We tend see lacs and crores worth of assets owned by our employers and companies who shares we hold but when it comes to our own assets leave aside crores most of us don’t even see a few lacs worth of assets and we have already reached middle age. Wondered why?

Life is such that most of us are driven by our financial circumstances. Normally we tend to think – This is all that I can obtain from what I have? One never really thinks in terms of – This is what I want to have, so how can I afford it?

It is not that we don’t know about this doctine or that this is some new age thought. We practice this philosophy in our lives practically each day. Say we take a particular road each day to work, we think – How can I reach faster? Say we feel we are overweight, we think – How can I reduce? So on and so forth. We go for many training programs from anger management to art of living to possibility thinking. We all use this “How can I” principle practically every now and then in our life. Strangely though when it comes to money and when we wish to buy something which we know we cannot afford we tend to get cold feet and label the event as destiny. Never do we think of using the “How can I” principle. This is why most people end up with barely 10% of what is possible during a lifetime.

What I am really talking about here is how you can drive your financial circumstances rather then let your circumstances drive you.

Let understand this with a real life example;

Say you wanted to take a personal loan. You would normally take a loan based on your income papers and start repaying via EMI’s. The question to ask is how can I have the loan without the stress of repayment? Well, how about taking a loan against some appreciating asset that you have? You get your loan and in terms of your cash outflow it’s all the same. The difference is not in your cashflow but in your networth. With a direct loan there is no change in networth. With a loan against an asset your networth also keeps improving. Further if you make good gains you could also use the gains to prepay your loan. The underlying statement here is that first build assets. The golden rule if that the more assets you have the more liabilities you can afford to have. But first build assets.

There are many reasons why we have been pre-conditioned not to think in terms of “How can I” in money matters. The problem is not with you it’s with our financial services industry which is totally product centric instead of being advice centric. What makes things worse is that products are sold based on history. As a result the advice available is rather shallow and what you may hear is “This product has been the best performer”, “This is the best product right now  – but the scenario may change in 2 months”, “Take it or leave it”, “Take it before its off the shelf, before its too late” etc. As a result people tend to buy tactics of the past hoping the future to repeat the past. Being stuck in time is another grave error. Yes history will repeat itself but the characters will be different. You don’t really need a financial guru or a financial astrologer you simply need a friendly pathfinder to guide you. All you need to do is to change your approach. Always ask yourself – How can I….? Think hard and you will always find a way in finance that is the beauty of finance – that there is always a way. Never think in terms of breaking or selling assets, increasing liability without an increase in inflow. Always try to keep what you have and get into the mode of preserving what you have and building more over it.

Yes in financial management you can have your cake and eat it too! All you have to do is ask yourself “How can I have everything?”