Category Archives: Finances

Poor Little Rich Kid

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.

Monthly saving is not that difficult to achieve

In today’s world, it’s all about making a fast buck and spending it just as fast. There may be tons of avenues to earn money, but the young generation is finding it more difficult to control expenses. Every young working member of this society complains that their income is never enough to set aside savings. Is saving really that difficult? Is it the living expenses that have gone up, or has the urge to spend gone up?

Here are my thoughts on some age-old techniques that our parents applied and are still very much relevant when it comes to saving. I will also add a few of my personal ideas that have worked for me when it comes to saving. Despite all the ideas and techniques, the will to control expenses and the wish to save money is the foremost requisite.

Here is my first technique to save money.

  • Set up a recurring deposit, so that on the first of every month the bank automatically transfers a portion of the salary to the RD for a year or more. This way, without your intervention you set aside a small amount that will accrue interest. You can set up the amount based on your salary.
  • Reduce the number of e-wallets that you use to one or maximum 2. The more you use these wallets, the more you end up spending. They offer you cash back schemes, which only make you spend more. Their cashback schemes are all a trap to make you spend, where you never planned to spend.
  • Here is a personal idea of mine. On the 7th of every month, sit down at your system and pay your bills personally. Do not set up auto payment instructions. The idea behind this is, when you sit and pay each bill, you will feel the pinch of seeing your bank balance reduce. It generally scares me enough to control expenses.
  • One can always use the traditional saving plans like an insurance plan, PF plan, pension plan, SIPs, Chit funds etc.
  • One technique that my mom employs is to maintain a book of accounts to keep track of all expenses. This comes in handy in case of unforeseen or unavoidable expenses. I use the Google sheets on my phone to keep track and I noticed that the expenses are not so unavoidable after all.
  • Everytime I receive a bonus, I use the complete bonus amount to buy a gold coin. The amount may be small, the coins may be of different denominations, but in your hour of need you can exchange the gold coins at any jeweller for cash and get the complete exchange rate as of that day.
  • This may not be the best idea, but it works for me. I use my procrastinating attitude to postpone shopping trips. I put away the chance to spend for as long as needed until one day, I don’t need that purchase. It works like a charm for me.

Remember, all these methods will work only if you have the will to make them work. Just make up your mind and it’s not so impossible to save some money however small our salary is. All the best in your efforts.

Disclaimer: I do not own any of these images. They are sourced from Google and Pinterest.

When is the right time to enjoy life

The other day on my way back from office, I was travelling by bus. As with most public transport, you encounter different people with differing perspectives. They are sometimes weird, funny and sometimes offensive. But, mostly they are entertainment for me. This particular conversation, however, rubbed me the wrong way. It got me thinking and feeling guilty and rebellious at the same time.

 The whole discussion started between an elderly couple, who were returning from a housewarming party. From what I gathered from their conversation, a newly married couple built an independent house with all comforts and luxuries in an affluent area of the city. The elderly couple felt it was a waste of money and an unnecessary expense at such an early stage in life. They were of the opinion that the young couple should have built a commercial complex thereby earning rents and thus saving money.

As their conversation progressed, they started to include the other passengers into the fray. The conversation soon veered into stories of personal struggle and hardships faced. Each person told about the struggles of their parents to give them a comfortable life and how, one should save as much as possible. The general consensus was that since our parents braved all hardships to give us a comfortable life, we owe it to them to struggle just as much for the next generation. Most of them felt that one should not waste money on lavish homes, vacations or other leisurely activities, unless you can make money out of them.

On the face of this reasoning, it seems quite logical that one should not overspend. However, the argument that building a beautiful home that you dreamed of, going on vacations, spending money on pampering yourself is an absolute waste of money, does not sit well with me. The more I thought about it, the more I realized that it is never a good time to take a vacation or pamper yourself unless you take a stand for yourself. If you don’t live life now, then you won’t have the health or the faculties to enjoy life in your old age. One can never stress enough on the importance of relaxation and stress release in the fast paced world today.

As Indians we are always taught to save first and hopefully enjoy life after retirement. But, it doesn’t work that way in reality. Do we really owe it to our parents to save more and enjoy later? Tell me your thoughts on the comments section.
Disclaimer: I do not own any of these images. They are sourced from Google and Pinterest.