CA-turned-author Lavanya stresses on applying key principles like Time Value of Money, Inflation, Compounding, Liquidity, to everyday decisions, during interview with ETV Bharat’s Saurabh Shukla.
They say money isn’t magic, it’s a habit. And CA-turned-writer Lavanya Mohan aptly puts it, that building wealth isn’t about mathematics or luck, rather it’s about the small and smart choices made every day.
In an interview with ETV Bharat, Lavanya Mohan, the author of “Money Doesn’t Grow On Trees”, talks about practical insights into personal finance, shedding light on the power of compounding to the dangers of poor investment choices to the importance of saving before spending, and being smart about loans and taxes. In her book, published by Simon & Schuster, she stresses on planning for inflation, leveraging job changes wisely and applying the four key principles – Time Value of Money, Inflation, Compounding and Liquidity – to everyday decisions.
ETB: How does an investment grow over time, and what common mistakes cause people to lose its value?
Lavanya Mohan: Investment growth happens from compounding – that is, when your returns earn returns. But for this to work, you need time, consistency, and the right investment choices. A common mistake is inconsistency, when people end up pausing SIPs during market drops, or pulling out money for non-emergencies. Another mistake is parking money in ‘investments’ that rarely beat inflation in the long term, like endowment insurance plans. For example, Rs one lakh invested yearly at 12% for 20 years can grow to Rs 80 lakh. That’s the difference discipline makes.
ETB: Is it wise to take a loan to fulfill personal desires, or should one prioritize saving first and then spending?
Lavanya Mohan: We are living in the age of ‘Buy Now, Cry Later’. But just because something is available on EMI doesn’t mean you can afford it. Loans are best reserved for big-ticket essentials—like education or a house. You don’t have to deprive yourself, but if you are constantly taking loans to fund holidays, clothes or the newest iPhone, that’s a slippery slope. Large expenses like holidays, gadgets etc, can actually be planned ahead of time so that you can get the best deals. Overall, savings should always come first. Spending should be from what’s left over. Every time you choose the latter, it comes at the cost of your future.
ETB: What role does taxation play in personal finance? Are standard tax-saving options sufficient, and what are lesser-known strategies people can use?
Lavanya Mohan: Tax is one of the most misunderstood parts of personal finance—mostly because we are taught to fear it. In reality, tax planning is just good planning. With the new regime, there’s no pressure to plan either, since most deductions have been removed and taxation has been simplified. So all those ‘tax-saving’ insurance plans your relationship manager pushes are more or less moot now. Salaried professionals should definitely look into the corporate NPS scheme which can drive maximum tax savings while also giving you decent returns.
ETB: How does inflation reduce the value of savings over time, and what protective measures do you recommend?
Lavanya Mohan: Inflation or price rise implies that Rs 100 tomorrow will be of much less value than Rs 100 today. So if you are putting all your savings in a regular savings account or low-interest FD, you are basically losing value every year. The same Rs 30,000 that could help buy a fridge today might barely get you a toaster ten years from now. Hence stress on investing, not just saving. If you are not earning above inflation—which hovers around 6-7% in India, you are just treading water. So how do you beat it? Start with investing across asset classes – equity mutual funds, index funds, gold, long term investments like the Sukanya Samriddhi Scheme if you have girl children, they all help protect your money’s real value.
ETB: What is compounding in the context of investing, and can it truly grow wealth over the long term?
Lavanya Mohan: Absolutely. Compounding can and will grow your wealth in the long term. But people expect it to work like instant noodles—it’s more like a slow-cooked biryani. You need time. Most people start late, stop halfway, or expect overnight results. But if you give it decades, it’s incredibly powerful. Take Warren Buffett for example: most of his wealth came after he turned 60. So yes, it works. But only if you stick around long enough.
ETB: In your book, you talk about the four pillars of financial well-being. What are they, and how can individuals apply them daily?
Lavanya Mohan: If money was a language, these four pillars would be grammar – Time Value of Money, Inflation, Compounding, and Liquidity. Together, they explain how money behaves, and misbehaves. If you understand that money today is worth more than tomorrow, that inflation is always nibbling away at your savings, that compounding needs time, and that not all investments are easy to cash out, you are already ahead. Apply these as a lens to every money decision, from where to park your emergency fund to how long to stay invested in mutual funds.
ETB: Since jobs provide regular income, what factors should one consider while negotiating or switching jobs to secure a better financial deal? Once a salary increase is achieved, how should one plan and manage their finances effectively?
Lavanya Mohan: Job changes are one of the few times you can meaningfully grow your income. Ask for what you are worth. Back it with data. Use tools like LinkedIn Salary or Glassdoor. Also, don’t stop at the CTC—understand what actually hits your bank account. Bonuses, ESOPs, insurance coverage, it all matters. Once the raise comes in, avoid lifestyle creep. That extra money? Automate it into a SIP or top up your emergency fund. In my book, I talk about the cost of ambition—the clothes, the dinners, the gadgets. They are fun, but they shouldn’t cost you your peace of mind. Earn more, sure. But also save smarter.
