Learn about money ( Lesson 3)

DESICION MAKING ON MONEY 

Bheema applies strategies as per advise of his friend Ram and eventually he found himself with two properties after three years. He thanked him in his dream,day and night after a year he comes with a successful business idea setting up a vegetable market inside his town limits as there is none. He launches vegetable market after a month it sales picks up as the message spreads,then he sets up another market even the new store sale picks up by 5x within few days. With high expectations he sets up a "super mart" which contain almost 60+ variety,however within few weeks with no sales in " super mart" he shuts it down the revenue from the other two stores are spent entirely for setting up of new store without further money for investment to run the existing stores he again falls into  money trap,he then calls his friend Ram.

BHEEMA: Hello ram

RAM : Yes bheema hearing you after a long time.

BHEEMA: ya

RAM: Is everything ok?

BHEEMA: completely messed

RAM:  what do you mean?

BHEEMA: Vegetable market...explains

RAM: Simple mistake leads to catastrophic consequences.

BHEEMA: What is that simple mistake?

RAM: Lack of financial knowledge.

BHEEMA: You told me earlier, but I was the  one who ignored.

RAM: Listen to me,Your Vegetable market in limits of town was a problem solver and it is really appealing however after your buisness picked up,you become "greedy" and set up stores than the market need.

BHEEMA: I can't understand 

RAM: suppose let's say your town has a population of five lakhs which requires 5000 tons of vegetables per day,now you have set up vegetable stores which is already supplying 5000 tons. Later you set up a additional stores which led excess supply of more than 1000 tons per day (which has no customers) this results in rising operations costs and thus you got stuck in losses.

BHEEMA: So?

RAM: Never take emotional decisions, your emotions influence your decision making,Instead you have to focus on rational decisions.

BHEEMA: You are my teacher.

LESSON LEARNED:

"NEVER TAKE EMOTIONAL DECISIONS"

 "ALWAYS TAKE RATIONAL DECISIONS"

HUMANS ARE CONTROLLED BY TWO EMOTIONS GREED AND FEAR

          -ROBERT KIYOSAKI

learn about money(lesson 2)

ASSET AND LIABILITY 

Ram and BHEEMA moved to their respective places after exchanging their contact numbers. Both were excited for their contact with their childhood friend after a long time. Bheema was discussing with his wife about his acquaintance with his childhood friend and their conversation. Later bheema went to park and neighbouring roads which is also his daily routine, he found a well furnished house with modern amenities at a affordable price. In excitement he ran to his house to inform his wife,her suggestion of contacting his friend bought his excitement to bottom as he was bit egoistic,however later agreed to her suggestion and contacted his friend ram.

BHEEMA: Hello is this ram?

RAM: Yes how are you bheema.

BHEEMA: Fine 

RAM: Hope everything is well.

BHEEMA: yes

RAM: Is anything wrong, bheema.

BHEEMA: Conflict of opinion.

RAM : What is it?

BHEEMA: I found a well furnished house,however my wife is not happy with purchasing it, tell me isn't it good investment.

RAM : What is an investment?

BHEEMA: Is it you! who is asking this question don't you know some thing which we own.

RAM: Its not, It is something which gives you better returns than the amount you invested.

BHEEMA: Ha yes that is what I said.

RAM: How that is generating you income.

BHEEMA: What income? How house can give money.

RAM: That is why I said you this is not an investment but expenditure.

BHEEMA: What?

RAM: To understand this you must know what is an asset and liability and its difference.

BHEEMA: What is it?

RAM: An asset is something which you own and generates a cashflow(adds to your income) , a liability is which you own and adds to your expenses.

BHEEMA: How can my house be an expenditure.

RAM: Maintanence of your house such as electric bill and water bill.

BHEEMA: Yes, I did not give a thought about this. So what should I do now.

RAM: Purchase an apartment or a three storey building and rent it,then apply for a loan in bank of amount of house which you currently want to own after pay back your loan with the rent you receive at the end after paying your loan which may take two years you will find it yourself with two properties.

BHEEMA: Wonderful Ram.

RAM:  Do it now don't wait for anything.

BHEEMA: Yes, thank you 

Call disconnected

LESSON LEARNED 

An ASSET is something which gives you  a

regular cashflow.

Eg: rental, shares.

LIABILITY is which adds to your expenses 

Eg : car, electronic gadgets

ASSET PUTS MONEY INTO YOUR POCKET LIABILITY TAKES MONEY OUT OF YOUR POCKET

               -ROBERT KIYOSAKI

Learn about money(Lesson 1)

BASICS ON MONEY

RAM AND BHEEMA 

Two bikers, who were on a long ride injured by hitting each other bikes, they managed to get themselves to the nearest hospital. Later after treatment, Ram realizes the other guy is Bheema who is his school friend, and gets into an ocean of conversation since it has been years since they met last time. During paying the bill Ram notices Bheema checking his purse again and again and then paid finally with a dull complexion.

RAM:

Ram enquired about it?

BHEEMA 

Bheema said I am earning 50,000 per month, 30,000 or 40,000 spent on expenses every month with 10,000 or 20,000 per month what do I have to do after my retirement replies in frustration.

RAM 

Ram with a smile asked his friend "What do you do as soon as you get your salary?

BHEEMA 

Bheema said I am going to buy what I need.

RAM

Ram said things what are they?

BHEEMA 

Bheema with a confused facial expression

*Rent

*Food

*phone bill

*watching movie

*buying a watch or phone or clothes whichever is popular in the market

RAM

That's right but I am concerned about the method you are following.

BHEEMA 

What? Said bheema

RAM 

Every month you get your salary first keep a portion of it for your savings. When you do this you will restrict yourself from buying things you don't need?

BHEEMA 

I am not buying unnecessary things.

RAM

But just now you said popular items in the market, so you end up buying whatever is popular in the market, regardless you need it or not. Was what you bought last month required or not?

BHEEMA 

Bheema said I bought the latest smartphone absolutely it was not necessary because my previous phone is working well. Thank you Ram today "I learned the greatest lesson in my life."

Lesson learned :

Income- saving = expenditure is CORRECT

Income - expenditure = savings is WRONG