LIFESTYLE INFLATION

WHY EARNING MORE ALWAYS DOESN'T MAKE YOU RICH?


Me and one of my friends are earning Rs 20,000 and Rs 50,000 per month respectively. Somehow, I managed to have Rs 7,000 lying in my account by the 29th of every month whereas, she struggles with a contracted budget till then. 

She keeps wondering where she goes wrong. Yet, she never understands her own shortcomings. 
 


Why she struggles?

First of all, let me tell you what are the reasons for this:

1] The itch of living a luxurious lifestyle:  As soon as our salaries get a hike, we get uncontended with our lifestyle and begin chasing luxury. In the wake of such mentality, we erode our budget and are left with little much to save. However, this is where we commit a biggest mistake. That is, more income doesn't ensure a wealthier future unless, we are fully aware of what we are doing with our money.

2] No insurance plans or security schemes:  Let us take an instance to understand this point. A boy named Ramesh has saved in crores or per say lakhs. One day he gets diagnosed with stage 4 cancer unfortunately. What will happen now? His lifetime savings will be used for his treatment. Other than that, if he had been wiser and had taken a health insurance plan, all his medical expenses would be covered in the diagnose.

            Been through harsh treatments and chemotherapies for 1 year and still his life couldn't be saved. His wife and two children are left behind.  If he had taken a life insurance plan with his wife as his nominee, then their financial struggles would not happened. 

3] No wealth creation: Mere depositing in savings account won't make us rich. Unless, we don't have created a diversified portfolio, wealth can't be formed. Remember that " Income is the present but, wealth is the future".  My friend thinks getting a return of 2-4%  on savings account would make her rich. Whereas, my diversified portfolio has made me financially secured for the present as well as the future.

4] Having extravagant expenses: She has unnecessary spendings i.e. fancier dinners, latest Iphones, dreamy cars, branded wears. I am not saying that living a comfortable life is a sin but, spending should be made wisely taking into consideration our needs and how much we will be left with after subtracting the expenses from the budget.

Knowing the shortcomings in her financial planning, let's take a quick review of what could be done to establish a secured financial portfolio


       Carefully plan your budget.👛
       Don't spend extravagantly.🤑
       Have a diversified portfolio.💸
       Invest in wealth creation [mutual funds, SIPs, etc.]🪎
       Buy security plans such as health and life insurance.👩‍💼
       Have a clear savings, investment and spending goal.
       If necessary, take the advice of a financial expert.👩‍🏫



Follow these simple steps and see what changes will bring!!







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