B-I-G salary, S-M-A-L-L bank balance!

By Sanjay Matai

 

Earning a six to seven digit salary has become a fairly common thing these days. In fact, today, what youngsters earn in one or two years is perhaps more than what their parents earned in decades. But if you talk about their bank balance, at the end of the month, it's zilch!

Yes, people are spending lavishly. No harm in that. But it makes sense only if you don't go overboard. We need to ask ourselves a very important question: are we wasting money?

 

Some expenses are a must, but wasting money, which eventually becomes a habit, is bad. In fact, there's a thin line separating 'spending' and 'splurging'. You admire Bill Gates, Warren Buffett, Narayana Murthy, Azim Premji, and so on and so forth. But do you follow their spending habits? 

Here are some examples of unscrupulous spending acts.

 

High-end gizmos

Flashing a trendy phone has become more of a status symbol than anything else. A simple phone does the same basic function as any other high-end, multiple features-enabled phone would.  

 

And I can bet that most of you don't even use 25 per cent of the features available. As for the rest, you may use them occasionally or possibly, never. This means that you have wasted money on something which you don't need or even use. Also, given the fast rate at which you change products, you may anyway have to replace it sooner than later.

For example, when your parents bought a television or VCR, they used it for decades! But a phone you pay Rs 15,000 for, may not keep you interested for long.And when you intend to sell it, it wouldn't fetch more than Rs 2,000 or 3,000!

It's a huge loss. Had you bought a low-cost phone, not only would it have saved money but also served the same purpose. It's the same story with DVD players, laptops and iPods. So, the next time you decide to buy a gadget, you know what to do.

 

Brand-conscious?

A good pair of branded jeans would cost you anywhere between Rs 4,000 to 7,000. A pair of Nike shoes would cost you Rs 3,000 to 5,000.

 

If you only buy branded wear, think again. You can buy the same quality product for less than even half the price. Of course, you won't get the label or designer packaging. 

 

Fancy restaurants

Try and recollect how many times your parents used to go out for dinners. Maybe once a month? How many times do you go? Probably, once or twice a week! Cut out three to four such dinners and you save upto Rs 5,000 every month.

 

As the saying goes, too much of anything is bad, and this applies here as well. Not only does it mean that more money goes to waste, but in the long run your lavish spending can have a serious impact on your health, too!

 

Try these simple strategies, and you will be pleasantly surprised to see a huge bank balance very soon. And don't forget the additional savings, when cut down on using your credit cards!

 

The author is a financial planner and promoter of www.wealtharchitects.in . He can be reached at sajay.matai@moneycontrol.com .