courtesy-creativefinancialhelp.com
Ravi Speaks:
A Mindset Change-In Present Day Money Spending & Saving.
Times have changed drastically
Gone are the earlier days when the person, after getting his monthly salary, would think of saving a few leftover amounts for the rainy days. Times have changed drastically and the spending of money has overtaken saving the same. It is not only the expenditure that has been happening fast and immediately but it is also the mindset change that we have to spend it and not care for the saving at all. Somehow, a western style of living has gone into each one of us to a greater extent. There may be people who, for example, from the 1960s onwards, like the ones in my category-who might still have the conservative thinking of saving a few bucks here and there. But the people have changed enormously, especially the youth in their spending behavior.
Just as the new generation has a different outlook, even for searching their jobs or placements right there from their professional colleges, only likewise they have very different thinking about the money spent as well. They don’t wait and even don’t think to save some amount. They try to live in present and want to encase the maximum from the present times which they want to enjoy. It is very good and modern-day thinking. After all, why should they even think about what they had to save or plan for the future when they are always in search of enjoying the pulp in the present phases itself?
Getting wealthy is not an issue, but staying wealthy is the key
At least I feel myself to be distinguished from my next young generation. They believe in spending enormously and I still believe that I should save something at this age of completing my six decades. Earning is easy as there are many sources available, but creating wealth is much more dependent on your saving rate rather than on your ROI. We can earn many amounts of money in a year and spend all of it on purchasing items we wanted or didn’t want but bought because they looked attractive or because of some social comparison. What is the use of that earning which can’t even support you in the future during uncertain times? Getting wealthy is not the main issue instead, staying wealthy is the key. Understanding the real meaning of enough in financial terms is so crucial. The present generation, just searching for their careers, does the job-hopping and tries to snatch the high emolument jobs. Similarly, they care the least even in spending the same high amount they earn. This bold mindset change is being conspicuously observed, at least by me. Hope most of you would agree with me on this front.
In earlier times, planning had a different meaning, and now it is changed
In my school days, we were told emphatically how we should plan our future and how we should go about certain professional lines which were only a few and could be counted on fingers like Engineering or Medical Legal, etc. We used to go ahead accordingly by choosing those subjects which would take us towards our plans. We were also taught how small achievements earned over the years created the basis for the future as a big reward. Our parents also would save their earnings/money in such a way that they had already planned even the amounts for the bigger functions like marriages and even for the higher professional education of their progeny. Now the term planning has changed its meaning, and it is not in the same way as it used to be in earlier times like ours. The planning nowadays is when to plan to go for an outing-may it be in India or outside India. People think that their automatic PF deductions would take care of the after-retired assignments like marriage etc and if at all some amount was left out from the monthly healthy earnings-let that be spent immediately on certain functions or entertainment. Even for a purchase of a flat which commonly the sane people would like to go in for before really trying to settle down, the new generation does not give any importance to such real serious saving like that. They would prefer availing of the higher loans-which they easily get from the financial institutions based on their healthy incomes, but would not like to engage in any such financial curtailment to save at the cost of liberal spending.
In earlier times, savings could be done from the smaller incomes comfortably
In my times when I started as the Medical Representative with Himalaya in 1982-March the first month earning which included my basic and the allowances-cumulative for that month was Rs.925 and the daily allowance for the HQ was if I remember correctly hardly Rs.20 per day. I used to save still from those meager amounts with a constant eye towards the annual incentives which were up to the tune of Rs.7500/- to Rs.10,000/-. Even if there was no saving on a monthly basis, still the annual Incentive we used to save completely and slowly and steadily, we could accumulate some amount and tell our parents that we were ready for the bigger functions like marriage and all such expenditures.
The present situation of very low-interest rates has diluted the attraction for small savings
The present generation would not at all save like what we would do-I mean the FDs, PPF, and KVPs and above all the recurring, etc. The reason simply is not because of their mistake (present generation not to be blamed for it) but it is heavily the situations arising out of the present financial scenario-where the conducting governments have slowly and steadily diluted the attraction for all such savings. Why should the present generation go in for just 4.40% interest or even a maximum till 5.00% on the Nationalised Banks’ Fixed Deposits and likewise the most diminished state of affairs which I have seen in my lifetime for the first time only? This interest used to be 10.5% to even 11.5% earlier-where the attraction was maximum, and the investments were meaningful. Look at the irony of this 4.40% on FD. The government, through Direct Bank deductions, would even charge the tax on the interest accrued. I am reminded of the old story where the greedy man selling the Honey would even crush the living honeybee to get that fraction of additional honey.
So, looking at this very poor return on one’s investment, the investment market gets driven accordingly to adapt to the changing scenario. “Transformations in Alternatives” is a new series that helps the alternative investment market rise to today’s most pressing business challenges. Now even the various services are giving the direction to the people of the present times for investing alternatively into such segments, which ensures them high returns in a stipulated time frame. Sorry to say such things make us take pity on the classified Government Of India’s investment plans. May it be through the Post Office or its Nationalized Bank services.
Present generation with higher packages takes a risk in trading rather than conventional saving methods
Now in this scenario, how can the present generation get attracted-where they are otherwise liberal in their spending? The present-day professionals are getting the high packages and even after the government squeezes their tax component from their earnings-they would like to invest the money in the running trade market and this trend has been increasing more pronouncedly. They might even go in for some dip in their earnings. They feel such investments give them higher returns also, and at no given point in time like the FD returns-God Forbid!
With the high-level spending of money by the young, earning people, the high level of risk-taking has also increased by them. That is exactly the order of the day. Sensible also to match their expectation levels and their mindset. Even now the bigger celebrities are also openly giving advertisements for the Mutual Fund investments attached with the speculative as well as the stable stocks functioning.
Another interesting picture is the increase in the various automobile models. Why this increase? It is directly proportional to the demand increase for such new models. The cost of the vehicles goes from 70 lacs to 90 lacs for the four-wheeler comfortable luxury cars. Money earned by the present-day youth is spent on such items-which fulfills his quest for the new specialty models and gives them the thrill to display in their community segment. I would like to inculcate in the minds of the present-day money spender-“How longevity in investment is a crucial factor behind your success”. But then I realize how easily we judge someone as crazy, based upon their actions and not because different experiences shape one’s opinion about how the world works.
Inclination towards the materialistic segment is higher than their social bindings in the present generation
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