How increasing earning and wealth have made personal financial decisions truly ‘personal’

How increasing earning and wealth have made personal financial decisions truly 'personal'

We attended a close friend’s wedding reception last month. It was a small group of friends, and he and his wife moved around talking with us freely. After the guests left, he told us that his new wife was a courageous woman to have met him on a matchmaking website only six months earlier, and to have made up her mind to move to Kenya with him. They are both in their late 50s, and have been widowed and divorced earlier. They had agreed on their terms of engagement in a well thought-out legal document.

We were talking about how things have changed for the better, with many middle-aged people making independent choices about their lives, time, money and interests. The conversation shifted to social media posts that show middle-aged people learning music and dance, art and sport, and about how they travel and tour, feeling free to pursue their old and new interests.

As is my wont, I see all of this as some measure of easing up with money. It takes a sense of security about money to let go of fears, apprehensions and worries about the future, and focus more on the present. There has to be a shift from scarcity mindset to generosity mindset to be willing to spend, to be positive about new things and focus on oneself without guilt. There is enough for everyone; everything is plentiful now and shall be in the future; and there is no need to suffer and be a martyr. That feeling is liberating.

There have been several positive outcomes for the common man, for his income and financial security after the opening up of the economy and a shift to capitalistic model, gradually in the mid-1980s, and significantly in 1991. The dramatic impact we see around us today has been due to the traction this liberal view of the world enabled over the many years hence.

Personal finance has become quite personal, as it rightly should. My friend and his wife have a detailed pre-nuptial agreement. They do not want to access or inherit each other’s wealth. They understand their mutual needs, complementary roles and expectations. There are no other strings attached. They are happy to be in the present, spend their money and time together, and are very aware that the relationship ends when either of them passes. We all wished them well. A very well-curated financial arrangement indeed.

While thinking about the positive aspects of this story, I was able to bring together many examples of personal financial strategies catering to personal preferences, as we now live in a world where security about income and wealth have gone up. It is routine for spouses to have distinctly three bank accounts—his, hers and joint. It is normal for friends to split expenses, even if each is immensely capable of paying it all. There is dignity about money and its use, which makes life pleasant.In this world of innumerable small entrepreneurs, who make money decisions every day, the flexibility about allocating money has also increased. The vendor who now gets money into his bank account, has a clear sense of what he earns, how seasonality works, and how his business cycles operate. He knew all this intuitively earlier, but now has numbers to back it up. His ability to offer deals and discounts, credit and advances has gone up. That also reflects in how he makes decisions about his work hours, his product and service choices, and his ways of spending the money he earns. Nothing helps personal finance as much as the ability to be in charge. We see it happening routinely around us.What has not changed, I ask myself. In the earlier world of scarcity, we needed one another much more. There was strength in the relationship-based culture that poverty necessitates. We had to look out for one another. Research shows that as one moves up the economic ladder, one seeks more privacy and space, and begins to distance oneself from others. This is not necessarily better, but a transitional outcome. We still remain rooted in a relationship-based orientation to money. We remain informal, approval-seeking and community-oriented. Social conditioning still determines a lot of our money decisions.

In a world of limited opportunity, gratitude reigns. We imbibe qualities like deference and bow easily to power. We don’t question inequality, but assume that some could be more deserving than the other. In the new world of wide economic opportunity, we are more equals than before. Anyone can become rich. But we have not made that transition. We remain somewhat feudalistic in orientation, hero-worshipping at heart, and accept entitled behaviours without much protest.

This translates into negative outcomes with respect to money. Crony capitalism unveils its ugly face as some are more equal than others in our books. The allocation decisions in personal finance suffer when we don’t check entitled behaviours by others—parents, children, spouse, neighbours, friends, relatives. The inability to be transaction-oriented hurts this even more.

When many are able to speak up for themselves and claim the first right over their money, we must see a drop in exploitative practices. We must see higher ability to make independent choices. We must see confidence arising from the availability of alternatives. We see some of it around us, very routinely—people take career breaks, change professions, learn new skills, quit work and start businesses. However, exploitation, fraud, malpractice, and trust deficits continue to prevail as they did in the past. We are too far away from level playing field and the rule of law.

What is heartening is that the transition is everywhere around us. The confidence about spending and earning is most visible. Beneath this layer, the ability to speak about money and make money decisions that matter to one’s well-being, are promising. My friend and his wife have found a deal that is fair to both parties. I wish this is an indication that equitable, transparent, information-based decisions about personal finance are being made more than ever before. There is a reason to celebrate that.


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