Lower laws of money:

1. Get Insured

Insurance is a boon of the modern world. For a minimal cost we can ensure that in case of any untoward incident, we are back to normal life with less difficulty. Probability theory has helped Insurance companies formulate ideal cost of insurance that benefits both the company and the Insurer. Though there are all sorts of insurances now, below two are related to almost everybody.

• Have a good life insurance. Term insurance plans are best as they provide good life cover at a very nominal cost. The point to be noted is that not every family member needs life insurance. Decide the term insurance amount based on your current financial status. If you have left enough for your family, then you should probably update nomination documents and will.
• Health Insurance: Have a good health insurance for your whole family. With ever increasing medical costs it will help cover medical and hospitalization expenses.

It would be foolish to not take benefit of this wonderful gift.

2. Educate

Poor people are unable to afford good education. Poor education leads to low quality and low sources of income, which again leaves little for them and their children’s education. This forms a vicious cycle of poverty. This is also true for every one in general.

• Online Education – Though education has become costly, internet has made almost all forms of education affordable and even free. Do join online courses on subjects that you love.
• Financial education – Knowing how money works, avoiding money traps, where and when to invest are an important part of education.
• Knowledge – Knowledge is Power. If we remain ignorant, we may not know avenues of income. We also keep losing money without our being aware of it. We must also keep track of our income and expenses and we have many handy tools/apps for this now. I use Google Keep with a Budget note having details of expenses, payments for and receipts due from savings/investment for the month/during the year ahead. I update it every few days and get to know my current financial status.
• Experience – Experience is the best teacher. It is also the best form of education and first hand knowledge. This is the application part of education and knowledge. Nothing can beat the knowledge gained by doing things. The more you do things, the more you gain. This is the reason experience forms a major and important part of everyone’s resume and appraisal.

Any form of education gives at least 10 times returns, that is 1000%. Some of them will provide you income forever.

3. Avoid Debts

The more you are in debt, the more you get into debt.

Large debts, leave you with little space for unavoidable expenses, forcing many of us to get into more debts. This is yet another vicious cycle of poverty that affects most of us. The more you are in debt, the more you get into debt.

• Reduce debts whenever possible. It would set you financially and mentally free.
• Signs of trap – If easy/pre-approved loan, low EMI, zero down payment and free credit cards attract you, then you are unconsciously being drawn into the debt trap. All banks and consumer goods will prominently show these banners and put up Ads to attract people.
• Loans are not bad – Getting loans and easy EMI is a bad idea, unless the utility has a value higher than the loan amount. Home loans may be considered having a higher utility (but not always) as prices rise, you get to own a house that won’t be possible with rent, low interest rate, tax concession, etc. Businesses take loan, but earn more than the interest they pay to banks. Thus their loans too have a higher utility value.

4. Saving and Investment

It is important to set aside a part of your income as savings. As a general rule, the savings should be at least 30% of your income.

