Learning v/s Education in Financial Planning

Posted on March 13, 2011 by Ranjan

When you understand the difference between learning and formal education, you will suddenly realize why financial literacy and education efforts does not work.

Let me start with a question. Do you learn driving or do you educate yourself yourself on the subject of driving? Also read, Who is driving your money car?

Learning is commonly defined as a process that brings together cognitive, emotional, and environmental influences and experiences for acquiring, enhancing, or making changes in one’s knowledge, skills, values, and world views (Wikipedia)

My understanding of formal education is that it focuses on just information and knowledge. Another post on this is Academic Skills v/s Life Skills

Here are a few thoughts/quotes:

“Formal education will make you a living; self-education will make you a fortune.” Jim Rohn.

Education is the ability to listen to almost anything without losing your temper or your self confidence. Robert Frost

The ancient Masters didn’t try to educate the people, but kindly taught them to not know. Lao Tzu

I also believe in “I want to learn, but not to be taught” feeling.

That’s why I don’t want the RupeeCamp to be just another financial literacy/education effort. I want to start with an awareness of our mental money story and end with clear financial decisions. Join us in India’s first learning and implementation program on personal finance

Coming Soon! RupeeCamp "Financial Planning Workshop". "Join us"

Welcome back! Join me on this journey to improving our financial IQ and sharing what we know. Updates at RSS feed or Email. And spread the word please Thank You!

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Who’s Driving Your Money Car?

Posted on March 12, 2011 by Ranjan

While talking to a group of Engineering students today, I gave them the good news that you don’t need to be an automobile engineer to drive a car. (Okay, you knew that already! :p )

And it applies to driving our money cars too. We don’t have to be a CFP to be able to drive our money car.

When we drive our cars, we essentially focus on 4 things.
1. Be able to handle the steering.
2. Be alert on the brakes.
3. Be able to change gears/clutch.
4. Step on the accelerator.

So with our money cars.
1. Maximize Income
2. Optimize Expenses.
3. Optimize savings
4. Maximize investments.

Often, the only thing people are interested in learning is stepping on the gas, err… investments. May I remind people that investment is just one component of personal finance and there are other things that should catch your attention too.

Type of Drivers

Let’s go back to drivers. Ideally, You would like to have a chauffeur driven car. Also that driver should not be using your car surreptiously and getting inflated maintenance bills or selling petrol/engine parts. Good luck with finding that kind of drivers as they arent’s easily available. Moreover, you should be able to afford them. They don’t come cheap.

If the drivers that you get do not charge they must be making money out of your car someway. There are some pointers above.

Even if you get a cheap driver and pay him adequately as per his qualifications, the driver may harm your car by driving rashly.

The last option is to drive your car yourself. Some people would like to learn driving by a trained driver. Others (like me) can learn it themselves. Sometime, the hard way!

Who’s driving yor money car?

In India, the 3 million insurance agents, MF Advisors and Brokers are driving your money car. Some of them are good, but they would form a miniscule %age of that 30+ lakh figure. 5-10%, is my guess.

There are some CFPs who are good and they can be your chauffeurs for your money car. How to find them and be able to afford them is the challenge.

How about learning to drive your own money car? You can learn it yourself, it’s not a big deal if you ask me.

But you might commit some mistakes and there’s no one to correct you. (Sidenote: I learnt driving myself. I started with the third gear instead of first in my new fiat car, circa 1995 and perhaps damaged some parts!)

How about taking some driving lessons from a trained money driver? Yours truly faces the question of choosing between
1. to be a money chauffeur for some people or
2. helping a lot of people learn to drive their money car.

I want to and have chosen to be your Personal Money Car Trainer. (Nice designation, no!, PMCT!!)

Join my RupeeCamp mailing list, if this sounds interesting. And tell all your friends too, because this kind of thing has not been attempted before and I would need all your support. Thanks.

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Information & Technology and Their Purpose

Posted on February 22, 2011 by Ranjan

What is the meaning of information, and what is its purpose? Dr. KC Chakrabarty, Deputy Governor, RBI asks in his speech on “Beyond CBS, Fast Forward to Bank 2.0″. Excerpts:

Peter Drucker in the New Information Revolution has said and I quote ‘The next information revolution is forcing us to redefine what business enterprise actually is— the creation of value and wealth.’ But it is not happening where information scientists, information executives, and the information industry in general are looking for. It is not a revolution in technology, machinery, techniques, software, or speed. It is a revolution in CONCEPTS-internet, web etc. It is age of the ‘Prosumer’: producer and consumer of information. This Prosumer is you- a web user who creates and uses content and information on the web. So far, for 50 years, the information revolution has centered on data—their collection, storage, transmission, analysis, and presentation. It has centered on the “T” in IT.

Read the full speech for an interesting perspective on the use of technology in Banks.

To my mind, information and technology have their limitations when it comes to personal finance. You don’t need too much information, which can easily lead to decision paralysis. Technology helps in tracking and making available all the information but in no way can take financial decisions for you.

In personal finance, you need to use the tools of technology and information to make optimal financial decisions. It’s important to be aware of your own behavioral patterns too.

In the case of personal finance, the purpose of information is to create value and wealth.

That’s what we always bear in mind while we are building RupeeCamp. Check it out.

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Happy Saraswati Puja

Posted on February 8, 2011 by Ranjan

My perception of Saraswati is as the Goddess of Learning. I have also been told that she is the elder sister of Lakshmi, the Goddess of Wealth. So Lakshmi follows Saraswati all the time.

So, if you have the right learning, wealth follows you wherever you go!

