VOLUME V CHAPTER X

FINANCIAL LITERACY

HAVE YOU THOUGHT OF YOUR FUTURE

You go on working for 30 years. Then suddenly you realize that you have reached 60 and the day you complete 60 you have to retire no more going to school, no more monthly pay. With a college going son and a daughter to be married the future loan frightening. If you are a govt. Servant you will get only half a basic pay minus computation as your pension. You may get a lump sum computation amount, gratuity and earned leave encashment, your pension has become half. But your expenses suddenly can’t be halved over night. How to adjust expenses and how to manage the future commitments – This is the very big question looming large before most of the teachers.

            Even as we have to mentally adjust ourselves to a regular work less retired life we have to adjust ourselves financially also and this requires that we should start planning for retirement, for children’s education, their marriage etc right from the day after our marriage.

            The author remembers how much a Principal suffered because of his family”s profligacy that put him in external debt. He remembers money lenders waiting at school gate on the pay day. To snatch away his pay packet against the loan taken indebtedness was rampant those days which was either out of necessity or vanity. Some of the Hindi movies of the 60s, 70s, and 80s portrayed this very poignantly.

            To day the teacher’s salary is quite substantial but things aren’t better today. More money at an young age has led to a culture of spending and the advent of the pernicious credit card has induced an appetite and urge for spending without cash payment. This has become the big cause of inbebtedness today.

            Even as staff development (professional) is an important responsibility of yours. You are equally responsible for their financial solvency also. You have to train them in personal finance management. The problem of excessive spending has become the giant killer of Gen.Y. and the onus of counselling for sound financial management rests with you.

            The staff must be made aware that they should not jump jobs for the sake of a few hundreds. That they have to plan well with their current salary.

            One Teacher told the Author, “When my father requested me for a loan to buy a house, their long term ambition, I was happy I could help him. But the same time it led me to think that he could have planned for this earlier. Because I am afraid whether my children would be so kind to me later. So I started setting the financial objectives”.

            “ Many, inspite of being aware of this Dire need, do not invest their time to learn and manage their finances properly. Many mistakenly equate tax planning with financial management” says Jawahar Karthikeyan, Financial consultant.

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VOLUME V CHAPTER XI

PUT YOUR EGGS IN DIFFERENT BASKETS

You can think of Equity linked –up tax saving scheme ( ELSS) MFs- Mutual funds. Its advantage is it locks your investment for 3 years and a good scheme that can give you greater real returns. Under 80c, Investment of upto Rs 1 Lakh in ELSS are exempt from taxation. This investment in ELSS at one go is not the way to go. Financial consultants say the investment must be done in a systematic investment plans. One disadvantage of ELSS is that you can’t sell it half way through.

PPF – Public provident fund and NSC – National Tax savings Certificate are popular tax savers giving 8% interest per annum. PPF interest income is not taxable.

Your savings should be objective based. ULIPS ( United Insurance Policy) is ideal for creating a corpus for retirement or your children’s education. This is also covered under 80 C. In this returns are tax free. This also gives you a life cover.

Your tax planning will be incomplete without a health insurance policy ( Mediclaim) . It protects you from exorbitant medical expenses when family members fall sick. Premium upto Rs. 20,000/- is fully tax exempt under 80 D.

Further according to our sastras we have to allocate 1/16th of our income for charitable purposes. A sort of showing our gratitude to the society that help us lead a good life and to God through helping his poor, sick and needy children who are not fortunately placed like you. These donations are exempt upto 50% under 80 G. You may think of donating to social service institution like the Cancer hospital, Hindu Mission hospital, Sri Ramakrishna Math, Sri Ramakrishna Mission Students Home, Kanchi Paramacharya Vidya mandir at Kanchi which provides vedic and secular education. Udavum karangal, Sivananda Gurukulam at Kattangulathur ( both fine orphanages). You may also donate to your own school and college where you studied. Donations to the Prime ministers National Relief Fund. The Chief minister’s Public Relief Fund are 100% exempt. Please ask for the receipt along with the 80G exemption certificate given to them by the income tax department. Please check up if the exemption is valid for the current year as it is given for a period of three years.

If you have taken a housing loan it will qualify for a massive tax rebate under 80c upto Rs 1 lakhof the principal and under section 24, Rs 1.5 lakh of the interest repaid every year is fully exempt. For your benefit an abstract of schemes described above are given below

Scheme Tax benefit Limit Returns Lock-in period
PPF Sec 80c 70 k P. A 8% P. A tax free 15 years through loans can be taken from corpus
LIC ULIP Sec 80c Upto Rs. 1 lakh P. A . premium should not exceed 20% of the sum assured Returns tax free Lock –in 3-5 years. Better take a policy or a ………….. of 10 years
Pension funds Sec 80 ccc Rs. 1 lakh 1/3 tax be commuted. Rest must be invested in annualies that pay low interest % roles 10 years and above is good . But loans can be taken earlier
NSC Sec 80c Rs. 1 lakh 8% p.annum 6 years
Bank funds Sec 80c Rs. 1 lakh 7.5% variable 5 years
Post office time deposits Sec 80c Rs. 1 lakh 7.5% p.a 5 years
Medical insurance Sec 80D Rs. 20,000 To be weighed against hospitalization charge To be renewed every year.

Young people can opt for higher amount.

For older person more than 75K not allowed.

