Basic guidelines to make your money work

The stark truth about managing our money these days is that we are mostly on our own. Few employers want us around for 40 years, so our income is likely to have ups and downs. Saving for retirement is now mostly our responsibility, too. Health insurance, for those of us who have it and manage to keep it, requires increasingly large amounts of money out of our pockets. The list goes on and on.

           At the same time, all sorts of individuals and institutions have smelled opportunity and lined up to peddle their wares, resulting in an explosion of credit cards, bank products and advisors of various stripes. Some of this is helpful because competition has led to lower costs. But in other instances the result has been painful. Rising fuel and food prices along with tougher loan standards do not help.

           Given the stakes, it is hard to avoid the persistent fear that we have cannot find the right choices, even though they are out there somewhere.

           Here are five basic guidelines. Think of them as the first principles of guidance that can be useful in making just about any financial decision.

INVESTING IS SIMPLE: The author Michael Pollan offered an elegant seven-word mantra in his bestselling book In Defense of Food that provides clarity amid the bounty of choices on supermarket shelves: “Eat food. Not too much. Mostly plants”.

           Boiling down investing is a similar exercise: Index (mostly). Save a ton. Reallocate infrequently. For most of us, investing in mutual funds and similar vehicles — and sticking with them — is the hardest part of the mantra to

 accept. It would seem that with a wide array of choices, we should be able

to create portfolios that can outperform the market averages.

           The fact is, however, besting the overall market in most investing classes is nearly impossible over long periods of time. Sure, it may be fun to try. But if you enjoy that sort of thing, do it with a tiny piece of your portfolio. And remember to call it what it actually is: gambling.

           The rest of us should save as much as we can in a collection of low-cost funds. Divide the money among stocks, bonds and other investments according to your time horizon and risk tolerance. Then adjust that allocation occasionally. Opinions vary on the frequency, but most experts agree that adjusting the mix more often than every 6 to 12 months is unnecessary and possibly costly.

IT STILL MAY BE WORTH PAYING FOR HELP: Investing, however, is only one small part of your financial life. Mortgages, taxes, college savings, insurance and debt are a few of the hugely important tasks we have to figure out.

            Perhaps the best thing a versatile professional—whether it is a financial planner, accountant, stock-broker or lawyer—does, is provide discipline. It is difficult to get most of this stuff right and to get it done at the right time. Professionals help make sure it all happens on schedule.

            Most of us would rather avoid paying for help because of the sometimes steep cost that they come at. For people without large portfolios or those who need help with something specific, financial planners can be a big help.

PEERS MAY KNOW MORE THAN PROFESSIONALS: Financial planners may not have all the answers, or the best answers, all the time. Moreover, they tend to be stronger on core areas of money management like insurance and taxes and less so on day-to-day financial decisions.

            Thankfully, numbers of Web communities and blogs have grown up around almost every aspect of spending and saving. Travelers and collectors of frequent flier miles have Flyer Talk. Fat Wallet is terrific on credit cards. Another site, the Bank Deals blog, is a great resource for new high rate account offerings.        

            Reading all these sites regularly is impossible. But they are great for researching particular questions, and most of the expert consumers who congregate there are open to inquiries from newcomers (as long as you search the archives first to make sure the answer isn’t there already).

EVERYTHING CAN BE AUTOMATED: One of the great consumer-friendly innovations in the world of money in recent years has been the automation of bill paying. Practically every utility, mortgage lender and credit card company now has a way of getting its money each month without you lifting a finger. Most will take the money directly from a bank account, and many also allow payment with a credit or debit card.

            This has a number of advantages: no stamps, no envelopes, and no late fees. But the real gift is that you do not have to worry about getting it all done.

             Automating the payments can have some hitches. It is tempting to neglect to look at the bills once they start paying themselves. It is a pain to turn the whole bill-paying machinery off and on again if you switch bank accounts. And you need to be sure you have enough of a cash cushion in your primary checking account to prevent overdrafts.

HAVE THE TALK: As fewer people have pensions and more retirees live longer, an increasing number of people may need financial help from their children. The question is whether your parents will be among them. Trying to pry financial information out of your parents does not make for a pleasant conversation. But the fact is, we are entitled to demand some answers if our parents do not initiate the discussion themselves.

