Just a few days ago, I was strolling through Instagram and something caught my eyes. I saw my friend enjoying the concert festival. After going through his profile, I was awestruck when I realised that going to the movies, theme parks was a normal affair for him. And, he is someone who used to tell me that he does not have Rs.500 to save to open a recurring account (RD) or a systematic investment plan (SIP).
This made me think is saving money degrading the quality of my life? After all, I hardly seem to enjoy life. As you must have realised, this blog post is meant for people who save a certain portion of their income. Even if you don’t save, this may encourage you to start saving.
As we start introspecting, we need to understand the reason behind our thought. Why do we feel that saving money is degrading our life’s quality? Are we saying ‘no’ to the plans made by our friends? Or, are we not able to do things that we could do earlier, like get on a bus to Goa or a flight to Mangalore to visit your sister? If you think that the examples are based on real-life, you are 100% right. After all the airport and bar hopping, I still had money in my savings account. That was an awesome feeling.
Fast forward three years, a higher salary has resulted in fewer flights and frequenting the cheapest bar I could find or not go to a bar at all. Because I hardly had money in my account after paying my rent and SIPs.
If you are facing a situation like me, you may need to ask how much are you saving or investing each month. Is it 20%, 30%, 40% or 99%?
Next, you need to question why you are saving all this money. Are you saving to buy a house, fund your retirement etc? Knowing the ‘why’ will help to put things in perspective.
Now, you need to ask yourself some important questions. In this process, I asked myself, ‘Is having drinks with someone I may not be talking to next month more important than being financially free?’ Of course, being financially free. However, that does not mean that I will not spend money meeting the right people who can help me become a better version of myself.
This leads to next powerful question i.e. what is your definition of a rich life? The concept of rich life was made famous by Ramit Sethi. You need to find out what it means to lead a rich life. How can money make you feel happy so that you don’t feel like you are living a sub-optimal life?
After your savings are in place, focus on one or two areas from where you can derive the maximum joy and leave out the rest.
E.g., I derive the maximum joy from reading, sipping good quality beverages, getting my monthly pedicures or body massage(it is always either one unless there is something special), making my room smelling fragrant and using high-quality towels and bedsheets. These areas are important for my overall mental health.
However, I am less likely to spend my money on shoes, clothes, jewellery, cosmetics etc. Travelling, clubbing, buying whatever the shit is on sale does not give me any happiness. This is my list.
My sister who has excellent money habits (I guess, few things run in the family) spends a lot on Nike shoes. She is a Nike girl( that is what she likes to call herself). She will hunt for the best bargains. She has one Nike for the gym, one for trekking and another one for office etc. Also, she loves polo t-shirts. Because of her relaxed office environment, she has Tshirts for office, gym Tshirts, going out with friends Tshirt. However, I hardly see her spend money on other stuff.
Finally, there are different aspects of life like relationships, career, health, entertainment, food, vacations. You need to figure out what makes you happy and where do you want to spend/invest your money.
Having less money at my disposal helped me to figure out what I want to do with my money and what I don’t want to do. You don’t need to waste money on things just to please other people or make yourself believe that you are happy. If sitting and writing in Starbucks or your room gives you more happiness than clubbing with your colleagues, choose the former. We tend to do a lot of things without thinking. I am also guilty of that. I did a lot of things to please people as I believed that in any relationship we need to make some adjustments.
If you still have money in your savings account after investing and spending on things that you like, a little extra money on the savings account never harmed anyone. There is no need to spend it. If it makes your palms scratch, transfer the money to your second savings account.
To be honest, saving money, having an emergency fund, making a retirement fund gives me a whole lot of intangible benefits.