“I am a Creative person; I cannot get all this mumbo jumbo about finance; I don’t care too!”
Isn’t this a common refrain of most of the Architecture students all across?
But pause for a minute and think whether pursuing such a creativity mean that practicalities, particularly, the financial ones, can be kept at bay. Possibly not! It is a dilemma professionals in all fields, be it doctors, actors, writers etc. face. While one might be deeply engrossed in his/her field of creativity or skill, yet one has to operate in a competitive and material world. It is not merely a case of earning money but a case of professional survival where on one hand to get the work and on the other to earn any money on the projects that come your way; you have to be financially savvy.
As said earlier, we are in a competitive field and many of you could vie for the same project at the same time, may be through a formal tender or negotiation process. While creativity and design are important in their own way, most organizations give huge importance to costs, and in Government projects, the lowest bidders normally are awarded the contracts.
Similarly, you shall be called upon to recommend a contractor on similar lines. So your estimate of costing, your clarity of the margins or mark ups and your knowledge of cost of funds is going to determine decisions in activating ‘your’ project. Choice would be yours, either do it yourself (and be in control of your proposals) or leave it to a third person (who will have to be paid and who will control).
During your practice you might at times come up with the situation that the client may take you along while negotiating a deal. Among the common issues involved are upfront payments versus staggered over time. Unless you have some sense of discounting, that is, how the receipt of Rs.500 today compares with Rs 500 receivable two years hence, you may not be able to give any concrete advice.
May be already into EMIs for your bike or mobile phone! But ever tried to know as to how was it worked out. Your client can possibly ask you about its intricacies if you are helping him with a property loan, or may be relevant even in your own loan that a project might involve, if you decide to become a builder. It is always good to have some basic knowledge of such queries, notwithstanding Google putting forth information on any subject under the sun.
Examples like the above referred situations will confront you every day of your professional career. Finally, once you start earning, taxation is going to be a big issue. Present income tax @3o% is a big burden and unless you know your financial marbles you may get taxed inappropriately. Of course there would be Chartered Accountants to help but it is your wealth and your income, knowing some basics of finance may be worth it to save and enjoy it.
So, Design and Creativity is all good, but need to handle finances is as much a part of professional practice. Don’t shy away from Economics or Finance lectures, seminars or Newspaper portions dealing with it. This will be a mean to bring your creativity to the world!
Best wishes
Ashwani Mehta