Wednesday, January 7, 2015

On Frugality

 

Ti's a new year, and one of the things I am hoping is to become more responsible in my financial life. Growing up in a town in Kerala, frugality is a point my parents used to enforce on my every day. Be it the way I decide what to buy, to what kind of people I hang out with and even the way I spend my little pocket money, we were asked to rethink it financially. The collective result of this endeavour is that today I think about 50 times before making any purchase. I may not be earning in huge amounts or have the luxury of a plush home and big car, but I am able to meet my needs, and save the bulk of my income. And thankfully, my wife also comes from similar upbringing, so she shares my point of view.

But things are not the same for people around me. Every day in office, I see my colleagues spending every dime on repeated online shopping purchases. Already in this first week of the new year, many of them have ordered new laptops, smartphones, jackets and shoes. On an average, our office gets about 2 shipment deliveries a week, it's double that during festivities. Last year, two of them bought new cars, brand new from the showroom. And all the while, I hear them talking of rising credit card bills and upcoming EMIs for loan payments. I would be the only one on the floor who has not EMIs at the moment. My monthly credit card bills for the only card I have never cross 1500/- Rs, I use it only for petrol bills and once I recharge my pre-paid cellphone for 300 /-, I am good for 2 months. I can never imagine getting a bill with more than 4 figures on it, yet everyone around me live with such numbers.One of my colleagues recently invested 3.4 lakhs in 'Interior Design' - she bought 2 beds (cots) , 1 cupboard, and kitchen shelves ! Obviously they did not do their homework because they could have got everything under 50,000/- if they had just got on the road to check price instead of online shopping.

Its Not how much you earn, its how much you save. These words of wizdom were given to be by my Father. He was born into poverty, the fifth of eight children. When everyone else looked up to the government and others for help, he decided the only one whom he could depend upon was he himself. He worked  his way out of poverty, and was able to provide enough for us, his children. He doesn't have any magical trick, or special education which helped him. And he didn't do anything illegal either. He just lived by his golden rule, work hard, and save whatever you can. If it was not for him, I would not be here typing these in today. But he was also careful that we kids do not get carried away with this new found success. We too had to earn it.

When I grew up , and started working, it was in a big city: Chennai. Expenses were high, and life was shiny, so I got carried away a little. But not too much. I always managed to prevent impulsive shopping, and managed to send half of my earnings home, a practice my then roommates would call impossible. I was not smart enough to make money off the stock market, and I surely didnot have any spare time for any side business. I just stuck to what I knew, and found it worked good enough for me. But I needed help, and some direction. There was no dearth of information on the internet, but lets be frank, the web is overloaded with crap, people reposting multiple times and often sharing things illegal. But I found two sites which stood out, they covered different areas of financial freedom, yet was enough for anyone willing to improve financially.

JagoInvestor sounds like one of those government slogans against corruption, but its actually a private blog and services run by some very inspiring individuals, and specialy made of Indians. I think their original aim was to inspire people to invest in various products in the market, but they soon switched to help their readers to save, and make sound financial decisions, covering a wide range of topics from stock markets, to tax calculations and spread awareness of shrewd marketing ploys of banks and investment companies, and about reliable products with strong performances. Many many Indians have managed to turn their financial lives around because of this team. I too came to know about Indian Government's Public Provident Fund, just because I found you could easily transfer money online to it. I also shutdown an Insurance Policy I had which I had taken not thinking through properly. I discontinued it and took a cheaper term plan. I also parked some money in some Mutual Funds and have found it has paid off better. If you are in India, and want to know how you can save some more, then please visit Jagoinvestor soon.

The other site I stumbled across purely by chance, their article on the true cost of commuting was picked up by Lifehacker, and soon linked to by the whole internet that side of the Atlantic sea. This was because Mr Money Moustache resides in the US of A , and retired at the early age of 30 (my current age) and now lives a more fun , active and free life than your average American. Living expenses in US are in the highest in the world, and most Americans work their whole lives and are still not able to make enough to retire. But he defies all odds and does the impossible, and asks and inspires others too to do the same. The magic formula he uses: frugality. Now since his advice is on life in the US, they cannot be applied completely in India, but a few of his tips are timeless and valid wherever you live. Like his advice to ditch the car, get a bike, and living closer to place of work, even if it is a tiny bit expensive. Others about Aquaponics, brewing your own beer, getting a cheaper pre-paid phone, and living an healthier life without spending at the gym is not for everyone. He explains the difference between cheapness and frugality clearly, and makes it clear that it is not for everyone ! As a result, I took a job closer to my home in Bangalore, cancelled my cable TV connection, and switched to a cheaper pre-paid connection. The savings in fuel alone have opened my eyes to how much I could have saved if I had thought of this earlier.

Another site I tumbled across is the Art Of Manliness. Its not a site about finances and frugality, but rather on how to be a better human, specifically a man. You can call it an online men's magazine , but it does not contain the sleaziness and materialistic nature you see generally. The site has a vintage feel, and uses pictures and classical drawings which invoke nostalgia. Everything from managing your expenses, dressing up better, cooking healthier meals, and overcoming your fears is covered , along with many tips and tricks.

We are turning into an increasingly consumerist society, people just think of consuming more, thinking of new ways to spend their hard earned money, hoping it will improve their social/professional life, a better status and all that.. The bigger issue is that they confuse frugality to being cheap, and don't bother to save all those nickels and dimes they lose daily. While I find solace and pride in my way of life, I hope others too wake up to reality. Soon.

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