Compromising with money

Dealing with money could be overwhelming. There are so many needs and responsibilities fighting for that finite sum that comes your way each month. Moreover, money is a hard issue to talk about because it is usually a subject we are never overjoyed to sit down and figure out. The outcome: one starts to make compromises with one’s finances. The two common reasons for the compromise being—lack of awareness to optimise what one has and thinking one day they will have more money, when they could start planning for their future.

Youngsters compromise with money in a bizarre way. They are so drunk on the elixir of youth and a sense of infallibility that they spend like there is no tomorrow. I don’t need to talk about the many young ones who are broke by third week of the month servicing loans and generally, in their world, ‘chilling out’. Their confidence is exhilarating. The belief that they will earn more tomorrow, which will fund their today, has resulted in scores of them living on EMI-to-EMI. They do not realise how these habits leave a trail that can impact their credit scores so badly that when they genuinely need a loan, to say buy a house, they may be denied one.

The going is not so great even for those who are married and have kids. One would expect them to have developed some maturity with time. However, many find it difficult to cope in this stage. Many double income families that I have come across tend to have varying objectives with the money they bring to the table. The reason for this varied view germinates because the couple rarely spends time discussing their joint financial goals and how they could work towards them. Many a time, barring a combined home loan for efficient tax saving, there is nothing else they plan together.

In the middle years or the years when financial commitments are more, couples tend to mostly compromise on their own retirement and future over that of children. One of the reasons for such a condition is, an incorrect start, which they did not acknowledge or try to work towards sooner. The other compromise they land up making is on their health, which has a financial impact that many tend to realise later. In order to get their children settled, many parents unsettle their financial lives, without having clarity on how they would manage their own retirement.

As a generation of nuclear Indian families face retirement, they are all facing the empty nest syndrome. They have large homes that they no more need. They have lesser money than they realise they will need in retirement. This generation is making the biggest compromise— readjusting their lifestyle and in some cases, actually extending their working lives. Everyone makes compromises of some kind; it’s definitely true that compromise is the key in any relationship, including your relationship with money.

It could be a hard decision to make, but sometimes you have to prioritise your happiness keeping financial well-being over your desires. Keep that in mind before you upgrade your phone, car or feel like splurging on something that you may later regret. I urge everyone to make small compromises today, so you don’t have to make big and more important financial ones tomorrow. You could also regularly read Outlook Money and save yourself from compromising on money.

nk@outlookindia.com