And learning is not about rote learning, cramming a lot of data and information but it’s also about inculcating the right attitude and temperament.

Learning is about imparting knowledge and facilitating behavioral change. And learners do not want a course just to impart knowledge. I think learners should actively seek to understand their behavior and .action oriented outcomes after taking the course.

So while I’m actively designing a “Smart RupeeManager” workshop on, I want to spend an hour where I say that it’s all about your mind. The story one has about money in their mind affects their money decisions. This story has been there with you right from your childhood. And it’s time to be aware of this story and maybe tweak it a bit, in sync with the modern times!

And once you are aware of your psychology of money, the next steps of taking financial decisions like the retirement, family security and children’s education/marriage, etc becomes easy!

What do you say?

Happy Learning! Happy Saraswati Puja!!

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Stop Your Brain To Take Quick Investment Decisions

Posted on January 28, 2011 by Ranjan

That’s what the book, Your Money & Your Brain by Jason Zweig says! Zweig simply points out that making investment decisions is one area where intuition and snap judgments simply don’t work and where our first reaction is usually the wrong one.

Read the review of the book here.. Excerpts:

Zweig’s basic premise is that our the function of our brains evolved to serve early humans in their quest to survive in a sometimes hostile world. While few can argue that humans have succeeded in dominating the planet, our brains haven’t quite kept pace. We still react to investment news and make decisions with the same mental firmware that allowed our forebears to avoid getting eaten by large carnivores, and that often leads us to poor investment choices.

Zweig points out the foibles of our investing brains, which are programmed to find patterns in the world around us. That may be good for coping with the natural world, but it is less useful for investing. For one, we leap to conclusions. If something happens twice in a row, we automatically project a third occurrence. We do this automatically and unconsciously.

Our “prediction” circuits are driven by the release of dopamine, a powerful brain chemical related to pleasure and rewards. This is one reason why people are drawn to stocks that keep going up; unfortunately, this neural extrapolation is usually setting us up for a fall.

So stop taking instant, impulsive decisions about your finances. Attending a “Personal Finance Workshop” would help!

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Want To Learn, But Not To Be Taught

Posted on January 20, 2011 by Ranjan

As I traveled across scenic Raigad, talking to students about personal finance and investing, I am constantly reminded of my favourite quote:

I want to learn, but I don’t want to be taught

Learning and Teaching is intertwined but we need to be aware of the thin line separating them. I don’t know a person who wants to stagnate or not to learn and improve. At the same time, we all are put off my people preaching to us. “Don’t tell me what to do, I know what to do myself”, is a common refrain.

Here’s the reason why I loved interacting with the students: Research shows that we retain much more when we play the role of teacher than when we play the role of learner. Why? It forces us to become active. It forces us to take initiative and accept responsibility.

Here are a few things that were reinforced in me while I was teaching personal finance:

1. Like the iceberg, information/knowledge about personal finance is just 1% of your money management skill. Your willingness to learn, your attitude towards money, awareness of your life/financial goals and willingness to improve is what really matters.

2. Respect the students and the students will respect you. It’s foolhardy to speak from a pedestal where you think the audience doesn’t really know what you are talking about. Today’s students are smarter than what I was when I was their age. But I do have the advantage of experience. With this understanding, I felt I could connect with the students. And even though I do not possess great oratorial skills, the students gave attention and I could feel that I drove some basic concepts into their head.

3. Life is much more beautiful in the rural areas. Simple, natural and beautiful. The mad rush in the cities is so much stressful. And as I said earlier, they are capable too. Remember, majority of India’s CWG/Asian Games medals came from villages and small towns.

On another note, though on the topic of education, Deepak Shenoy and Shyam Somanadh have launched MarketVision, a financial education site with videos on Money, Markets and Investing. It is a great resource on investing, go check it out.

As you may be aware, I am also working on building an educational resource on personal finance. I am veering towards the behavioral aspects of finance and want to build games, simulations and immersive platforms. This is because as I said earlier, money management skill can be built on two components which has 1-10% information/knowledge and 90-99% behavioral aspects. And I feel that a lot of those behavioral aspects can be streamlined and automated with the things that we are building!

I’d really appreciate your feedback, thoughts on building a learning platform. Thanks.

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Teaching v/s Preaching

Posted on January 5, 2011 by Ranjan

In the last two days, I had mixed experiences while talking to a group of students during a market awareness campaign. (by SEBI through CGSI). While few students were interested to learn, most were a captive audience waiting to get a certificate at the end of the session. I was more optimistic last time when I talked to the students.

Teaching to an unresponsive group, preaching instead of teaching became an easier option.:)

Trying to teach someone something when they aren’t ready is a lot like feeding an infant. Usually, most of the food winds up on the head, face, hands, clothes, floor…anywhere but in their mouth.

Then once in their mouth, only half of it is actually digested.

Now contrast that to teaching someone who is ready. They devour everything in sight and ask for more. Like you, for example!

I have been interested in designing an effective learning platform on personal finance. It is not just about building a website, uploading resources, pdf files, presentations alone. If that was the case, SEBI’s Investor website with it’s resources would be enough. Better than the above website is NISM’s InvestorFirst website

I believe that great learning experiences would include creativity, humor, stories, collaboration, communication and simplicity.

The tortoise/hare story was one small example of what I want/plan to do. I have found some very smart people to collaborate on building a learning platform on personal finance.

I know for sure that I do not want to get into preaching.

Infact I want to learn from you guys who are interested in learning. Please help us with your feedback and suggestions on how to build a learning platform on personal finance. Please! Thanks.

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