Use digital marketing to promote yourself as an authority in your field. Having an excellent brand image of authority is the new age boon that can bring abundance.
Take care of your health. You may be working 80 hours a week but keep only 3 to 4 hours every week for physical exercise. That will need some willpower, but if the ‘theme’ is always in front of you, that will help you overcome procrastination. I had been a master of procrastination once. So I know that a desire to change myself can overcome it. Look at yourself in the mirror every day and see the change. It’s a great inspiration to stay on course.
Before coming to the end of today’s post, here is a recap of what I shared to help you achieve a life of fulfillment and happiness.
- Don’t go after a single point agenda of making money.
- Know yourself and your inner voice.
- Chalk out a map of how you wish to see yourself 5 years, 10 years and 30 years in future.
- Draw an action plan to work toward a theme of life that you desire.
- Move towards it but remain flexible to change course.
- Your goals will change but take care not to lose sight of the theme.
- Once you feel you’ve reasonably achieved it, don’t stop. Enrich it every day. A static life is boring. Renew and re-invent yourself every day.
- Last but not least, think about others and their problems that you can solve.
Remember a famous quotation by the legendary marketing expert, Zig Ziglar
“If you can give enough people what they want, you will get what you want”
Wish you all a Merry Christmas and a Very Happy 2019.
“Money money money
Brighter than sunshine, sweeter than honey.
Money money money
It brings luxury & comfort it makes life funny…”
Let’s be honest. We all want money and most of us run after money. The irony is, not everyone understands that the goal should be achieving financial independence. That is way more important than just having money.
It means living your life happily, to have what you dream about, to be what you really are, and do what you love to do without having to worry about cash flow.
Imagine a situation when you have a ‘system’ that works for you, and generates an ever increasing regular income for you, month after month, year after year while you live a dream lifestyle. How would that be? That would be great, hands raised, no doubt. But, is there any formula to reach that blissful situation? To find an answer, let us think over, what prevents most of us from being financially independent.
We are what we are today because of our past actions, or inactions. And what actions we are taking today will decide how our future will be.
The root cause of our lack of abundance is the lessons taught our conventional education system and the society since our childhood.
At home, our parents tell us to get good grades so that we can find a decent job, earn monthly salaries and retire with benefits. But they fail to realize that salaried people live a life of financial illusion. The annual increments and promotions that they expect would never be able to provide enough passive income to make them financially free in real sense.
Our conventional education system is not designed to make us wealthy, or even financially literate. Our Schools and Universities focus on enhancing our professional and scholastic skills but not financial skills. Otherwise, why highly educated engineers, doctors, teachers who earned top grades in schools and colleges struggle financially throughout their lives?
There are 2 ways to achieve financial freedom for employees. The first one is the favourite of our poor or middle class parents and friends. The second option is taught by wealthy people to their children.
- Earn from salary, live a frugal life, save maximum, invest the saving and earn passive income after paying taxes.
- Take actions to build a part time business while continuing with the day job, pay taxes after spending, build assets that give regular returns even when you are sleeping and finally retire wealthy, in a matter of a few years, much before the age of 60.
As it is, the first idea does not sound attractive anyway because if I postpone all my pleasures during my youth with a hope of a better life when I’ll become old, then what is the fun of living?
The Self Made Millionnairs’ Way
“You won’t get rich without multiple flows of income.” Says all self made millionaires like Robert Kiyosaki, Brian Tracy, Tony Robbins, and a host of others who started career as employees.
Smart people save a part of their salary, but they look for ways to increase the income gradually, without sacrificing much the quality of life. This calls for multiple sources of income. A well planned part time self-employment or business can generate the desired side income in addition to the salary.
Yet, according to Jobvite, a recruiting software company, only about 25% of employees have a second source of income outside of their primary job, that also because “they have to” earn extra money to sustain themselves, not to achieve financial freedom see the below infographic, courtesy CNBC.
Yes, it is only the change of mindset that can make anyone wealthy and financially independent. The rich focus on earning big while the poor think of saving from only one source of income. It’s so simple but needs a determination to exit the comfort zone of mind.
Side Income Options That Can be Scaled Up Later
There are many freelancing and small business opportunities that can be launched to generate some decent side incomes. Here we’re discussing options that can be scaled up to reach a level when you don’t have to work to keep it running but the system will take care of generating income. We are going to look at the options that meet most of the following conditions. The option should:
1. Need zero or very little capital to start with.
2. Provide solutions to burning problems and people should be ready to pay well for it.
3. Need skills and knowledge that can be transferred or outsourced to run the business.
1. Direct selling
1. Writing books
2. Interior decoration
3. Personal Services
4. Financial advisor
6. Online invoicing
7. Beauty and personal grooming consultant
Examples of Other Scalable Freelancing Startups:
1. Website designing
2. Digital marketing
3. Graphic designing
5. Event management
Today, it’s easy to start any part time business that require very little or no upfront investment. But choosing the right business for you must be done very carefully after doing thorough research and whether it will suit your profile and ability. But you may rest assured, there are more than one option for everyone having a passion and commitment to achieve financial freedom.
I am coming up with the results of my own long time exposure to many of those businesses to share with you in my forthcoming posts soon.
Hope you have enjoyed this article. Your comments and feedback are welcome.
