Dealing With F****c*** Affairs With Anil Lamba

Affairs are common, so much so that you'll deal with one in your life.

No. No. Not that one.

We're talking about financial affairs.

Anil Lamba shares his secrets to building a long-term, loyal relationship with money in his book Financial Affairs of the Common Man published in 2019.

Lamba begins by asking a thought-provoking question, "How is it that certain families with relatively lesser incomes appear to manage their expenses quite comfortably, while others having substantially higher earnings are either perpetually running short of cash or always seem to be in debt?"

Most of us focus far more on raising our incomes than on allocating our earnings more efficiently. However, financial success doesn't primarily depend on 'how much you earn' but on 'how you manage what you earn'.

Make money your mistress not wife

To handle our money well, we need to first understand the role it plays in our lives. So, even before we delve deeper into financial planning, let me ask – what's money for you? Is it a safety net to deal with life's vagaries? Is it a way to pay your bills? Is it a way to buy happiness? Is it a way to show off your status in society?

I see many who spend their entire lives making money they don't need. Those are precious lives wasted over pieces of paper. That's why it's crucial to figure out the end you're seeking because money is just a means. In other words, rupee bills are a way to achieve your life's purpose and not the other way around. On your death bed, you won't care about how much money you made but whether you achieved your life's mission.

As Diljit Dosanjh sings in Born to Shine ,

"Ho Paise-Poose Bare Billo Soche Duniya

Jatt Paida Hoya Bas Shaon Vaste."

(Money may be the primary concern of others, but I am born to rule the world)

Once you figure out your ikigai, let's find a way for you to attract the money you need.

Flirt with stocks

Let's start with the three most important words in personal finance: start investing early. Why? Because of the power of compounding.

Where should you invest? We're totally spoilt for choice. And in the face of multitude of investment options, most of us panic and avoid dealing with the complicated world of finance.

But even an ordinary plan, such as regularly investing in broad market index, can achieve extraordinary results. Running away from investing is not an option.

Lamba says, "Inflation is a killer once you you have stopped earning. If you have not invested wisely, it might well happen that the nest egg you kept aside to live on post-retirement may not even suffice for six months." He asks us to move out of our comfort zones and invest in stocks and other instruments.

Indulge with insurance

You have only one life. Insure it.

"The poorer a person is, the greater the need for insurance," Lamba writes. "Paradoxically it is the rich that are usually insured while the poor most often are not."

Term policies are cheapest, according to Lamba, who disdains mixing investment and insurance.

Besides life insurance, medical cover is equally important. Health problems can potentially drain away our entire life's savings.

"It is best to buy a health insurance policy at a young age," Lamba says. Before buying policy, check if the coverage is sufficient, i.e. the policy includes not only hospitalization but also pre- and post-hospitalization expenses and covers out patient department (OPD) check ups, dental treatment, maternity, and critical illnesses.

Romance your financial statements

Creating your personal balance sheet and profit and loss statements is hard (at least initially). However, doing so would ensure you have your entire financial life summarized in one place, and that would make dealing with monetary challenges far more easy.

"It will give you immense clarity about your own finances," writes Lamba. It "will help improve your control over money management."

Dealing with consequences of affairs

All affairs are expensive. Financial affairs are no different. They cost you taxes. So, should you hide your financial affairs?

Short answer is no. Because eventually karma will catch up.

"Attempting to save, and definitely evade, taxes is actually a mug's game," says Lamba. "One has spent all that time and energy (and most likely lost one's peace of mind in the process too) and in the end gained nothing."

Of course, plan your finances in a way that minimizes your tax expense. One way to do so is to invest in public provident fund (PPF).

"I have always felt that if one has systematically deposited money in a PPF account, starting relatively early in life, if no other retirement planning has been done, this account alone can suffice," writes Lamba.

That's it. To know more about Lamba, please check out his website: https://anillamba.com/

I don't recommend his book. I read it only because, first, I paid for it (sunk cost), second, I'm interested in everything finance and, third, I wanted to write an article on it.

Anil Lamba may accuse me of (financial) cheating on him for not recommending his book. I do love you, Anil. You're doing amazing work. It's just that this book isn't attractive enough. It just doesn't have the spark. The structure of the book is too boring. You get it?

I’m Rahul Satija, and I’m on a mission to help you achieve your financial goals.

Disclaimer: Any view expressed in the article is my own. The article is meant for only educational purpose. Please share your feedback at [email protected] .