What is the activity that we are involved most of the day? That should be for the living. I mean, job that we perform. In the modern day world almost everyone earns money. More or less we try to live within what we make in the month. There is no problem if the salary is less. You are forced to restirct your expenses. The real problem starts when you earn more than what is required. Here 'required' has different definition in people's life. We will discuss about what that 'required' is.
Absolutely no planning
I know of a couple of friends who are in early stage of their career. they have bought a new car in EMI. Almost entire salary is spent in paying back. Savings is absolutely zero. Leave out the savings, what you will do when there is some emergency expense? This I will call a poor planning of the salary. Savings should not be the left over of expenditure. It should be a fixed amount every month. A plan for the future. A new generation is coming with this kind of mind set of spend-whatever-you-earn. Widely believed that the US economic recession is due to this no savings and too much credit of its citizens. Now that trend is in Indian youth, especially IT professionals.
A recent ad made me to appreciate the idea of a company to sell its product. Samsung Galaxy S II. 0 down payment. 0% interest on EMI for 12 months. My God!! It will mesmerize people to buy the product. No matter if they require it or not. Good marketing brain but no sense form the customers. Its not a good buy, if you really do not require that. Do not buy things that you don't require. One day, you will be forced to sell the things that you require. Great words said by Warren Buffet. Lot of thought put into these words. First rule to be followed for us to be a good consumers.
One more thing worth mentioning is the temptation of people to do what others do (this is only in the negative sense). We involve in chat regarding latest bikes, gadgets, cars and one day we end up buying them. And there will be an ego between people to show who is the most updated and to show them who has the most latest version of it. There is no use in it. Its just a profit for the company which sells it. I have a basic mobile for the last 3 years. And I want to use it for more. I mean, unless you feel you need it, don't buy. I have an interesting colleuge. He will say I require that. He will buy things he likes. He already has a laptop in good working condition and now he wants to buy a new one just because he wants to be upgraded. And uses it mostly for movies and games. And he 'requires' it. There are lot of people of this grade who buy things that are not at all needed.
Too much planning
There is one more interesting set of people who spend almost their entire life paying the EMI of house that they bought in the outskirts of a city (we dont get houses in the city these days and the real estate thycoons now market those places as the city in next 10 years). This comes in the category of too much planning. One day that place will not be of any value. Most of these are again done because others do it. We never knew where we will end up in 10 years. Still we want to hurry in making decisions. This is another prime example of poor financial planning.
One day we may end up in a poor situation where all our wealth is spent or locked. That moment will be the worst part and we may lose all our confidence of getting back from that position. We work hard to earn the money. Don't lose it in buying stupid stuffs. Have a plan, short term-long term-emergency. This is an advise to all my friends.
Absolutely no planning
I know of a couple of friends who are in early stage of their career. they have bought a new car in EMI. Almost entire salary is spent in paying back. Savings is absolutely zero. Leave out the savings, what you will do when there is some emergency expense? This I will call a poor planning of the salary. Savings should not be the left over of expenditure. It should be a fixed amount every month. A plan for the future. A new generation is coming with this kind of mind set of spend-whatever-you-earn. Widely believed that the US economic recession is due to this no savings and too much credit of its citizens. Now that trend is in Indian youth, especially IT professionals.
A recent ad made me to appreciate the idea of a company to sell its product. Samsung Galaxy S II. 0 down payment. 0% interest on EMI for 12 months. My God!! It will mesmerize people to buy the product. No matter if they require it or not. Good marketing brain but no sense form the customers. Its not a good buy, if you really do not require that. Do not buy things that you don't require. One day, you will be forced to sell the things that you require. Great words said by Warren Buffet. Lot of thought put into these words. First rule to be followed for us to be a good consumers.
One more thing worth mentioning is the temptation of people to do what others do (this is only in the negative sense). We involve in chat regarding latest bikes, gadgets, cars and one day we end up buying them. And there will be an ego between people to show who is the most updated and to show them who has the most latest version of it. There is no use in it. Its just a profit for the company which sells it. I have a basic mobile for the last 3 years. And I want to use it for more. I mean, unless you feel you need it, don't buy. I have an interesting colleuge. He will say I require that. He will buy things he likes. He already has a laptop in good working condition and now he wants to buy a new one just because he wants to be upgraded. And uses it mostly for movies and games. And he 'requires' it. There are lot of people of this grade who buy things that are not at all needed.
Too much planning
There is one more interesting set of people who spend almost their entire life paying the EMI of house that they bought in the outskirts of a city (we dont get houses in the city these days and the real estate thycoons now market those places as the city in next 10 years). This comes in the category of too much planning. One day that place will not be of any value. Most of these are again done because others do it. We never knew where we will end up in 10 years. Still we want to hurry in making decisions. This is another prime example of poor financial planning.
One day we may end up in a poor situation where all our wealth is spent or locked. That moment will be the worst part and we may lose all our confidence of getting back from that position. We work hard to earn the money. Don't lose it in buying stupid stuffs. Have a plan, short term-long term-emergency. This is an advise to all my friends.
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