FINE LINE BETWEEN YOLO AND I NEED TO SAVE

I love reading quotes. All kinds of quotes – on life, loss, positivity, women empowerment, humorous, finance everything (Daughter loves them too and throws them right back at me at appropriate times!). It gives me happiness, courage, power to jump start my day, positivity and knowledge as well. Some days ago, I read one quote which caught my mind.

 

 

This got me intruded. This is what I feel many many times. Many of us do. There are so many shopping temptations. Increasing due to social media. Hard to resist. (Stop showing me the advertisement of the garment I wishlisted, Google!) So, what should we do? Here is my solution.

• Money looks better in the bank than on your feet.

(Yup, yet another quote! – Keep this in mind whenever your temptations grip you) As already mentioned in last post, you should save minimum 20% of your income. By saving, I mean investing and not kept in bank accounts. If you will see high bank balance, you would be tempted to spend the money on unnecessary items. Start an SIP. Choose an SIP date very close to your salary day. That way, automatically, a certain amount will be deducted from your account every month and you won’t be inclined to buy anything by peeking into your bank balance. Focus on your future goals (I have so many!). A new car, a bigger house, kid’s education or travelling. Start a goal-based SIP.

 

• Necessity, Comfort and Luxury

After enough Savings, how you should take decision about whether to buy a product or not. So comes the rule of ‘Necessity, Comfort and Luxury’. This is the first financial rule my dad taught me and it has helped me tremendously in my financial decisions (Totally ignoring my overflowing wardrobe for the time being). Hope this benefits you too.

 

Put the object you want to buy in one of these categories: 

1. Is it a necessity?
2. Is it for my comfort?
3. It’s a luxury and I want to show off.

 

o  Necessity: You know the meaning of necessity. (E.g., Due to online schools, a computer/tablet/mobile has become a necessity for kids) Does the item you wish to buy fall into the category of necessity for you or your family? Do you have money to buy it? Don’t think twice. Purchase that thing. If you don’t have enough money for it then you can also dig into your savings to buy necessary items.

o  Comfort: Will the object you want to get bring comfort for you or your family? Do you have necessary dough? (Slang for money people, keep up) If yes, don’t make an immediate purchase. Give it some thought and a day (Once you will get used to that comfort, there is no going back). If you still want to buy it then off you go but if you don’t have enough bucks then start a goal- based SIP and delay your acquisition.

o  Luxury: The items which won’t fall into necessity and comfort zone will make an entrance into this category. (I am talking about yet another Jewellery item, Watch, Louis Vuitton Bag, High end car, Weekend homes etc). Once you are in this category, I believe we won’t be talking about whether you have enough Moolah or not (Yes, I am using a Thesaurus). According to Investopedia ‘A luxury item is not necessary to live, but it is deemed highly desirable within a culture or society.’ You got the point. This classification is the trickiest one. When buying a luxury item, think 100 times. Wait for a week or more (Recall the quote I dished out earlier in this post). Even after giving it enough time and thought, you can’t get it out of your mind (considering money is inconsequential) then go for it. What can I say?  YOLO.

 

                                      — X —

– Foram

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