Money & Me: ‘I would advise anyone starting out not to risk everything on a single business or opportunity’

• • Hi! I am Meheryar Tata, a Chartered Accountant by qualification and a software developer & consultant by profession!
  • I am passionate about leveraging technology to help people be more productive and are also the founder of ‘Excel to Tally’ a website that helps accountants complete their daily work faster!
  • In 2015, I quit my awesome job as a Manager at a Big four firm to start an online rental startup and invested a large amount of my savings…almost INR 25 lacs!
  • I would advise anyone starting out to make sure not to risk everything on a single business or opportunity...it’s important to be able to live to fight another day if things don’t work out!
  • Here is my journey with money.

How did your upbringing influence your attitude toward money?

My dad worked in the private sector and my mom was a homemaker. My sister and I had a comfortable and stable upbringing and no financial troubles.

My parents made sure we were involved in basic financial tasks like depositing cheques and withdrawing money from a bank when we were quite young.

When we were in high school (8^th standard onwards) we got a small amount of pocket money each month to handle expenses like bus fare and canteen snacks. It was from the monthly pocket money that we could choose to either spend all each month or save some and get something bigger later.

How old were you when you started investing/saving?

My first job was when I started my CA articles in 2008 and my first salary slip (which I still have with me) was for Rs. 4,000/- (a little less than $100). I began saving immediately.

I opened a brokerage account sometime later that same year and put some savings in there regularly along with studying and learning about investing. Have kept it up over the years and I still manage money for my wife and me independently.

Why did you pursue Chartered Accountancy?

Studying science/engineering and ending up working for an FMCG business was something that didn’t make sense to me. So, I picked commerce which I felt would give me a better view of what business was like.

Once that was picked I felt a B.Com alone would not be enough to get good roles and decided to do CA along with it.

How did you finance your studies?

It was self-financed. CA from ICAI, India is amongst the least expensive professional qualifications available.

I didn’t end up taking any tuition or going to classes. So it was just the cost of the study material and the exam fees if I recall correctly would be less than Rs. 20,000 (almost USD 400) back then over a period of 5 years.

After qualifying as a Chartered Accountant, I started my career at a Big 4 firm on the valuations team.

What did you do with your first big salary after becoming a CA? 

After qualifying as a CA, I hosted a dinner for the close family (about 15 of us) at a nice restaurant to celebrate. No vacations or gifts.

I am not a travel buff so a holiday was never something that I thought of and I find that figuring out what someone would like as a gift is very stressful!

You started a tech company early in your career. How did you save for the same?

My co-founder and I, each invested about INR 25 lakhs (USD 35,000) into the venture. At the time, it was a significant portion of our savings but it was not all our savings!

We were 27 and 29 years old at the time and had worked for many years before that so had some more savings.

However, the operational complexity was too high for it to run without full-time involvement from us. Finally, we bit the bullet and shut down in December 2017, ~2 years since our launch! It’s always HARD to shut down something and tell the world that you were wrong.

When the startup did not take off as expected, how did you deal with the loss in money?

We both knew what we were risking when we started.

While we all hear of the success stories in the media, the fact is that probably >90% of new businesses fail within the first couple of years. So we were always mentally ready for that and when we did fail, it definitely hurt but it didn’t kill us from a personal financial perspective.

I would advise anyone starting out to make sure not to risk everything on a single business or opportunity…it’s important to be able to live to fight another day if things don’t work out!

What was your greatest financial mistake?

I am very careful and patient before buying physical goods so I can’t recall any regrets on that front.

As for financial assets, I have been investing in the stock markets over the last 12 years. I have made plenty of mistakes in picking stocks where I have lost 100% of the capital invested in them.

Thankfully the corresponding winners so far have meant that I could afford those mistakes and learn from them.

Do you prefer to pay by credit card or debit card?

I use a credit card for large expenses to get the benefit of an extended credit period and the additional interest on my bank balance.

But when using credit cards it’s important to NEVER pay less than 100% of the amount due when it is due as otherwise, you will be borrowing money at ridiculous interest rates (36-42%). So I would suggest using them only if you can keep that discipline.

For smaller expenses, I usually pay via cash or UPI which I find the quickest / most convenient option.

I only use my debit card to withdraw money from an ATM.

As a self-employed professional, how do you manage your own finances?

Savings for me is ‘income minus expenses’, and my expenses are quite low. So after my limited expenses, everything gets saved! As my income grew, my expenses didn’t grow in proportion so that saved amount kept going up.

(I know this doesn’t work for everyone, so for some folks, settings aside a fixed some as “savings” and spending the balance can prove to be effective.)

As for what I did with the savings, when I was still employed, I would put 100% of it into financial assets (equity shares) after doing the required homework around what each company does and whether it’s available at a price below its fair value. My thinking here was that since I had a fixed income on one side and a long time horizon until I needed the money, I could accept a higher amount of volatility in the short term in exchange for hopefully a higher rate of return. Thankfully this played out as I expected.

Currently, as a consultant since I don’t have a “fixed” regular income, I balance out my investments between equity and debt. The debt component earns a much lower rate of return but its purpose is to protect capital and provide something to fall back on if money is required on an emergency basis.

What financial advice would you give to our readers?

I think the first step is to become financially literate. Unfortunately, too many people just ignore financial literacy by saying it’s “too hard” or they “don’t understand numbers” but given how critical a skill managing your personal finances is, I think it’s something you cannot afford to ignore.

If you don’t understand something, ask someone for help…but at the end of the day, you and only you are responsible for your financial well-being. No one else is or should be.

Meheryar is passionate about leveraging technology to help people be more productive. He has done a bunch of different projects in this space, a few of which you can take a look at here.

Currently, he is working on building an ERP system for Indian NGOs. – ERP4Impact also helps small and mid-size businesses with sales growth and operational improvement projects. Meheryar has also founded Excel to Tally – helping people pass their accounting entries in Tally more quicker. He can be contacted at admin@fromexceltotally.com.