As we saw in the opening episode of this blog post housewives present a typical example

of insufficient financial awareness and it will be a service to society if sincere efforts are made to

equip them with sufficient financial awareness. The reasons that most housewives keep away

from family finances are:

The male earning partner does not encourage her to participate in family finances.

The wife herself is not keen on managing the finances and places total faith in her spouse .

Both of them are not very educated and the survival itself is difficult with limited income

One or more reasons. maybe present in each family but it does not mean that the situation should

continue like that. Irrespective of the family income and education it is important that the parents and

adult children sit on the salary day and discuss the financial plan for the ensuing month.Details of

income and expenses etc, should be transparent which will make the growing children aware of the

family .Once this is done one person in the house should accept the responsibility of wring the family

accounts. Accounting in simple terms means observing. When we write down the family accounts for

money inflow and outflow we start observing what happens to the money that comes in to the family.

This observation should be applied not only to money but also to our thoughts,words and deeds as well.

once writing accounts is stabilised then we can see where we spend more and if there are any unwanted

items on which money has been spent the same can be regulated in the following months.


While it is natural every one wants money we don’t have a definite idea about how much money

we may need for each important mile stone occasions going forward in life. For example a young

couple who are newly married and live in a joint family need money for monthly family expenses

houserent etc which is a normal outgo.But as they go forward become parents they may need additional

income which may not be available immediately as the salary income is inelastic and is likely to

increase at a much slower rate than the expenses.To avoid any problem at a later date the couple

shouldvisualise the situation in money terms and arrive at the income that will be required two or three

years hence and find out ways to increase the inflow and or increase their monthly savings. Each family

should be ready with the estimated requirement of money and when the same will be needed. While

planning care should be taken to account for inflation also.


Understanding the different type of income will surely help families to make informed decisions

for a better future financially. Normally income is classified into three major types.

1.Active Income. 2.Passive Income.3.Investment income.

Most of us earn our income from salary or wages.This income is stable so long as we work.

But the increase may not be fast or sufficient to meet inflation adjusted expenditures.Since

we earn this kind of an income by our activities or services and this income stops once we stop

our work this is called active income. 2) insurance agents canvass a policy and they inturn get

a commission form the insurance company.This commission is assured till the insurance policy

expires or the policy holder discontinues the payment of premium. The work of the agent ends with

initial canvassing and occasional services to the policy holder whereas the commission keeps accruing

without any further work from him/her. This type of income which accrues due to the one time work

is called passive income.#3) Interest from bank deposits,dividend from shares,rental income etc,all

form part of investment income.

Families should understand these types of income and try to earn income atleast from two different

sourcess.These incomes are taxed at different rates in Income tax and a basic knowledge of how we

are likely to be taxed is essential to plan for savings and investments.


Banks and Financial Literacy:

As I mentioned earlier in my previous episodes Banks and Post Offices play a very important

role in our financial planning as also Nation building. Bank branch is the place where we have to

start our financial journey.The banks especially in the public Sector have rendered enormous work

in taking banking to the doorsteps of millions of villagers and downtrodden. We can derive tangible

benefits by saving in banks. Banks offer different product for depositors,borrowers ,students, small

business etc, at reasonable interest rates.Opening abank account and conducting it well will surely be

helpful when we approach them later in our life for housing loans, education loans, car loans etc.In short

BANKS are our stepping stones for FINANCIAL FREEDOM. We will see more about banks and their

services next week.Till then GOOD LUCK..




position thereby instilling a sense of responsible financial behavior.


3 thoughts on “Take charge of money matters.

  1. Basthi Shenoy

    Nice and lucid write up. It is absolutely necessary that spouse and children are involved in money matters early. If you are able to instill the habit of savings in kids, they learn how to save and build their own corpus for later days. Ensure that all your investments are in joint names to avoid hassles of inheritance in case of untimely death of a partner.

    1. pichaiiyer

      Rightly observed sir..
      Thanks for your good wishes.

  2. Sarasija Raghuraman

    Authentic facts and practical suggestions.
    Good work, Pichai Sir. Keep it up !!

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