“Nice to meet you. Just hold on for a second. I need to send an SMS to my husband.”
My cousin and I stood there waiting. The girl, a manager with a private sector bank, busily tapped out a text message on her new iPhone.
She was pretty slow with the typing, but we knew what was going on.
She was just showing off her new Rs 30,000 iPhone – hot stuff for Alwar, a small town in Rajasthan where I grew up and which has a relatively middle class population.
We had seen her arrive to the bank with her husband who drove a shiny black and modified SUV.
She and her husband were young… probably in their early thirties. As I came to know from her, he was a real estate broker in the town. Even though their income must be down in a weak housing and job market, their spending didn’t reflect the crisis.
“What’s going on here?” I asked my cousin who was a local.
“These aren’t the only people out here sporting an iPhone and an expensive car,” he told me. “This small town has changed a lot, brother, since you left it 10 years ago.
“And by the way, who doesn’t own an iPhone or a big car these days?” he continued. “In a world of rising incomes, easy loans and EMIs, buying expensive stuff is so very easy. Don’t you think?
Me? I don’t have an iPhone…or an SUV. I’m doing well with my old age Nokia and an Alto.
But I probably have one thing these habitual consumers don’t: The house I live in is fully paid for. Plus I don’t have a rupee of debt on my head.
I could buy an iPhone or a new car tomorrow. I wouldn’t need a rupee of debt to do it. But I won’t…Why?
Because these expensive things won’t add to my assets. They will only add to my liabilities. Also, those things won’t make me the slightest bit happier.
I’d be the same guy I was before…only Rs 5-6 lac poorer!
You see, I don’t try to keep up with my peers – with their swanky phones and cars, and a new higher-paying job every six months.
In fact, I’m doing the opposite. I’m downsizing.
I’m trying to go minimalist (my society’s security guards and the housemaid are happy to get something or the other from my house every day. In their already minimalist life, they need to enjoy some ‘stuff’).
Think about this…What good are all these possessions, really? You can’t take it with you when you die.
Instead, the truth about life is that after a while, you don’t own your material possessions…they own you.
I don’t need a big car to claim that ‘I have arrived’. It’s ridiculous!
Anyways, this brings me to the main idea of this post.
What is the reason for all this saving and investing?
When you get older (if you’re not already older), how is this money that you save and invest now going to serve you?
Jonathan Clements, the much respected Wall Street Journal columnist, who retired in 2008 after writing 1,008 columns for the newspaper, said that your savings can deliver 3 key benefits:
1. If you have money, you don’t have to worry about it.
Well, this isn’t something that is guaranteed.
I’ve seen a lot of rich men who are always worried about their finances.
However, the real idea is that if you save and invest diligently, you should reach the point where money worries are relatively rare.
2. Money can give you the freedom to pursue your passions.
When you picture your financial independence, what do you see?
Enjoying your life to the fullest given that you’ve ensured that your family’s needs have been taken care of?
Seeing around the world?
Working on a cause you are passionate about?
Saving and investing can help you achieve complete mukti (freedom) from all your financial worries, so that you can attain complete peace of mind and pursue your passions.
3. Money can buy you time with friends and family.
What are we all living for? When I used to work at a job, the best part of my waking hours was when I came home at night…to my family.
Now I stay with them 24×7 while also taking care of them financially.
Research has found that regularly being with your friends and family can provide a huge boost to your happiness. And money can help you in this regard.
If you don’t need to work or you only work part time, it helps you spend more time with your family and friends, go on regular vacations with them, and spend other quality time in their company.
Anyways, as Clements also said, you don’t usually need millions of rupees in your bank account to spend time with friends and family or pursue your passions.
But in order to get there, the girl I met in that private bank in Alwar needs to skip out on her flashy mobile and glitzy car.
The quicker she grasps this about saving versus spending, the quicker she’ll be able to start living like a free bird… even if she doesn’t have many millions of rupees in her bank.
So if you are disgruntled with how your financial life is going, here’s my advice…
Forget spending more money at the mall – and instead spend more time with friends while saving and investing money regularly.
At the end of it, your bank account may still seem inadequate, but your life will be far, far richer.