Premium in excess as you advance to age

Housing loan principal, stamp paper charges and registration Sec 80c 1 Lakh For the devotion of the loan
Housing loan interest Sec 24 1.5 lakhs Duration of the loan

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VOLUME V CHAPTER XII

FACTOR IN INFLATION

One thing you should remember, your money is not the same some time later. If you invest Rs. 2 lakhs in a bank FD RS. 2,00,000 at an interest rate of 7% then a year later you will get Rs. 2,14,000 but it will be worth much less. Don’t blame the bank. It did not lessen the value of your money. The villain is the inflation which has reached the double digit and surreptitiously eaten away your money’s value like the white ants. A simple inflation rate of 6% p. a. is said to value the real value of your money in 12 years. This is biggest risk of all. Normally we don’t take this in consideration. Since the rate of inflation differs for different products and services you have to factor in different rates for different types of investments when you want to invest for your child’s college education or daughter’s marriage. You have to consider the possible rate of inflation at that future point. So the cost if it is Rs 10 lakhs today. At that time it may rise to Rs. 25 lakhs. A marriage costing Rs. 6/7 lakhs today and may cost you 12-14 lakhs at that time.

            To take care of your financial transactions, you can take the help of a Certified Financial Planner or Money Manager who will advise you on investment plans. They will track your expenses, loans, investments, credit cards, insurance, they take care of minute details as well as your financial plan. After retirement, even if you won’t have any tax liability you have to file your annual IT returns and more so if you have additional sources of income other than your pension. For the last 10 years the author had availed the help of an auditor who collects all the information for the whole year from the author, collates them work out the IT returns, get it typed and signed by the author. Finally file it with the It department by the due date. A Huge load is taken off the authors shoulders by his auditor – of course for a fee.

            Will you now sit down and start thinking about the future of the present and the present of the future ? Forewarned is forearmed!

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ONE WHO KNOWS (VOL 5 – CHAPTER X, XI & XII)

– Dimensions of the Life and Work of a Principal –

525) One who knows that an institution’s value system is the guiding light in its hour of anguish, darkness, confusion and self-doubt and when faced with a moral dilemma.

526) One who knows that a value system builds confidence, gives peace of mind and increases energy and enthusiasm.

527) One who knows that openness to new ideas, meritocracy, speed, imagination and excellence in execution are the 5 time invariant and content relevant attributes of success.

528) One who knows that leadership is about creating self-belief, confidence and make the staff achieve miracles, dream the impossible and realize it.

529) One who moulds a staff team who have a sense of respect for their competitors, have a sense of paranoia that keeps them on their toes and also have a sense of humility about what they have achieved.

530) One who chooses a dream, goes after in confidently and creates a life that he will be proud of in the years to come.

531) One who is a thoroughbred professional – who draws a clear line between personal and organisational resources, treating all his colleagues with respect and dignity, being issue based and not personality based, establishing person independent rules and procedures and showing integrity and honesty in all transactions with all.

532) One who knows that much respect for his higher officers, leaving something for himself.

533) One who is an optimist who sees an opportunity in every difficulty.

534) One who knows that

“Mind may become dumb,

Thoughts may become still,

Emotions may get dried up,

Feelings may get stalled,

Heart may become hard,

Reason may disappear,

When your body directs your head.”

535) One who tells his staff: ‘a teacher is one who converts a seed into a tree’

536) One who knows that during a world war II the French devised a triad system of dividing the injured soldiers like,

Likely survivors

Borderline cases

Those who would not survive

To decide who should be treated first and like that students can be divided into high achievers, average achievers and low achievers but with a difference that all the 3 groups should be given attention and care according to their intellectual level and need.

537) One who knows that the principal must be invisible, but yet able to identify issues facing the staff and students.

538) One who asks his staff to teach in such a way that it will not disturb the silence in them from which it came.

539) One who tells his staff that people will believe them only if they first believed in.

540) One who advises his students that they should be like a Bharatha ( in Mahabharata) who even thought he had not committed any mistake, accepts that he had committed a mistake.

And not like Vali who committed a mistake and later accepted it before his death or like Ravana who committed a mistake and didn’t accept it.

541) One who tells his students that when a teacher sees his student occupying a high position he teaches should say : “I have lived before my death.”

542) One who knows that he has to respect his staff for their knowledge, skills, personal life and their ability to add value to the school, if he wants to regain them

543) One who knows that as Principal he should not be disturbed by anything.

544) One who asks his staff to train their students not just to give answers but to question their answers.

545) One who knows that negotiation can take place only with clasped hands and not between two clenched fists.

546) One who knows that work can be service while service should not become work.

547) One who knows that he should not enter into a turf war with the neighbouring school, like the one between Eurekha forbes and Kent in the water purifier market. And knows that he should become the president of the education science.

548) It will take a great combo if the Principal is aggressive and results driven while the Vice-Principal is keen on strategic thinking and planning orientation.

549) One who tells his staff that it is their job to make the ordinary seem extraordinary for the pupil and yet make it appear within the grasp of his little ages.

550) One who knows that he and his staff should grow up together.

551) One who knows that he must make his school a stradivarius for the beautiful music of imparting education.

552) One who believes that “ Students never fail, only teachers fail”

553) One who never practises ‘double think’.

554) One who believes that no one’s performance is beyond review even as Rich Lesser took over as C.E.O of the Boston commonwealth group after he was elected by his peers.

555) One who remembers what Rich Lesser said when asked how he will know that he is on right track.” Don’t worry, he has a board of 800 directors – who are not the way “not shy”

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“When the sun rises and shines,
Not all the lotus buds in the lakes and ponds bloom,
Only those that are ready, do.
The rest have to bide their time,
But all are destined to bloom,
All have to fulfill that destiny.
There is no need to despair.”  – Sathya Sai Baba