“Nice to meet you. Just hold on for a second. I need to send an SMS to my husband.”
My cousin and I stood there waiting. The girl, a manager with a private sector bank, busily tapped out a text message on her new iPhone.
She was pretty slow with the typing, but we knew what was going on.
She was just showing off her new Rs 30,000 iPhone – hot stuff for Alwar, a small town in Rajasthan where I grew up and which has a relatively middle class population.
We had seen her arrive to the bank with her husband who drove a shiny black and modified SUV.
She and her husband were young… probably in their early thirties. As I came to know from her, he was a real estate broker in the town. Even though their income must be down in a weak housing and job market, their spending didn’t reflect the crisis.
“What’s going on here?” I asked my cousin who was a local.
“These aren’t the only people out here sporting an iPhone and an expensive car,” he told me. “This small town has changed a lot, brother, since you left it 10 years ago.
“And by the way, who doesn’t own an iPhone or a big car these days?” he continued. “In a world of rising incomes, easy loans and EMIs, buying expensive stuff is so very easy. Don’t you think?
Me? I don’t have an iPhone…or an SUV. I’m doing well with my old mobile and an old, small car.
But I probably have one thing these habitual consumers don’t: The house I live in is fully paid for. Plus I don’t have a rupee of debt on my head.
I could buy an iPhone or a new car tomorrow. I wouldn’t need a rupee of debt to do it. But I won’t…Why?
Because these expensive things won’t add to my assets. They will only add to my liabilities. Also, those things won’t make me the slightest bit happier.
I’d be the same guy I was before…only Rs 5-6 lac poorer!
You see, I don’t try to keep up with my peers – with their swanky phones and cars, and a new higher-paying job every six months.
In fact, I’m doing the opposite. I’m downsizing.
I’m trying to go minimalist (my society’s security guards and the housemaid are happy to get something or the other from my house every day. In their already minimalist life, they need to enjoy some ‘stuff’).
Think about this – What good are all these possessions, really? You can’t take it with you when you die.
Instead, the truth about life is that after a while, you don’t own your material possessions…they own you.
I don’t need a big car to claim that ‘I have arrived’. It’s ridiculous!
Anyways, this brings me to the main idea of this post – What is the point of saving and investing?
When you get older (if you’re not already older), how is this money that you save and invest now going to serve you?
Jonathan Clements, the much respected Wall Street Journal columnist, who retired in 2008 after writing 1,008 columns for the newspaper, said that your savings can deliver 3 key benefits:
1. If you have money, you don’t have to worry about it.
Well, this isn’t something that is guaranteed.
I’ve seen a lot of rich men who are always worried about their finances.
However, the real idea is that if you save and invest diligently, you should reach the point where money worries are relatively rare.
2. Money can give you the freedom to pursue your passions.
When you picture your financial independence, what do you see?
Enjoying your life to the fullest given that you’ve ensured that your family’s needs have been taken care of?
Seeing around the world?
Working on a cause you are passionate about?
Saving and investing can help you achieve complete mukti (freedom) from all your financial worries, so that you can attain complete peace of mind and pursue your passions.
3. Money can buy you time with friends and family.
What are we all living for? When I used to work at a job, the best part of my waking hours was when I came home at night…to my family.
Now I stay with them 24×7 while also taking care of them financially.
Research has found that regularly being with your friends and family can provide a huge boost to your happiness. And money can help you in this regard.
If you don’t need to work or you only work part time, it helps you spend more time with your family and friends, go on regular vacations with them, and spend other quality time in their company.
Anyways, as Clements also said, you don’t usually need millions of rupees in your bank account to spend time with friends and family or pursue your passions.
But in order to get there, the girl I met in that private bank in Alwar needs to skip out on her flashy mobile and glitzy car.
The quicker she grasps this about saving versus spending, the quicker she’ll be able to start living like a free bird… even if she doesn’t have many millions of rupees in her bank.
So if you are disgruntled with how your financial life is going, here’s my advice…
Forget spending more money at the mall – and instead spend more time with friends while saving and investing money regularly.
At the end of it, your bank account may still seem inadequate, but your life will be far, far richer.
That’s the entire point of saving and investing.