Skip to main content

Saving & investing money versus living life king size

Should you save money or should you live life king size and enjoy your life - is one of the perennial question about people who are interested in doing a bit of financial planning. (Of course, the question doesn't arise if you don't do financial planning at all - you'll, in all probability chose the latter).

 Taking a step back, one needs to understand what is meant by "living life king size" in the above? Rather than going into an attempt to give a standard definition, I'll try to pose scenarios -
  • Do you always want the latest model of iPhone? And the iPad? And you are willing to consider buying an Apple Watch also?
  • Your car needs an upgrade every few years? From an Alto to i10 to Honda City to (hopefully!) CRV in few years.
  • For you affordability of things means easy access to EMIs?
  • You want to keep upgrading something or the other in your house every few months - One year it may be the cupboards, the other year it may be the sofas, and the next year it may be the new TV and so on. And you love buying them on EMIs?
  • You don't think twice before flying off to Goa (from Mumbai) or Shimla (From Delhi) and so on for a weekend trip?
  • Do you love buying new shirts/ tops every month and new pair of jeans every quarter? And your shoes fill half of your cupboard?
  • Are you  a valued customer of Swiggy/ Foodpanda and other food delivery apps which you use thrice a week. And weekends are spend partying at the Hard Rock Cafe or something similar?
  • You haven't used a bus/ train/ metro in ages and you are a valued customer of Ola/ Uber and several airlines. 
  • You take yearly gym membership (with personal trainer) on 2nd January and stop going on 15th January?
  • You watch movie every weekend, and that too on Saturday/ Sunday evenings at a PVR in around the central business district, located 10-15 km from your home?
  • You like your house to be big so that you can store all kinds of stuff you have accumulated over the years?


 There is no end to the avenues you can spend money and enjoy. And it is important to enjoy thing you enjoy! Earning may not make any sense if you don't spend a part of it in doing things you love or if doesn't provide you some convenience.

 At the same time, like most of the other things, there is a trade off involved. You can either splurge on thing you want then and now or save a part of for rainy day(unless you are damn rich!).  If latter is a part of your plan, then it may be important to prioritize what expenses are important and what are mere gratifications which may not matter eventually. What is the opportunity cost of saving/ splurging? And what is the future value of this opportunity cost. 

 For instance, future value of Rs. 5K you save by not partying over the weekend may be Rs. 10K  few years down the line, had you invested the same somewhere. Or the Rs. 10k you save by buying only 1 jeans and 3 shirts in a year instead of 4 jeans and 8 shirts may be worth 20K in 5 years if your equity SIPs do well! 

 There are no easy answers to what is the ideal trade off of splurging versus saving (hence investing!) but if one plans to plan for the road ahead, one needs to consider the trade off.

 What do you think?
Labels:

Comments

Post a Comment

Shop @ Amazon

Popular posts from this blog

Random Birthday thoughts

As I would have cribbed @ 1000000000 words per day, I am currently at a place called Jhunjhunu where I have no social life to speak of, internet is the only thing that keeps me going, apart from few random movies or episodes of Seinfeld. So prospects of celebrating birthday in this solitary confinement are not that exciting! Too add to that, as I switched on my laptop yesterday night, I realized that it had conked off and is showing fan error as the reason. For me this was the end of world. And I knew not how would I survive! I hoped the issue will get sorted out in a week but it is too much to ask in this small town and this time period seemed to be an extremely optimistic guess. My birthday eve and early morning were spent on developing strategies on how to get it repaired. I couldn't find any IBM authorized dealer here, and I would have needed to send it to Delhi. There were two options - first was about sending it as a parcel to one of my friends at IBM , either directly or i...
9 comments
Read more

Financial tips for a 25 year old

Originally published at  BeingfinWise __ If you are 25 year old, there is a good likelihood that you would have started working or are likely to start soon. And hopefully start(ed) managing your own finances. So, what do you do next? The good news is that having a profession can soon lead to cash flows which perhaps wouldn't have seen in your student days. And that can be empowering in many ways. The bad news is that, if you are reckless with spending money, it can soon lead to a downward financial spiral. Managing your finances well can be a good first step towards a healthy financial life. And it starts with small steps.
Post a Comment
Read more

Expenses that can set your financial plans back

Originally published on BeingFinWise __ It is good to have a financial plan. It enables you to have financial resources ready when you may need them. At the same time, it enables you adapt your lifestyle in alignment with the desired goals. But the ride is not always as straightforward as the excel sheets with projected expenses & rate of returns suggest. There can be several factors that can set back your financial planning, even by several years. While one may not have a foolproof mechanism against all eventualities, one can definitely mitigate the impact of several uncertainties by having proper safeguards in place. Here are some factors that can set your financial plan back by several years
Post a Comment
Read more

How to make best use of credit cards?

You can also read this on BeingFinWise __ Credit cards can be an amazing tool to manage your finances, get good deals and some excellent rewards. All you need to do is understand some credit card hacks and be on lookout for deals! However, before starting on how can you make the best use of credit cards, you need to be sure if credit cards really suit you or do you tend to lack financial discipline if you have access to credit cards. If this is the case, it may be wiser to avoid credit cards altogether. (You may also be interested in - You should stop using credit cards now if ... ) Here are 5 ways you can get the best out of credit cards.
Post a Comment
Read more

Get cashback while doing online shopping

Originally published on BeingFinWise __ Cashbacks are an amazing way to save money while shopping. More so while you do online shopping. In addition to regular deals and discounts, you can get cashback if you go via affiliates . This way you can get cashback on your online shopping, over and above your regular deals. Some of the popular affiliate networks offering cashback on online shopping in India are Cashkaro ,  Gopaisa , Pennyful etc.
2 comments
Read more