Today I was invited to a debate by Gulf News (did I tell you that if GN wanted a devil's advocate they call me!), the debate was about personal finances and how people manage them? The question of the decade I thought. I haven't seen anyone who actually manages his or her finances in a way that it would leave them boyent at the end of each month. Of course I am not sure if you guys know that I am a financier, and a chartered accountant, I left this field after seeing the damage we can do to organisations; I am sure you read about the death of one of the big fives Arthur Anderson? Well that was the straw that killed the camel, that is when I decided I will give it a quit as I couldn't stand being in the company of a bunch who only really care about balancing the debits and the credits, or those that gamble in the stocks and convertibles market. I thought the best way to manage my future earnings is by following the Education provision route, so I started to teach, and to educate people about their best study pathways. So I kissed my past career goodbye, and embraced the new career, you can call me an outlier (not sure if you read the book, but the theory fits me well)I worked at it for longer than 10,000 hours, so I am almost perfect :)
Anyway, what we the debators realised is that almost 80% of the people fall under the heading of walking towards disaster, I.e. They spend more than they earn, they are constantly under tremendous loans, using their credit cards as a source of personal finance and also having a car loan, mortgage, personal loan, business loan, you name it they have it. And what these 80% do not realise is that they are falling in a trap, and to make it worse they also try to copy the johnses (not sure if this is spelled properly!), as they want to buy every new bag, shoes, dress and accessory also they want to go to every restaurant in town, live in the best neighbourhoods and spend weekends away in exotic locations, forgetting that one day they may lose their jobs and can end up in jail.
The other 20% of the people are those who take out some of their income to save it for future use. Boring!
Main reason for the problems is the bankers, they give loans left right and centre without checking the credit worthiness of the person and/or the employer. Employers can be in trouble too and they can make people redundant or liquidate, so a person can be out of a job in no time, we all remember what happened during the economic crisis when many companies just closed down or sacked three quarter of their employees.
So we all agreed at the end that there should be proper education to every one in schools and universities, banks should be regulated, credit checks need to be developed, goverment need to have better insolvency rules, and protection to individuals. Also we all agreed that people should think of how to increase their earnings rather than think of reducing their expenses. But how to encourage people to increase their earnings if there is no avenue for venture capital? So one of the people in the debate said that his daughter works for a venture capital/angel investors company and she can help, also there were two people that help both blue and White colour workers to save and invest in stocks and funds.
Personally I believe in investing in your own ideas, grew them and venture out. I do not believe in giving my money to a bank to invest it, as they will cheat and lie to you. I have a personal experience in this, but that I will leave to a future blog