Asset Rich - Cash Poor?

I present to you two case studies in personal finance, each illustrating distinct approaches to wealth management. May you not only find them engaging but also derive valuable insights from their underlying financial behaviors. Enjoy this analysis to its fullest potential.

Story Number 1

"The Illusion of Wealth"

On a breezy Saturday evening, I found myself in the company of an intriguing non-Bengali couple, let’s call them Vinay and Lovely. They were the textbook definition of success: a power duo with no kids, living in a farmhouse on the outskirts of Kolkata. Lovely, a high-flying director at a logistics firm, raked in a salary north of ₹1 crore, while Vinay, a scientist fresh off a decade-long stint in Germany, could make Einstein proud with his credentials. Financially, they seemed untouchable.

Over cups of artisanal coffee (imported, of course), our conversation took an inevitable turn toward finances. That’s when the façade cracked.

Despite their combined net income of ₹2.5 crore, the couple was struggling to pay their EMIs. Turns out, they had gone all-in on real estate—because, you know, "land never disappoints" and "brick and mortar is the safest bet." Except, in their case, it did disappoint. Two of their under-construction flats, one in Kolkata, the other in Bengaluru, were stuck in the developer limbo. And their other properties? Well, let’s just say the market had decided to take a decade-long nap instead of skyrocketing like they'd hoped.

The worst part? Their financial assets amounted to a grand total of ₹15+ lakh. Yes, a mere 15+ lakhs. That’s less than what some of their corporate juniors probably had in mutual funds. One medical emergency, one job loss, or even a minor stroke of bad luck, and their financial house of cards would come crashing down.

Here was a couple earning more in a year than most people do in a lifetime, yet they were living paycheck to paycheck, all because they had mistaken leverage for wealth. And as I took another sip of my coffee, I couldn’t help but wonder: Were they rich, or just really, really broke in an expensive way?

Earning huge money does not automatically translate into being better at managing money. Related to it so much in this case.

Story Number 2

"Rich, Broke, and Everything in Between"

Money, I bet, is a funny thing. Some have it but never seem to keep it, while others barely spend it despite having more than they’ll ever need. I’ve seen both the ends of this mad-mad-mad spectrum up close.

Take an ex-student of mine, let’s call her Avantika. She’s young, single, and earns upwards of ₹50 lakh per year. On paper, she should be financially comfortable. In reality? She’s always broke AF. One major reason is, is her love for travel, her passport sees more action than her savings account. But the bigger drain? Her family. Old money, but with a lifestyle that hasn’t adjusted to their declining income. Since she’s one of the high earners in the family (relatively speaking), she foots the bill for everyone’s expenses.

She often calls me up for some financial advice, but every action plan gets postponed. "I'll start in two months… after my XYZ trip. I’ve been looking forward to it for so long, sir." And, so, the cycle continues, big paycheck, big expenses, and bigger excuses. It's an unending loop, you see..

Now, on the other side of the wealth equation, there’s someone I know, a woman in her mid-60s who built an undergarments manufacturing empire from scratch. Net worth? Easily over ₹100 crore. Lifestyle? You’d never guess. She books sleeper train berths to visit her relatives, doesn’t bother with flashy displays of wealth, and lives with the kind of financial discipline that would make an investment banker blush. You might walk past her on the street and never suspect that her family garage houses an two expensive cars, parked comfortably inside a posh property in the heart of North Kolkata.

Two women, both successful in their own ways. One spends like there's no tomorrow. The other lives as if she's still earning her first Rupee. And in the end, wealth isn't just about how much you make, it's about what you do with it. Period.

Jishnu Chatterjee,
January, 2025.

Author is a Jack-of-All trades. He believes that specialization is for insects. Author is a public servant, a Linux evangelist, chess enthusiast and a long-term investor.