Financial Illiterate

It had been quite a long time since I blogged. Every time I come across something interesting, think about making an entry to my blog, the priorities change and the thought process evaporates. Today, I did something stupid that I thought will be a worth sharing to my readers - at least as an eye opener. If you had guessed by now, the topic is about me and it is about how illiterate I was in the matter of financial management. 

It is a simple theme. The difference between the GROSS income and the NET income and the limited knowledge I had. It goes like this!

I was planning to enroll myself for my organizations's ESPP offer. I was thinking about it for some time - almost 15 months. Finally, this morning - Sunday, June 23-2012 - I thought I will act on it. Logged on to the enrollment site, picked up a calculator, did some math, calculated the deductions, projected my expenses and finally decided on some percentage of contribution towards this ESPP option. Logged on to the site, answered the initial questions, updated the necessary details, reviewed the details and submitted. 

So far so good, but, when I got the confirmation mail, i realized that the percentage contribution is applied on the GROSS income and deducted from the NET income. That my friend, is a huge ... HUGE difference. 

I little post mortem on what happened:

1. I was not paying attention on the terms GROSS and NET - Oversight

2. I did not grasp and realize the terms pre-tax and post-tax calculation - negligence

3. I did not do my home work properly - competency

All the three issues can be linked to my financial illiteracy. It is just not enough to make sure the expenses are covered, the bills are paid on time and the bank statements are accurate. It is more than that and I am ready to take the next step to educate myself about personal financing. This is could probably my first baby step towards the long term goal of "financial freedom" and every journey begins with this first step. I am happy that I made this mistake that helped me to realize my grey area ...

Any suggestion - please leave a message.

So long ...

bright