That’s the entire point of saving and investing.
Sure and I subscribe to the view.
In fact the book Rich Dad Poor Dad captures this very well.
Over spending is a curse and takes its toll while being stingy is also a curse.
The balance, as in most aspects of life, is what has to be learnt.
But for ‘want’ (versus ‘need’) where would the world be.
Its a big revolving celestial body on whose body the economy is currently (some decades back it was industrial revolution) fired by marketing which is creating such wants that there is no logic or sense.
Yes, you are absolutely right, Sudhir.
Today, it’s more about “what I want” than “what I need”. But the fact remains that – as I have experienced in personal life – while I might imagine that a new car or a fancy new gadget will be my ticket to eternal bliss, once I spend money and buy that stuff, the thrill is most likely gone.
Instead, I then want to posses something else.
And of course, as you said it rightly, it’s a marketing+media nexus that has created this society of over-consuming consumers and under-saving savers.
In Fact, Seth Godin says that 200 years ago there had been a conspiracy to teach the masses “How to consume more”. I highly recommend you watch this video.
Thanks for sharing! Regards.
I just hope you approve this comment, for this is going to be slightly contrarian to your post. While you have posted the goodness and virtue of saving, you are drubbing getting new stuff like iphone and bigger car which is something I can’t agree fully. What if the couple in Alwar in the article had all their financial planning in place and are wealthy enough to afford these blings? Just by seeing people and guessing their age, one cannot judge what their income is, what they have inherited or how good they are planning their finances.
While saving and investing are good to have habits, what’s more important is how you can increase your topline. If you earn less, the amount of money available for saving. When you earn more, the amount of money available for saving is more.”At the end of it, your bank account may still seem inadequate, but your life will be far, far richer.” – Why do you need to do with inadequate bank account? Why not get a motivation to improve your income through education, changing careers, taking better decisions, performing well at work etc? Earn more, save more and spend to enjoy life rather than self imposed minimalism.
“marketing+media nexus that has created this society…”. Yes it has. But think about the good things of it. Its role in economy, increasing employment, providing options for consumers etc. Net net, you can’t live in a world of choice and freedom in the absence of these things. Plus if all of us start downsizing, the economy will take a beating, unemployment will rise and in fact will be more detrimental to the society overall.
Hi Phantom,
You have brought about the other side of the picture and that’s absolutely fine since it adds to the entire thought process.
But since it’s a blog about saving and investing, sorry for being biased ‘for’ the need to save and invest.
And yes, you rightly pointed out that if someone has properly planned finances or has a good amount of inheritance to benefit from, he or she can simply spend and enjoy life.
But then, based on sheer probability, I believe the audience of this post are those who either aren’t as fortunate to have an inheritance, or are still worried about the decision to spend or save.
And as you said that it’s important how you can increase your topline, this post suggests that you can do that by investing and letting your money earn for itself.
Anyways, thank you for your comment and thanks for extending the discussion.
Regards,
Vishal
After using a Nokia phone for 5 years (2.5 years with a half screen display and about an year with a battery threatening to die out every 20 minutes), I was cajoled into buying an iPhone by a friend who told me how hard I work to save every penny and thus I deserve to own this Magnum Opus amongst all existing gadgets. After 6 months of delibration and taunting for owning a Nokia from the ‘Neanderthal Age, I had to finally convince myself to own it as a birthday gift.I bought the cheapest and the most outdated one, still an ‘iPhone’ though.
‘Like Mrs. iPhone from Alwar, I’m not trying to show off that I’ve arrived on the scene, but indicating that being an erstwhile Wealth Manager with a bank, I realise what it means to start saving and downsizing in the initial years of my working life. But it’s hard to be sticking to your guns in this age of conspicuous consumption. Even if Mr. Property broker tries to save and cut down on show off expenses, Mrs. iPhone necessarily needs to have the 4s version of it to flaunt it in her evening kitty party. And surely we never argue who calls the last shots. So Mr. Sudhir even if u know what it means to save and downsize for a better future, Mrs. iPhone from Alwar will echo the same logic that Mr. Phantom does….if we don’t spend enough on lifestyle goods, India will lose its newly acquired status of a trillion dollar ecenomy. After all wer there because of Mrs. iPhone.She obviously doesn’t realise that she better save for a bright future, because even if she doesn’t buy one, Apple still sells 3.5 million of them a quarter. So the economy won’t go into a tailspin.
