There are many types of people I meet – some who are simple and some who think they are leading a simple life. I know a person who cannot print anything from a word or excel. He has no clue about downloading his bank statement. He is a big executive in the pharma business – and is completely dependent on his over efficient secretary. She books his ticket, takes a printout, does a web-check in, arranges for a taxi, gives him a print out of all the telephone numbers he can need @ the travel location (in case he loses his Blackberry) sends an email of his international programs to his wife, – phew!

She co-ordinates with his broker, banker, CA to file his tax returns. His car is taken care of by his administration – right from fuel to servicing, he knows nothing. He does not know where is passport, pan-card, HOUSE DOCUMENTS, gas connection, health and life insurance papers are kept. He carries his driving license (he needs in to enter airports you see!).

He says his life style is very simple – and he spends only Rs. 15-20,000 a month.

To me this is a joke. He and his wife eat out at least 6-10 times a month (his figures, not mine), he happily sends ‘gifts’ to friends and relatives. Any travel is air travel, any local travel is by a Honda Accord. His kids have flown the nest, however he has 2 servants, one cook, and a driver. On days the driver is absent, it is Meru Cabs or the company finds a substitute driver. Vacations are in 5 star plus hotels, Diwali card sending happens at company expense (oops I am harsh, am I?), medical expenses are company paid.

My estimate is he and his wife have a Rs. 100,000 per month life style if not more. His monthly electricity bill was Rs. 5440. He thought it was 1200-1300. He had no clue about his expenses – he had never kept track. Meeting me was not a pleasurable experience for him.

His estimate was he needed about Rs. 2 crores to retire, I multiplied it by a factor of 10. He baulked. No clue whether he will call me again.

If this is your story, re think and re consider – see where you stand. Make a realistic estimate of your expenses, then multiply it by TWO. Chances are you will be correct. If you have kept track of your expenses – writing it down or in excel – you will be right. If you are doing ‘mental accounting’ chances are you will be wrong. Dramatically wrong.

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  1. Hello Mr. Subramanyam,

    Thanks for the “eye opening” insight on retirement expenses. I like the following line and cannot agree more.

    “Make a realistic estimate of your expenses, then multiply it by two” 🙂

    I tried mental accounting for 2 years and it was a total flop. For the past 3 years, I am writing my monthly budget during start of the month and make an actual expense sheet during month ends. Me and my wife sit together on the last day of the month and compare actual Vs budgetted. 🙂 When we started, the the equation was like “2.5 x budgetted = actual” and it took us close to a year to close the gap somewhat!!

    So, writing down definitely helps.

    Thanks for the insight.

  2. Nice one Subra 🙂

    I guess the biggest challenge with people is to actually do the calculations and account for everything . Once people write it down , they will be shocked and they know about it somewhere in their heart and hence run away from doing this 🙂

    Do you think desktop softwares which help in tracking the expenses etc help much ?


  3. This a real eye-opener Subra.. 🙂

    I see many hot-shots like this who know nothing and donot have the tendency and the patience to learn also. This is their lifestyle and happily boast of it as their success story… 😛

    Now, what somebody can tell them when they have never seen bad times… phewww… why would they realise the value for money…

  4. I could not agree more to what you have written in this article. I actually wonder at times and I go blank, am I saving (investing) enough money for my retirement. I know its good to enjoy today but not at the cost of your tomorrow. I enjoy life today but at the same time I am careful for my tomorrow.

    Thanks again

  5. as per your book i got a couple of kids in my office to calculate how much they needed for their retirement. Over a beer they must be cursing you – they cannot curse me!!!

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