When you read the title of this post, ‘poor little rich kid’, we are all reminded of the story of Richie Rich. The comic character who was so rich that his riches caused unique and comical problems for him. Today, however, I am talking about that poor little rich person who is rich in wealth but doesn’t have money to spend. If you think that it is oxymoronic, then let me explain.

Many of the young adults, are college-educated, working in cushy jobs in software or MNCs. We earn fat salaries, travel in style, dress up in the latest trends, but how many have ready cash to spend in case of emergency. In our quest to secure our financial future, some of us have cornered ourselves in the present.

This little bit of wisdom has come upon me after seeing the misfortune of my neighbour. He comes from a regular middle-class family. With his sheer hard work, he got himself a respectable job in a reputed company, he earns a sizable 6 figure salary. He belongs to the upwardly mobile young generation, who grew up middle-class, but who suddenly find themselves swimming in wealth. His parents advised him to make his financial future secure before he can spend on any luxury. That sounds like sane advice, and my neighbour took it.

He invested in a wide range of long term investment policies. He opened a few different insurance policies, mutual funds, recurring deposits etc. He observed his peers become homeowners and under peer pressure, he also booked a house in a gated community along with his office friends. Taking into consideration different parameters, he took a home loan and bought a house along with his friends. When you say home loans, automatically there will be monthly payments that cannot be missed. Apart from these expenses, he also pledged to donate to a few charities to appease his conscience. As a result of all these planned payments, my neighbour’s comfortable 6 figure salary was gone before his eyes. Halfway through the month, his bank balance was hitting zero after making all the payments and donations. On the paper, he was a rich guy with sizable investments and assets yet, his salary was just about sufficient for all his monthly bills and payments.

He did not have money to spend on himself anymore. With the recent COVID situation, he was worried about his job security. All the while that he was at home, he was scared out of his wits because he could not afford to fall sick or lose his job. He was ready to take a pay cut by the time he started working from home. He was among the lucky ones who did not lose their job but, shudders to think about those who did lose it.

Instead of tying himself up with a mountain of future payments, if my neighbour has planned his money better, it would have saved him a world of tension. Thinking about long term goals, he missed on taking immediate contingencies into account. He was not a lonely case, it happened with a few of his other colleagues, and they had to move out of their fancy apartments to save money. Many went back to their hometowns and villages to manage finances.

What I would like to point out is that it is definitely good to plan for the future. But do not lose focus on the present. Always keep aside some contingency money that will see you through unforeseen situations like this. You may not need it, but the safety blanket it provides will help you sleep better.