‘Sir I actually wish to save more, but am not able too – my current expenses are too high’ – a common refrain especially from those people earning EVEN Rs. 18L CTC. That set me wondering…so here is an article…
We spend most of our money using electronic gadgets – online, credit cards, debit cards, etc. This has one convenience of course – of not having to carry cash. The other advantage is that the data on what you spend is electronically available and can be analysed..Here is an attempt – this of course is generic, but you can analyse your expenses too..So now let me enumerate:
- You bought a house too big or in too expensive a location: Did you wonder whether you could have bought a flat in a slightly less expensive location or a smaller house? Do you realize that your Housing EMI is forcing you to work longer or make you compromise on the size of your Retirement corpus?
- You have replaced cars too soon? Most people buy a car every 5-6 years. Really? is it necessary? Can you not push it to say 8-9th year? or buy a smaller car? A bigger car costs more not only in fuel but also more in insurance, maintenance, etc. See if you can work with a smaller car – given Indian roads you really cannot unleash the power of the bigger car, right?
- Your trading mistakes: the ‘small trading losses of Rs. 2ooo or Rs. 200,000’ depending on your portfolio all add up. Losing money while trading is a big big drain on your ability to save/ invest money.
- Appetizers / Salads / Desserts: Eating out is not a very sensible thing to do, but we all do it. The big worry here is not the food bill, but the subtle manner of increasing your bill. As soon as you walk in ‘Water – bottled or ordinary’, then the offer of appetizers, papad, salad and in the end the dessert of course. Be careful how you are being had 🙂 . Monitor your eating out expenses, and find substitutes like buying sweets (even better, making them) and consuming at home – at least you are not paying for the ambience!
- Clothes: It is not just which brand you buy, but also how many such clothes you buy. Do an audit of your cupboard. Cross your heart and tell yourself that you need those 122 shirts or 54 pants!! Ok this maybe an exaggeration but according to a retail trade expert the shops in Mumbai have more stock than what Mumbai buys over a 5 year period. Now do an audit of your house – do you have more clothes than what you can wear over the next 5 years or is it 10? We buy too much, store too much but do not use them.
- Coffee! it is no longer Rs. 15 or 25 in a Udipi it is Rs. 160 in Starbucks or CCD or …and all these amounts add up. Imagine Rs. 150 twice a week – this is about Rs. 1200 a month. Imagine what Rs. 1200 SIP in a good equity fund can do for your portfolio over the next 40 years!! That was the title of my book!! ‘Retire Rich: Invest Rs. 40 a day’ – read that article in the blog!!
- Gadgets: How can we forget this? the gadgets without which we cannot live is costing us our retirement. How much you spend on a phone for yourself and your family is of course your business, but do you realize the 39 year impact or a Rs. 28000 extra paid for a ‘must have new toy’ ?
- Vacations: of course you deserve your vacations, but after you have ensured a worry free retirement. I’ve got no problem with one really cool trip each year, but the problem is now families have raised their expectations so each new trip has to be better than the last trip. Not every vacation can be Ritz Carlton in the Cayman Islands or Kempinski Grand in Switzerland.
See from where you can get that ‘extra’ money for retirement? go have fun…..but after you have funded your retirement..
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