The new generation's ever-changing social and economic attitude often keeps them confused or alien to ways they can manage their money. The previous generation's lessons often go unheard as it doesn't seem relevant in the current situation; their ignorance is a grave matter of concern. I have witnessed enough individuals construe that a fair amount of the younger generation in their early forties is majorly depending on their inherits. Securing one's future and maintaining the current lifestyle is no less than an acrobatic rope walk. Not that I have a magic formula that shall make everyone a billionaire. It's just that over the years, I have practised some basic rules and very painfully understood "For ignorance of any kind, the cost is money".
It is possible to build enough from scratch in a private employed environment to take care of your life post the fifties. What I preach is what I have practised. The necessity of saving is equally applicable for everyone, irrespective of their current financial state, inheritance included. The thrill of achievement can only be experienced. One might become rich by a stroke of luck or a well-utilized opportunity, but to stay rich is another ball game. I had a windfall gain some thirty-six years back, and I have no clue what I did with that money. I have nothing today that I can say is that monies acquisition. An unforeseen compulsion drained nearly thirty per cent of my life-saving, just seven years back. However, the saving strategy adopted years back kept me in good stead. Shaken but not stirred.
I am sharing the Top 5
1. Put the cart before the horse.
Most of us usually follow a typical stereotype format. Phase one, try and get the best education, phase two, find the best Job, Phase 3, get married and have children. Money starts playing a bigger role at this juncture as you need to provide for transportation, house, education, and entertainment. To arrange for all this, we rightfully take loans. However, now we start to feel the rope tightening around our necks. Our hard-earned precious salary vanishes even before the month begins. Loans, credits card bills and the essential services eat it alls up. We have little left to play around with, and we meet the social and the consumer business advertising pulls through plastic money, needless to say, to be paid next month when the Salary comes in.
This plastic money and the consumer society create a swamp that keeps sucking us into a debt spiral. We spend money on many things that leave alone, might not need. We have a major share of impulsive shopping that stacks up in the cupboard and is invariably given for charity either on account of constant change in size or lack of storage space. However, consumer society bling gets us every time we get to a mall. The two magic words work wonder on our advertisement possessed mind, and we are so obsessed that we convince ourselves every time this is the "Last purchase I am making." At the end of the month, either you have no money left, or you're under plastic debt." Where is the saving?" Despite all the goodwill in the world, you somehow can't manage to save.
Now let's try and put the card before the horse, sounds strange in this scenario, but yes, that's the deal. Plan your financial deposit figure at the end of five years from the given day, get a monthly figure, do the juggling act, and finally come to a figure. From now on, regimentally, this amount is what you will set aside from your salary even before the loan, credit cards or essential services bills are paid. No compromises are acceptable. If you can pull it for a year, guaranteed you are hooked. Now the new high is what percentage of over achievement can you do. You shall find more solace in overachieving this target than your annual appraisal.
Now everything else can wait. Your glass of wine, weekly movie, dinner, consumer advertisers spell all is good with the residual amount. Yes, you shall have to do some hard thinking to fix that amount, don't peg too low or too high either case, you shall not succeed. This needs some serious introspection, money flow analysis and calculations. It shall be easy if you are on an all-digital payment mode. Then it's easy to stack your expenses and find the money drainers. Base on the asperations and your analysis of the money drainers, arrive at a figure. Be kind to yourself; keep some for your weekly dinners and small enjoyments.
My biggest money drainers were online shopping, tools, electrical gadgets, stationery, clothes, mobiles and many useless things. At the end of six months, I was not using any of that stuff; the stuff was there for sure but of no use, Impulsive buying behaviour. I still laugh at myself for buying a hip flask $150 never used. So at the end of my analysis, I was good with a $600 figure as my monthly saving target. I chose $500 way back in 2020, first-year I achieved 80% of the target. Years went by, the target doubled in amount, and the achievement was always above a hundred per cent plus.
I want to restate that we have fallen prey to the new commercial wave of malls and the changing social and consumer society but had to restrain some of these to meet our targets.
2. Live below your means.
The consumer society we live in is doing everything possible to ensure that we spend more than our means. Advertisers are more creative so that you always want to buy new things. But if you take the time to think about it, you'll realize that you don't need to change your smartphone every year to get the latest iPhone, for example. You don't need to drink and eat at fancy restaurants every weekend. You don't need to buy all the colours of your polo or other clothes, nor do you need to have over fifty pairs of shoes. You may be buying a lot of things you don't need. Stop stealing from yourself; you need to start living below your means; it is the primary money-saving rule that helps you achieve your monthly saving.
The credit card myth, the user, feels, "I ain't giving no money now", and there you go on a binge of shopping all the watches, phones, car accessories and many more things that might never get used.
3. Don't get into debt
This is a credit card maze, using one card to pay the other and so on. Savings are impossible. We need a change in attitude while using credit cards, moving to charge card behaviour, and giving you peace and increasing your credit rating. Make sure you use all the loyalty points you can collect, provided you are not on credit. "That is pay the evening you use your card" I am a strong advocate of plastic money till the time it's used this way.
4. If you Loan it, you own it.
If you're to invest your years of saving into a portfolio, property, or shares, make sure they are in your name. If you need to loan it to a friend, ensure you have your shares worth of stake in your name as insurance. Do shy away. I have stories of individuals who have been silent spectators to friends, family, and relatives emotionally borrowing money and then enjoys the benefits without any returns to the lender for years. Unless given for a medical or charity perspective.
5. Read before you think and then sign
Not much to state here, read papers, understand, seel legal advice, be very serious before signing any paper.
Happy Saving
©Jawahar Dhawan
