If you pay taxes honestly about 50% of what you earn goes off in various taxes – income, service, securities transaction, etc.

Now take away another 28% in housing EMI, then another 7% in building maintenance etc. It means your government, and your house have taken away 85% of what you earn. So the 15% that you are left with has to go long enough for you to provide for your current needs, children’s needs, parents needs and your own retirement needs.

So every paisa that you spend (which is part of that 15%!) has to go towards your goal….so that extra samosa, or that soft drink, or that McDonalds trip which goes to the waist takes you that much further away from your goal.

So take care of every rupee (nay paisa) that you are spending. Much of that expenditure has nothing to do with your goals!

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  1. Just had a veg. spring roll…..and now I realised that I am one spring roll away from my goal. Very true, many a times we tend to ignore small little things, but all of them put togther would definitely make a big difference.

  2. There are only to ways to become so called “RICH” —
    1. Save every little penny everytime (i.e. become a “Pakka Kanjoos’)
    2. Earn so much that these expenses become miniscule

    — I would prefer to go the second way.

  3. Dear subra
    first struggle to earn.
    then postpone consumption to invest.
    then invest dividends from investmentS to start RD or SIP.
    then invest income from RD and SIP to buy some postal savings or whatever.
    by that time u r old enough to transfer all your holdings to your son’s or daughter’s.
    same process goes on and on and on for generations.
    the tragedy of life is that u end up just as a security guard of whatever wealth u have, u never enjoy it.
    one fine day u leave this world without enjoying best of it…..LOL

  4. Happy to see this post and the comments.
    Nothing applies to everybody as it is. So we need to validate, verify and apply things to our situation. I agree with Subra completely based on my inference applied to my situation.
    It is critically importent to set right goals in our life. Their achievement should satisfy your needs of body, mind and soal. So if my goal is right, and me eating spring roal maps to goals for satisfying my body, I should be happy. It is essential to enjoy process and achievement of goal without feeling guilty about it. Else the goal is incorrect.

  5. Manish, great, you couldnt have said it better what i also had in mind. I used to believe and follow very much in (1), now really believing in (2). My parents saved every penny and now has a small fortune in FD (but i,young, am already on verge of beating them because of my inflation adjusted high salaries). Now i did the same mistake of “saving every penny” (in FD) for sometime. But realised “penny wise, pound foolish” is a very bad idea. Do we want to be in “poverty mindset” and live like this or “rich mindset” and live well, but work harder/smarter/innovate/learn/take risk and earn far more money ?. I go for (2). I think great many rich people became rich not because they saved like this, but because of other things i mentioned just above.

  6. I am really not sure how the 50% figure is arrived at. Maximum income tax is 30%. Service tax is 12% and applied on the money you spend and not on your income/investment. Security transaction is minuscule and wont cost a lot if you don’t churn your portfolio every month.

    If you keep your money in Mutual fund for 10 years then it will cost 15% as management cost. 1.5% as management cost is norm in MF industry. This calculation is not related to this article but I find it amusing.

  7. I think one can be kanjoos when spending on self, but one should have a big heart when spending for close friends and relatives. That gives invaluable intangible returns on investment!

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