• Saving for a fixed period – A part of your savings (usually 3 months income) should be handy as short term savings. Another part of your savings should go into medium term savings to buy car, house repair, child education or marriage, etc. A part of the savings should go into long term savings for retirement.
• Saving with purpose – Here we set aside money each month, for each item with it’s period and purpose in mind – child education, house repair/renovation, new vehicle, smartphone, furniture, home appliances. We can easily determine when these expenses may have to be incurred and have funds ready for it. For eg. I want to buy a new smartphone for Rs.12000/- next year, I will set aside Rs.1000/- each month. There are various terms for this type of saving but rarely used for household budget – depreciation, sinking fund, reserve fund, repair fund, building fund. This method not only helps us from getting into debts for known expenses (like the smartphone example), but also gives us interest above the saved amount. This interest may seems small, but can pay off our insurance cost! Our rule 1 right?
• Don’t do what the banker says. Do what the bank does.
  I was in debt full of loan for every need and paying a huge interest to bank from home loan. I realised how much by interest the bank was earning every year. I could do what the bank does and earn at least half the interest for the same amount from Fixed Deposit.
• Compounding Power – This is another wonder of the modern world. The longer we save our money, the faster it will grow, with compounding interest. For eg. Rs.10000/- saved now at 8% simple interest for 25 years will yield Rs.30000/-, while with compounding interest it will be Rs.68500/-.
• Mutual Funds – Mutual fund is yet another marvel of the modern world. It has put the power of investing in the hands of common man, while also benefiting all businesses. While we talked of saving above, investing is saving with the purpose generating another source of income. Recurring Deposits and Fixed Deposits are investments as well which provide safe and assured returns but at a lower rate of interest. Mutual funds on the other hand are assumed to return on an average 10-12% return on investment and also much higher for most people. Lower returns and inflation has put Recurring Deposit and Fixed Deposit into savings category. It may be a marketing strategy to sell more mutual funds.
• Invest and then spend, not spend and then invest what remains or we may never have enough to save each time.
• Build assets and reduce liabilities. Assets build our income, Liabilities build expenses. Every time you spend categorise it into asset or liability. Education is an asset, a perfectly working smartphone is an asset if you utilise it correctly. A vehicle may be an asset or liability.

It is advised to do your own maths and not go by others numbers and advertisements.

Higher laws of money:

1. Money is not real.

Remember, when reality bites, it bites real hard and make us feel reality is really real. Don’t fall for it.

It is in our minds. We can only have as much money as we can ever think of. Those who think in 1000s earn 1000s, those who think in Crores earn Crores. THINK BIG. Have money in your mind in all forms, see it, feel it. I had a picture of money falling from sky in a garden as my desktop wallpaper for some days at a time when I was in financial trap and there was no logical way out. I was out of the trap soon. Remember, when reality bites, it bites real hard and make us feel reality is really real. Don’t fall for it. Having no money crushes us mentally. Life will make us feel money is real. Having an external tool, like the desktop wallpaper, helps at such times.

2. Dream and Passion

When dreaming, don’t let reality come in between. Dream BIG.. limitless.”

Dream and passion will take you where nothing else can take you and no one else has ever gone. One rule I go by – When dreaming, don’t let reality come in between. Dream BIG.. limitless. Then again, when you are dreaming, why not also find ways to make it real, Why just dream in vain? When you feel you are working really hard for something, realise that you are not passionate. When you are passionate, you won’t realise how long and how hard you have worked. A desktop/smartphone wallpaper works here too. Keep a picture of your favourite idol. It sends unconscious signals to achieve our dreams/goals.

3. Be morally right

There is nothing that will stop you from losing whatever you have earned, wealth, health and respect if you are not morally right. Be morally correct and keep all your papers right. Have a moral way of living. Law of karma is very strong, and no amount of belief and visualization will help if our acts are wrong. On the other hand, doing good karma ensures we have a good life ahead in all aspects .

4. The Art of Giving

Yes. It is a part of law of karma that is directly related to money, also known as dana. The more you give, the more you receive. Everyone will recommend different percentage of earning that one should donate. Some will recommend giving out freely, with both hands, even that act of thinking of giving has profound effect. Whom you give and how you give also matters. Giving to a worthy recipient with pure heart has more beneficial effect, than otherwise.

The lower laws are ruled by earthly logic, the higher laws defy all logic.

Both the lower laws and higher laws are important. The lower laws are practical tips of growing money, that help to keep us confident. It also helps to make our dream, passion and belief stronger as it brings our dream into domain of reality. We cannot imagine something that our mind rejects as impractical. The higher laws on the other hand, can grow our wealth beyond what is possible with the lower laws of money. The lower laws are ruled by earthly logic, the higher laws defy all logic. There are successful people of both kinds.

Mind can Matter. Get both the lower and higher laws of money work for you. Wish you a life of your dreams.