I have this amazing character. He lives in a family of 4.
Interestingly 3 of them in the family are earning members and only 1 non earning member, still, whenever I meet him, he is complaining about his money problems.
Just last week when we were speaking on phone he started off with his dukhi dastaan (sad story)... "So much money is stuck in collections, I have to settle this much loans, markets are going down, no money at all... and so on"
Last night I saw his facebook update... "Off to Ooty for the weekend with family... very excited"
Does he really have money problem???
With 3 earning members, earning decently... if the person has enough budgets to go for a family holiday... then does he really have a money problem?
No... Money is never a problem... Money management is the problem...
My first job was for Rs. 450 per month as a trainee... I never had money problems...
Most of us who are reading this will be earning atleast a few hundred times of that right now... Still do you have money problems?
This friend of mine is a classic example of confused priorities...
Most of us think we are not earning enough because we almost always find it difficult to manage the month ends... thats our Money problem...
How many of us actually have a bank balance equal to next 6 months of our expenses?
Fact is that most of us are actually earning what we need or something more. Problem happens with the way we spend the money... its actually problem with the Money management...
An average person's money planning could be as follows:
15% - 20% of monthly income towards rent (if staying in a rented house)
10% - 15% of monthly income towards provisions
10% - 15% of monthly income towards entertainment and outings, personal needs, clothing, fashion etc.
10% towards commuting, phone bills, electricity bills etc.
15% towards investments - gold, bank, shares... whatever...
10% set aside every month for an annual holiday with family...
taking the outer limits, you have spent about 80% of your monthly income.
(If you stay in your own house, then the rent fund and investment fund could be used for paying the EMIs)
You still have 20% left which is freely available, can become your emergency fund etc.
What else could you need?
Going by this standard, an average person spending about Rs. 30,000 per month could live a decent life (if not luxurious). A person making anything above Rs. 50,000 per month can live like a king.
Problem happens when these calculations are not followed. You spend too much on entertainment, holidays, rent an expensive apartment just for the social status, take up EMIs which are disproportionate to your income, invest money in every second insurance policy you get from those telemarketing guys...
and the biggest financial sin of them all --- swipe your credit card...
If you are one of those thinking too much about your money problems... then step back and look at it my way...
Money is never the problem... Money management is...
Interestingly 3 of them in the family are earning members and only 1 non earning member, still, whenever I meet him, he is complaining about his money problems.
Just last week when we were speaking on phone he started off with his dukhi dastaan (sad story)... "So much money is stuck in collections, I have to settle this much loans, markets are going down, no money at all... and so on"
Last night I saw his facebook update... "Off to Ooty for the weekend with family... very excited"
Does he really have money problem???
With 3 earning members, earning decently... if the person has enough budgets to go for a family holiday... then does he really have a money problem?
No... Money is never a problem... Money management is the problem...
My first job was for Rs. 450 per month as a trainee... I never had money problems...
Most of us who are reading this will be earning atleast a few hundred times of that right now... Still do you have money problems?
This friend of mine is a classic example of confused priorities...
Most of us think we are not earning enough because we almost always find it difficult to manage the month ends... thats our Money problem...
How many of us actually have a bank balance equal to next 6 months of our expenses?
Fact is that most of us are actually earning what we need or something more. Problem happens with the way we spend the money... its actually problem with the Money management...
An average person's money planning could be as follows:
15% - 20% of monthly income towards rent (if staying in a rented house)
10% - 15% of monthly income towards provisions
10% - 15% of monthly income towards entertainment and outings, personal needs, clothing, fashion etc.
10% towards commuting, phone bills, electricity bills etc.
15% towards investments - gold, bank, shares... whatever...
10% set aside every month for an annual holiday with family...
taking the outer limits, you have spent about 80% of your monthly income.
(If you stay in your own house, then the rent fund and investment fund could be used for paying the EMIs)
You still have 20% left which is freely available, can become your emergency fund etc.
What else could you need?
Going by this standard, an average person spending about Rs. 30,000 per month could live a decent life (if not luxurious). A person making anything above Rs. 50,000 per month can live like a king.
Problem happens when these calculations are not followed. You spend too much on entertainment, holidays, rent an expensive apartment just for the social status, take up EMIs which are disproportionate to your income, invest money in every second insurance policy you get from those telemarketing guys...
and the biggest financial sin of them all --- swipe your credit card...
If you are one of those thinking too much about your money problems... then step back and look at it my way...
Money is never the problem... Money management is...
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