              This is not a case for callousness. They took care of us for 20 or so years, and we will take care of them, too, if it comes to that. But it is not fair of them to withhold warnings of deteriorating finances. If we do not know what is coming, we cannot help them plan for it.   





The committed Indian

India tops Asian nations when it comes to workers who are aware of their organization’s goals and believes in them

          The popular image in India of the average government or public sector employee is that he comes in a couples of hours late, spends an hour gossiping, goes for an extended lunch and then goes home. Very accidentally, he might end up doing some work. This is the reason the Sixth Pay Commission, which has recommended substantial pay hikes for bureaucrats of all hues, has come in for so much flak. 

            But though there is limited evidence, things may be changing. Go to a public sector bank and you are likely to see more friendly faces and fewer files. The fact that many banks are now listed on the bourses and have shareholders to answer to has brought in greater accountability. Besides, most people would like to work and wear a smile if given a chance. It is the philosophy of some political parties that the workers of the world should unite in idleness that has created a generation of drones.

            Young India is today confident that it can go places. And, in various surveys, it is emerging that this country is one of the most upbeat and enthusiastic. A recent Watson Wyatt study (see box) says that

India leads the Asian pack when it comes to engaged workers. Engagement means that the employee is aware of the organizations goals and believes in them. The level for

India was 78% against 58% for


Japan was the lowest with 39%.

            How times change. Some Japanese management techniques are still

being hawked in

India though studies show they are long-term failures. Japanese employees were committed salary men. Now they see themselves as exploited and insecure.

Sticking To commitments

The key findings of the Watson Wyatt Work

India survey:

Indian employees responded very positively when asked about their commitment, which was 20 points above the Asia Pacific norm. Commitment was driven primarily by job satisfaction and leader—ship. Compensation and benefits, and communication were rated as secondary drivers of commitment.


Similar to their Asia Pacific counterparts, the highest level of dissatisfaction for

India respondents was for compensation and benefits. This was followed by supervision, training and development, leadership and management effectiveness.


India was one of five countries above the norm on alignment, with more than 80% of respondents indicating they understood their companies goals and strategies and how their roles contributed to their companiessuccess.


India was higher than the Asia Pacific norm on enablement with more than 70% of employees agreeing they received the necessary resources and could access information quickly to do their work effectively.



            What makes Indian workers committed? The Work Asia study says that commitment was driven primarily by job satisfaction (which measured employeessatisfaction with opportunities to utilize their skills, learn on the job and do meaningful work) and leadership. Compensation rated as secondary drivers.

India was also one of five countries above the norm on alignment with more than 80% of the respondents indicating they understood their companies

goals and how their roles contributed to success.

            The reasons are in line with those of employees in other countries. A Watson Wyatt Work USA survey rates the factors that drive employee commitment as: trust in senior leadership (14%); chance to use skills (14%); job security (11%); competitiveness of rewards (11%); quality of the companys products / services (10%); absence of stress (7%); integrity of the companys business conduct (7%); and other fact—ors (26%).

           The survey also points out that the era where commitment equaled

loyalty to the organization is over. In the IT and BPO sectors, attrition rates

are high.

           One reason is that managements have failed to realize that todays youngsters are committed to their jobs, not the company they work for. Incidentally, committed workers mean better bottom lines. So even the hard-nosed numbers men should sit up and take notice of these studies. 

           How can you develop commitment? Here is what Bennet Simonton, author of Leading People to be Highly Motivated and Committed, said: To be committed to work, one must have ownership, one must be able to influence what goes on in the workplace. And to influence the workplace, one must be heard and reasonably answered by bosses”. Are bosses listening?            

Resume management

Spinning a Yarn

Many applicants lie about their accomplishments and professional skills in their resumes. The advice is just tell the truth

Stretching dates of past employment to exaggerating about professional and educational quail—fications are some of the common lies resorted to by job seekers to make they appear attractive to the employer. What these individuals do not realize, however, is

that by misrepresenting facts, they run the risk of damaging their careers.

           Some common lies include: stretching dates to cover employment gaps. Employment dates are often fudged to hide gaps in employment or a period of job-hopping.

           Enhancing job title and embellishing past achievements. Many prospective employees lie but previous job responsibilities. They exaggerate past accomplishments and professional skills. They claim bogus degrees, computer skills and language fluency to inflate their resumes. Some even claim to having been paid a higher salary at a previous job in a bid to get more money.

