For a start, a budget in place is essential to savings
One of the perks of my job is, I get to meet people who otherwise I would have never chanced upon. In recent times, I met quite a few retirees—senior citizens who are well into their 70s and one who is 94, and going perfectly strong. All of them are financially independent and extremely content with their lives, which made me ask them about how they are so content. The answer was simple—they all made a point, which somewhat summed up to: live within your means and be frugal with money.
Juxtapose frugal living to a millennial and you are going to attract strange looks. For most of them, even the thought of frugal living is a strenuous one. All of them have at some point in time or the other struck a great deal buying a phone or booking a holiday, but ask them if they could have done without the deal and saved the sum? Chances are the stares will get stronger and stranger, because they would not just get the idea that I am trying to emphasise the need to save money and not spend it just because there is a great deal. So, the need to save money as a concept itself is a challenge among many youngsters.
Now, frugal living isn’t about chasing low-cost cheap stuff, it’s about being smart with what you purchase. Warren Buffett has been carrying the same wallet for 20 years and closer home, Wipro chief Azim Premji is known to travel economy class when travelling by air. These are examples of being thrifty; also the reasons why both these men are where they are and with the monies that they have. They could very well afford to spend more, but then, the practicality of their decisions to spend on what is essential forms a habit, which in the long run helps with wealth creation.
Art of saving
I know of many youngsters who promise to save more every few months after a tough month with money. But, the exuberance vanishes the moment the next month arrives. The reason for their inability to stick to their resolution is lack of willpower and to some extent, the wrong way in which they try to save. Having a vague sense to save more will not lead anywhere concrete. Just like putting a right number to your financial goal, you need to have a clear sum that you will save each month, which is measurable. Once you start following this approach, you will find that the habit will stick and you will automatically start saving more than you expect.
Live your life with a budget and I am sure you will land up saving a defined sum for a start. Once you get used to savings, it will automatically get you into the habit of spending only on what is necessary and a must. With these two elements taken care of, you would be financially well-off and have more money over time, which then needs to find an automatic route to wealth creation.
I learnt my lesson by spending time with the 94-year-old at a shopping mall, where he picked only what he wanted from the list he had prepared with his wife. When an overzealous attendant tried passing him a bigger pack size of a soap bar, he was agitated. “I won’t take an extra shower because the soap is cheaper, so, why should I buy more than what I need,” he quipped. I hurriedly emptied my shopping cart leaving with exactly what I needed, and have embarked on my frugal path. When will you make a start?