What did Mamma the Economist teach us?
Addressing a conference of financial analysts more than 15 years ago, a leading journalist commented that we pick up negative aspects of life from our fathers. For example, qualities like greed, leverage, expediency are all qualities inherited from fathers. He added that, people pick up positive attributes like ambition, prudence, courtesy and empathy from their mothers. The journalist may have been a tad harsh on fathers but the real point was that we overlook the role of mothers as economists. Here are financial lessons mothers teach us.
1. Understand your incomes and expenses
Mothers teach us, even as kids, that expenses should be carved within your income. It is like cutting your coat according to your cloth. Sounds like basic wisdom, but we rarely apply simple things in practice. Mothers carry their income statements in their minds and any decision to buy or not to buy something is almost immediate. It is with this state of readiness and consciousness that all financial management begins.
2. Mothers love bargains and so should you
This is not only applicable to shopping but to every purchase; be it shares, gold or property. Most mothers have a basic principle that if something is worth buying, it is worth buying cheaper. This makes economic sense even for investors because you often tend to follow the herd instinct and buy and sell with the crowds. As mothers would say, wait for the right price, otherwise it is not worth buying.
3. Debt is bad and defaults are worse
Most mothers tend to be averse to debt, and rightly so. Mothers teach children never to borrow money and if they borrow, to return the money immediately. While debt exerts financial pressure, delays and defaults have social consequences as you lose your standing in the society. CIBIL and credit scores may have come much later, but mothers have been harping on timely debt servicing for ages.
4. What you want is not what you need
This is one of the most important economics lessons that we learn from mothers. Compulsive shopping is a norm these days, but the basic test you need to apply is whether you want it or you need it. Want is something social or personal, need is economics. Most mothers channelize funds very smartly because they are able to draw a line between what the family members want and what the family needs.
5. Stash away for a rainy day
We all wondered how mothers would always chip in with cash when the family faced an emergency. That is because mothers always stash away small amounts from birthday gifts to grandfather’s gifts for a rainy day. This is a very good example of sound economics; why you should not spend just because you have the funds.
6. Little savings matter a lot over time
We profess the merits of MF SIPs but forget that mothers used to make those small savings for their children’s marriage and education right from an early age. The instruments may have changed from gold to mutual funds, but the concept remains the same. Think deep into the future, because you never know how it could be.
7. Be honest and share when you can
Mothers tell children that it is important to get up in the morning, look at the mirror and confidently say you did you best. Mothers lay emphasis on qualities like honesty, ethics and sharing of gains. if you look back at businesses that went bust, it was mostly for one of these reasons. When your mother spares a dime for the poor kid or treats your maid with dignity, she is actually trying to instil in you that real economics lies in sharing too.
8. Have a parallel source of income
We admire Warren Buffett when he talks about a parallel source of income. Mothers have been doing this for ages. You may have found your homemaker mothers also contributing to the family kitty using skills in teaching, music or even tailoring. Let us conclude with a small story.
A family had fallen into bad times but managed to improve its fortunes substantially. During the bad phase, the mother had taken up tuition classes to make ends meet. The daughter was surprised when she found her mother continuing tuitions. Now we don’t need the extra money, why do you still take tuitions, asked the daughter. The mother’s response, “Good times don’t last, but good practices do”. That best sums up mothers as economists; conservative, pragmatic and evolving too.
Here is wishing everyone a “Happy Mother’s Day”.