           Inventing employers and fabricating reasons for leaving the previous job. Providing fraudulent references. Many applicants submit incorrect information relating to their references and think that the potential employer would be too busy to verify them.

           Many think they can get away with these white lies and the company will not perform any background checks. On the contrary, may companies today take background checks very seriously?

           A white lie can follow you places and if discovered, it can destroy your career. If you lie in your resume, the prospective employer will presume you will also fib at the workplace. The next time you go job hunting, always remember to tell the truth. If you do not, youd better be well armed to back up those tall claims. 




Politics of Dismissal

Recognizing you are on your way out is one thing. Accepting it is another.

Jill Baker Altman sensed trouble brewing when bosses at her office headquarters started requesting a lot more information. Trisha Svehla knew something was wrong the day a new President invited all Vice Presidents on a finishing trip – except one. Guess who got excluded? The tip-off for Robert Moleskin came from a friendly office manager assigned to take notes at an executive committee meeting. She told him he had some strong advocates at the firm, but others felt he was a "bad fit". "She really spilled the beans," Moleskin recalls.

All three professionals were alert to warning signs when their jobs were in jeopardy, and they got out gracefully. They managed to walk out of the door more or less on their own terms, even though initially it wasnt their decision to leave.

"You write a new script for yourself, you create a new plan. You take those steps before you lose a job," says Svehla, a Human Resource Consultant and Founder of Downers Grove, an Illinois based firm.

But, it is not as easy as it sounds. Recognizing that you are on your way out is one thing. Accepting it is another. Says Altman; a Chicago based Strategic Staffing Consultant. "You may know it, but it is still shocking to have someone confirm your guess".

Hired for what she thought was a long-term turnaround, Altman worked less than a year at a large staffing firm when pressure mounted for faster results. She thought about the exit package she wanted and how to minimize any damage to her or the firm and its clients. Then, she wrote down what she planned to say and rehearsed it with her husband before going to her boss. "Now that you have decided that I am not a long term player, I thought that we were going to have this conversation any moment," Altman recalls telling her boss. "Maybe we should be having a conversation about how we can handle this gracefully".

Her boss jaw fell open. "I was two months ahead" of the decision, Altman, says. The up-shot? The company kept her on the payroll with benefits, including a car allowance, through the end of the year even though she stopped working seven weeks earlier. On the date that would have marked her one-year anniversary, the company even sent her a congratulatory key chain.

"There was a lot of goodwill for handling myself professionally," she says. "The way you leave an organization is almost more important than how you come into it," Altman adds.

Moleskin has never forgotten getting canned early in his business career, not because it scarred him for life but because it made him better at what he does now. The Chicago based recruiter says that knowing you are going to be dismissed "can be a liberating revelation".

You can stop angling for a bigger bonus or a plum assignment and focus on your next job. Chances are, the person who wanted you fired has won some kind of political battle, but you are trying to win a war no one else cares about because your employer is indifferent to what happens to you after you leave.

"People who stay enmeshed in ongoing office politics make a mistake," she says. "You need to manage the politics of dismissal. You cannot stop them from firing you, but you can make them pay. You need to use what leverage you can. In most cases, the person firing you hates being in that situation as much as you do. Often, the biggest leverage you have is guilt".

It took to months for the consulting firm where the worked to send a human resources officer to Chicago to let him go. The delay gave him time to prepare.

And, like Altman, he rehearsed. He greeted the human resources (HR) officer warmly, asked about her children and showed her the latest photos of his daughter. "Im disappointed because I really like working here, but I understand sometimes you have to do these things," he had told her. "Lets make sure the project needs are met and agree on what well tell our clients". He is convinced that his sympathetic attitude caught her off guard and made the firm receptive to his proposal that he stay on with full pay until he found a new job, working half-time on projects and half-time on his job search.

"They seized on it," he recalls. They even paid his annual bonus and accrued vacation. Mean—while, he made rounds of the firms consultants, asking for their help. "I gave them my story about why it did not work out, which they turned around and gave to my references. My good attitude moved people who were on the fence about me, both in and out my office".

Another project manager told him, "Im a little envious. Theyre paying you to find yourself a better job". Sure enough, two months later he landed a higher-paying job. Therefore, in such situations, caution and planning, are essential requirements.





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