If you wish to achieve financial freedom by the time you retire, you should know what is going to be the future value of money that you are saving today. I am not sure if you know that the actual inflation is more than what the CPI (Consumer Price Index) based inflation statistics is published by newspapers. But the real inflation over the last 100 years tells a different story.
Indian media talk about GDP growth. They often overlook the fact that with a population of 1.25 billion, we should look at our per capita GDP than our overall GDP. Unfortunately, India’s GDP growth per capita has remained flat over the last century, while other major economies have shown much faster growth in their ‘GDP per capita’, refer the graph above, source courtesy Wikimedia Commons statistics.
How inflation over last decades affected the purchasing power of people
In the year 1920, a family of four could manage their expenses comfortably with an income of Re 1 per month. Those were arguably, the good old days of our grandparents.
In 1940, a similar family could have the same standard of living, with a take-home salary of Rs. 10 per month. A 10 times reduction of purchasing power.
Come 1960, for the same living standard, a family needed Rs. 100 as monthly income..
1980 – The baby boomers in India needed Rs 1000 per month to run a family well.
Enter the year 2000 – The take-home income needed to be was Rs. 10,000 per month for the same middle-class family. Throughout this period, we had different Governments and economists at the helm of policy and financial affairs. All of them tried to check inflation with their best efforts. But the inflation rate over the last 100 years seems to have remained too difficult to control. Obviously, by 2020, an average family is going to need an income of Rs. 100,000 per month to maintain their standard of living that the same person managed with Rs. 10,000 in the year 2000.
Sitting in 2017 you might think one hundred thousand rupees would be a lot, but such underestimation of inflation has been there among people over the last 100 years!.
The Compounded Annual Growth Rate (CAGR) of Inflation Over the Last 100 Years.
This is just to give you an idea about the difference between what the statistics of CPI (Consumer Price Inflation) you see on the TV and other media, while the reality is different. If we take the starting value at Re 1.00 in 1920 and take the end value at Rs. 100,000.00 in 2020, the CAGR can be calculated using the formula as:. CAGR =((End Value/Start Value)^(1/Periods) -1. Converting it into percentage works out to 12%. This is the real inflation rate that we need to prepare for. To know more about working out CAGR, Click Here..
Why is it so important to know the actual inflation in order to plan your Financial Independence?
The trend shows that if you invest your money today at any financial instrument that yields a minimum return of 12% compounded gain, then only at the end of the maturity period you will get back a sum that will have a similar purchasing power of the amount at the starting of the investment. Question is, “Which investment can ensure such return?” There are very few, and those involve taking a fair amount of risk that is not under your control. But there are ways when you can take charge of your financial growth.. I shall discuss that in my next post..
One of the primary area to achieve financial freedom is to know and plan investments to save income tax optimally in balance with returns.
Today we are going to have a look at the Income Tax Brackets for individuals and the various Tax Saving options extended to them, with some simple examples to work out the tax.
The Income Tax Slabs extend some additional exemptions for the Senior Citizens and Very Senior Citizens. You can refer to the below tables for a ready reference.
EXAMPLE OF WORKING OUT THE TAX
Vikram, aged 30 has a taxable salary of Rs. 6,75,000. His tax calculation will be as below.
Upto Rs. 2,50,000: Nil
The next slab is up to Rs. 5,00,000. Therefore, for Rs 5 lac less Rs. 2.50 lac, that is Rs. 2,50 lac, his tax liability would be Rs. 2.50 lac x 5%, working out to Rs. 12,500.
He still has Rs. 1,75,000 that will fall into the third slab which is more than Rs. 5.00 lac but below Rs. 10.00 lac. Against that his liability will be Rs. 1.75 lac x 20%, that is Rs. 35,000.
Hence his total tax liability will be Rs. 12,500 + Rs. 35,000, that is Rs. 47,500.
Besides, he has to pay 2% Education Cess and 1% Higher Education Cess on the Tax of Rs. 47,500, making the total liability as Rs. 48,925.
TAX SAVING OPTIONS
Tax Saving options are extended to individuals to encourage public to invest in various schemes to secure their financial future as well as help the Government in strengthening the country.
There are three stages when an individual can save taxes. For detailed information on investments covering the tax savings at any one or more of those stages, Click Here.
- Investment Stage
- Earning Stage
- Withdrawal Stage
IMPORTANT SECTIONS UNDER IT ACT TO BRING DOWN TAXABLE INCOME
There are many Tax Saving sections under Income Tax rules. The most common sections that can be used to save tax are:
- 80C/80CCC: Life Insurance, Provident Fund, PPF, Tax Saving Bonds, Tax Saving Mutual Funds (like ELSS), Tax Saving Fixed Deposits are some options.
- 10(10D): Interest earned from Life Insurance policies that have at least 10 times of annualized premium as Basic Sum Assured. This section gives a strong incentive to protect one’s family in addition to tax saving by investing in life insurance plans.
- 80(D): Health Insurance for normal people
- 80DD: Health Insurance when one or more family members are disabled/handicapped
- 80DDB: Health Insurance for normal people plus if any family members are handicapped and/or senir citizen
- 80E: Repayment interest against Educational Loan
- 80G: Donation with a limit of Rs. 10 lacs
- 80EE: Repayment interest against housing loan
This covers a basic overview of the individual income tax and various tax saving sections for all taxpayers who wish to start building their corpus at an early age.