‘I earn Rs. 15L CTC – and clearly I am overpaid. However I am not able to save a rupee – I have no idea where my money goes’

Can you believe this…if you are a middle class Indian?

I found it a little amusing…but not difficult to believe. When I spoke to him, I just heard some of his expenses – Rs. 3000 for a gift for a colleague’s wedding, EMI on a car, and EMI on a motorcycle. Rented house – supporting his parents so paying Rs. 23,000 as rent.

These were too adhoc, so I did not want to be judgmental. So I asked him to maintain accounts for at least a couple of months before I could comment….and here are the expenses:

 take home 84000
misc 23000  household
emi car 12000
emi bike 7500
petrol 5500
investing 7000 80C
Personal exp 6000
rent 23000

i was not as stunned to see this. This guy is about 28 years of age – works as an accountant – and as he himself admits, he is well paid. He is still a bachelor, says he is not a big spender – and has ZERO savings – except for some mutual funds (80C), nsc, and ppf.

I said my life style is very different, cannot comment on yours.

However readers are welcome to comment. He reads my blog….:-)



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  1. Hope by now he might have good knowledge where he went wrong but before that he might have got good advice from Subra Sir. So he will definitely prosper in his life because atleast he has not done any bad investment as many of us might have done.

    Apart from expense I am amused with your behaviour about money as Subra Sir pointed out you are tend to give expensive gifts to colleagues and you are also feeling that your are paid well. As per my view you must come out of this assumption and you have to be careful of spending each rupee. Then automatically all your unnecessary expenses will cut short

  2. My 2p, worth about that much – There are only two ways out of this.
    a) reduce expenses
    b) increase income

    For some strange reasons people are busting their chops on a). We are out to sell his bike or his car or make him travel by public transport, and to cut household expenses and not give gifts to friends.

    Wokay, if he’s desperate, but give little ijjat to poor fellow; this is the age to live, boss. After your marriage and kids, your expenses are diapers and clothes and toys and all that, which are far inferior in the pleasure-to-rupee ratio as compared to just going to goa for a weekend.

    Have a heart – he’s spending just 6K on himself per month, which according to me is the biggest problem. (I spent FAR more than that on myself when i was a bachelor – one drink at a lounge costed Rs. 250, darnit, and that was 2004) These days won’t come again, he has to enjoy his life. S

    Yes some changes are needed. He can easily get a 1 cr. insurance policy (term) for 2K a month which he can take out of his 7K per month 80C investment.

    He needs health insurance, but I pay like 5K for a 4 lakh cover for a family for a year, so that isn’t a big deal.

    He needs to have a buffer in case he loses his job. Six months of expenses or so. He probably has some of it, has to work to get the rest.

    Other than that, why focus on saving? Why not focus on increasing income? He’s 28 – probably has 6 years of experience. 15 lakh per year is pretty much par for the course in IT for that; he’s not overpaid, and definitely not in Mumbai 🙂

    He can get more by shifting jobs if he wants. He should definitely look and see if he can get better paying jobs, or even try going up the ladder in his organization.

    Also slight issue – how come he’s paying that much tax? 1.25 lakh salary, 84K take home = nearly 33% tax; even top bracket is 30.9% and there are lower brackets; if he gets just 15K off as HRA per month and 1 L on 80C he should get around 1L per month in hand.

    That means some money must be getting lumpsumed at the end of the year, or going to PF; But it can’t be PF because, if it was PF, what is the need to put 7K per month in 80C? No, it has to be some bonus at the end of the year or something like that.

    VOILA! we have found the annual saving.

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