Hi Vishal,
One more thought provoking post i should say. Mainly I liked the way you took this point “Money can buy you time with friends and family” and the way you explained it. The other 2 reasons/points are known to many, but this one is something different. Different because the way ppl would see is that “money” is something that cant buy you relations or friends, at least not permanent ones. But, there is a whole new dimension to the way you explained that very statement “Money can buy you time with friends and family”. I liked it.. Keep writing and helping ppl like me as usual 🙂
Thanks a lot, I do not know exactly how you get time to do this other than your usual work and that to you don’t even charge – u have started writing on stocks too..That’s a big booster for ppl like us, who want to learn and then make investments.
Thanks once again,
Prasad
Folks I think all of us will agree on conspicuous consumption gradually reaching a point which seems ridiculous and should be avoided since it can bring a individual down.
The point on no consumption or reducing it, is the other side which also beyond a point is ridiculous and brings everyone (the economy) down.
Lets keep the cash flowing, that is of essence.
Goddess Lakshmi (specially money, since she is also related to knowledge and host of other virtues) is not static and her essence is in flow.
You captured the essence of it all, Sudhir.
Thanks for the same!
I just want to say that this is the only post that had comments which are really thought provoking. Good one.
I have gone through your views about saving and spending in our old age,I may like to remind a doha of kabir dasjee who said” sai itna dijiye jaame kutumb samay,
Mai bhi bhukha na rahu sadhu na bhukha jaaye.
I hope you understood the meaning of this doha, which depicts the fact of life and the role of money in life specially for old and retired people.
It says there is no limit of desire ,the more who has the more he desires.
Well said, Mr. Keshary! 🙂
Yes we need to switch to need base expenditure for that matter lifestyle necessary for sustained co existence too
I think its very important for us to desire, Desire makes you to work hard, work for growth, if there is no desire there wont be any growth.
The underlying idea from the above discussion – Desire…but have limits to your desires.
Dear Vishal,
I fully agree with all your three points about ‘Money’. My wife and I have always followed the points expressed by you in ‘Saving and Investing’ for the past 41 years of our married life and today we are happy and contented with what we have. For everybody’s benefit I would like to quote your advise “And yes, you rightly pointed out that if someone has properly planned finances or has a good amount of inheritance to benefit from, he or she can simply spend and enjoy life.
But then, based on sheer probability, I believe the audience of this post are those who either aren’t as fortunate to have an inheritance, or are still worried about the decision to spend or save.”
Regards.
Dear Mr. Dipakkumar, your experience serves as an inspiration for us all. Thanks for sharing the same!
Dear Vishal,
Nice post!
There is nothing wrong in having a latest gadget or a luxury car. It is only the question of its affordability and its funding. As long as it is not debt driven purchase and it is not for the sake of holding the latest gadget, it is okay.
Moreover it should also serve the purpose, what is the point in having a luxury car and if you are going to hardly use it in a day.
It is a matter of affordability, comfort and the purpose to have it. It also applies to the luxury apartments and villas (you didn’t mention about that).
I hope such people listen to Mr. Khantilal’s golden words in one of your post!
Indeed Ajay. The question is whether you can afford this, and also what is the opportunity cost of the same. I mean, if you are buying a luxury car, are you sacrificing your retirement to some extent? Difficult question to answer when you are adamant on buying that shiny car. But then this is what makes the difference between a comfortable retirement and a messy one. Regards.
I completely agree on saving and investing point. But also spend money on things that you love (like buying an expensive car, or making an awesome trip) — if that really makes you happy (even for few minutes). Of course, spending that money should be affordable, provided you have saved enough. Spend it and be guilt free about that expense. Its all in the mindset and is subjective. Some could be happy with old Nokia, some with their new iPhone — each have their own measure of happiness. As long as you don’t regret buying it, I’d say it is fine.