I am stunned, or at least shocked when I talk about money to some people. I really wish we had some magazines like MoneySense who did surveys and gave us some macro numbers on how people spent their money.

I met this guy earning well and having literally no cash in his hands. Around 32 years of age he is now preparing to receive his first kid in the world – and he was struggling to pay for the delivery charges. Never mind that his office will reimburse the money, he has to pay about Rs. 50k to the hospital (assuming I did not ask him what amount).

I rarely write about how a person should spend etc. – I am more on the wealth side. I prefer writing about how people should save and invest..but this was shocking. How can a 32 year old with a 31 year old wife – each earning about Rs. 10L a year not have even Rs. 100,000 in cash / mutual fund with easy access? Beats me.

They have had vacations in South East Asia, Europe, and Middle East. None of them came cheap – I know for sure that the Europe trip must have been darned expensive because it included 4 days in Switzerland and the whole trip was about 15 days. They drive a Honda City and a Swift Dezire, live in a rented house, do not support their parents. The wife has some ULIP (tax saving!!) and the husband believed in paying all the taxes. No savings whatsoever. Money earned, all spent.

Last year they donated Rs. 55,000 to a charity I know, and that is where I met them. Seriously, they cannot afford the charity. They need to put money away to buy a house, now for the kid, and generally create an emergency fund, and of course a retirement fund. She is a banker (oops!!) and he is in the IT space, both industries known for their fickle minded HR policies. Frankly the have another 15 years in which to put together this money, and their salaries, though good, are not really astronomical. Their parents are not so well off – but they are not dependent on these kids as of now. However on probing I found that parents could exhaust their money – they do not have any indexed pension, and worse, they have no medical insurance. This couple used their credit card the last time that they had a medical emergency BUT STILL DID NOT GET MEDICAL INSURANCE for their parents.

Their monthly expenses (to this old man) were stunning: Cook Rs. 9000, Maid Rs. 3500, Petrol Rs. 12,000, Electricity Rs. 6000 on an average, eating out is 8-10 times a month, and the bill is Rs. 2k*10 so say 20k a month, movies, shopping….). Of course all this is a guess, and they have not kept records. It should not be difficult to construct the expenses..all expenses have been paid by credit card. Though they thought they were earning well and spending well, they were actually living far beyond their means. Corporate travel meant a hired taxi, air travel and luxury hotels. Even when they went on their personal visits, they used the same combination. They started staying in 4 and 5* hotels (corporate discounts meant they paid much less than the rack rates, but still these are expensive)..so they did not really consider saving!

Their travels were more as a tick box item. They have not seen anything in India. Both are from South, have not seen, say the Taj, but have seen the Eiffel Tower and Big Ben.

Honestly, I do not know where to put the finger on….but yes they are headed for the Poor House soon if they do not change their spending habits…Hey to invest you need money. Money comes from saving. Saving happens by spending sensibly.


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  1. I have observed.. there is huge difference, the way businessmen spend their money and the way salaried person spend their money..

    Few salaried people take their hard earned money so lightly, as if they didnt work hard at all to get it and it will flow in same sequence life long..

  2. You are absolutely right on comparing the Taj with the Eiffel. We have thousands of places, be it natural or historical, in India to visit. People are obsessed with this foreign vacation. We had a small historical temples visit this time with our extended family with a fraction of a foreign trip but with full satisfaction.

  3. perhaps we should see it as an honest acknowledgement that they don’t think they deserve the incomes they get 🙂

  4. That’s great Subra sir. We can understand if someone of 31 or 32 doesn’t have any saving, if he has spent a lot on repaying the debt. Atleast he is debt free now.

    Shitty (not pity) of them to live a totally meaningless life. Such a life style will only lead to suicide when things go uncontrollable.

  5. And here I am even after getting 30 lakh in hand after all taxes thinking if i should be selling my 8 year old hatch back and go for sedan..
    Have 4(Combined value is greater than 8 figure) sites and nearing 8 figure portfolio of MF equity and ppf and epf,

    When i read such articles, i feel like i should be spending some money, but then i go and do number crunching on retirement calculator and child education it brings me back to my senses.

  6. lakshminarasimman

    people will not agree what i am going to say

    a boy’s world will change totally once first child is born. till that point he is like a carefree untied bull.

    i dont see anything wrong with this couple at all. it is normal.

    this couple have done whatever they felt gave them happiness at that point of time;enjoyed their youth well and now they are thinking to change their ways.

    sadly, for most of the people commenting here, enjoyment means once a year spreading their transaction statements and seeing how much their 1000 rupees monthly sip has multiplied; passing judgments on others and feeling superior

  7. you are a very rich man, an old man, or a brilliant man or a combination of all 3. If you think the people coming to subramoney.com are the people who do Rs. 1000 sip, you sound contemtuous. Great, why are you here with those down market people?

    you think this is normal, I feel sorry for your ability to think.

  8. Aryan..

    With a 9 digit portfolio (10 cr) have some fun..pay yourself. And pass on the secrets for a pf that is at least 30 times your net cashflow.

    Do not get me wrong..not being sarcastic or doubting you.

    But as the saying goes..does not help being the richest man underground.

  9. @NN,
    its nearing 8 digit including all epf ppf Mf etc. I am not sure how you got that PF 30 times than my cash flow.

  10. @lakshminarasimman, Though I don’t share the same view as yours, I respect your view and your opinion.

    Also, please don’t feel sad about people who take care of their transactions seriously. We are a different tribe who cares more about the future happiness/security than the present.

  11. So are you telling me that first I should visit all places in India, to qualify for a foreign vacation? That means I will turn too old to enjoy Eiffel tower.

  12. The point here is not about just spending.. If we think expenses are the only way that a couple is enjoying life certainly some thing not right here.. Let us assume that in critical situations like hospitalization of parents where will the person get the money if he does not have medical insurance for parents… If he has the basics right.. say medical insurances for parents and self and then term insurance for him and then some emergency funds and if he has zero balance in savings or in MF its ok.. but at some point of time they have to prepare themself for kids education their retirement.. they should know their competency and if they feel they can hold on to their jobs for long time they can have a better retirement.. If my only goal is to become a CEO of a company and even i reach a position of VP or SVP money will automatically come and which will take care of everything..

  13. @aryan

    my mistake.assumed 9 digit mentioned by you = 10 cr.

    But I agree..with a decent 8 digit net worth..retirement and children education are milestones that I am still not sure I have planned for.

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