Five fi­nan­cial lessons you can learn from Will Smith

Mint Asia ST - - Money - MONIKA HALAN

Will Smith was clearly one of the big stars at the HT Lead­er­ship Sum­mit ( bit.ly/2ojh8gp) last week. The packed hall of suits and saris at Taj Palace Delhi went a lit­tle crazy when he bounded onto stage emit­ting war cries to get the en­ergy of the room up. That prompted ac­tor Farhan Akhtar who was mod­er­at­ing the con­ver­sa­tion to say: we can do this for 30 min­utes and then take ques­tions, to an­other round of mass hys­te­ria in the room. But jokes apart, Smith the star came across as a fee­ton-the-ground per­son who found his spot­light the minute he got him­self into a plan. In fact, some of the one-hour talk was around money and I found lots of money lessons in that time. Here are five of them.

One, pay your taxes. Smith did not start out as a Hol­ly­wood ac­tor, he be­gan as a suc­cess­ful rap singer. He made mil­lions but omit­ted to pay his taxes. “I was young; I was grow­ing up... I didn’t pay my taxes... They (In­ter­nal Rev­enue Ser­vice) come and they start tak­ing your things.” In fact, he owed the tax­man al­most $3 mil­lion and was broke be­cause his next al­bum failed. Smith went from rich to poor be­cause he took the law of the land casually.

Les­son from this is that if you have a vi­sion for your­self as a suc­cess­ful per­son, stay­ing within the law from the start is a good idea. Pay­ing taxes and hav­ing clean books comes right on top. Spe­cially true in a tax non-com­plaint coun­try like ours where cash is still king.

Two, re­boot when down. Smith took on a Hol­ly­wood role just so that he could make some money. He said: “My tran­si­tion from mu­sic to films wasn’t re­ally a choice. IRS took all my stuff and I moved to LA. I got rid of every­thing in Philadel­phia. I was broke and our next al­bum flopped. I had gone from hav­ing mil­lions of dol­lars to go­ing broke.” It took a fi­nan­cial dis­as­ter to shake him out of his old life into a new one. Set­backs will hap­pen to every­body and some­times go­ing down to zero, or even neg­a­tive, is a good wake-up call. Re­mem­ber that if you get fired with a large EMI on your head. Or when faced with a big per­sonal cri­sis. Here is the mo­ment when you press the re­boot but­ton.

Three, get dis­ci­plined. Smith landed on his feet with a Hol­ly­wood show, but “in the first three years of The Fresh Prince of Bel Air, the IRS was tak­ing 70% of my money. I was still broke,” he said. But hav­ing been poor, rich and then back to poor again, Smith de­cided to have a plan rather than me­an­der along.

He got a sec­ond shot and de­cided he will never be poor again. “I got re­ally dis­ci­plined,” he said. Get­ting into a plan is the most im­por­tant thing in your money life. Mak­ing loads of money is not good enough if you don’t have a plan to make it stay with you. Smith said he re­alised the dif­fer­ence be­tween ‘rich broke’ and ‘poor broke’ and de­cided never to be poor broke again. Rich broke have as­sets they can sell, poor broke don’t have money to fill gas in the car. Um, they don’t have a car.”

Four, fail, learn, try again. “Fail early, fail of­ten, fail for­ward and fail your way to the top... I have been lucky enough to em­brace fail­ure,” he said. True in life and also true for money. None of us be­gin with the per­fect plan with our money de­ci­sions.

Smith says ex­am­ine why you failed and then try again. Works per­fectly well for money as well and the peo­ple who say “I was just un­lucky with my money” sim­ply don’t have a feed­back mech­a­nism that in­forms them of their er­rors. Very of­ten the prob­lem is not with the mar­ket or the fund man­ager but with us, when we pick a prod­uct that does not suit our needs. Or buy­ing out of greed. Don’t be afraid to re-ex­am­ine your plan if you think it is not work­ing.

Five. Do the thing you fear the most. Smith bungee jumped out of a he­li­copter over the Grand Canyon on his 50th birth­day. He said that when you do the thing you fear the most, it is out of the way for the rest of your life. Eq­uity in­vest­ing is sim­i­lar.

Many gold, FD and real es­tate in­vestors are wary of an as­set class they can­not wear or live in. This ongoing mar­ket car­nage is the right time to face your fear of eq­ui­ties. And to end with a Will Smith quote and the big­gest money les­son of all: “We spend money that we do not have on things we do not need to im­press peo­ple who do not care.”

Monika Halan is con­sult­ing edi­tor at Mint and writes on house­hold fi­nance, pol­icy and reg­u­la­tion

RAMESH PATHANIA/MINT

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