What is the right spending?

Certain beliefs are engrained in us since childhood. One such is about Money. Whether we realize it or not, many of our assumptions about how Money works and how to manage it best come from our upbringing.

One such belief for me is how much to spend. I was raised in a middle-class family in the 80s/90s, where saving for a rainy day was the first priority over everything else. Our parents and grandparents told us to look down and not up. This means if you ever want to compare your financial condition with someone, look at people who are less fortunate than you and not otherwise. We were often told – the one who walks looking up tumbles sooner or later.

Those money habits were not an option for my grandparents. Those were the only reason a Sindhi immigrant family, which came empty-handed, could establish a family and provide a decent education to children – us. All our basic needs were met comfortably. To do that, our family ensured that definition of need was kept very low. So as children, we never felt that we had less. I am a big fan of Morgan Housel, who strongly advocates that financial freedom cannot come without prudence. To quote from his famous book The Psychology of Money

“People tend to want wealth to signal to others that they should be liked and admired. But in reality, those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth as a benchmark for their own desire to be liked and admired.

 Wealth is the nice cars not purchased. The diamonds not bought. The watches were not worn, the clothes forgone and the first-class upgrade declined. Wealth is financial assets that haven’t yet been converted into the stuff you see.”

These money beliefs still shape my spending decisions, but in the last few years, I have started questioning how much low you should go on spending. I agree saving is important to make sure you meet your future needs in case incomes fluctuate. But how much of the present is OK to be compromised for the future.  

What if you start prioritizing your future needs over present needs beyond a point? And that’s my whole point. My father passed away a few months back. I liked many things about him, but one thing that always bothered me, and I never agreed with him, was his strong reluctance to spend on himself. He was opposed to spending on him by anyone else as well. He worked hard in his youth and had enough savings to live a comfortable life. All his children were well-off to spend on him, but he was so used to saving Money that even when we had enough, the idea of spending on himself didn’t seem correct to him. He would prefer my used clothes rather than allowing us to buy new ones for him.

When we purchased them forcefully, he would not touch those and resorted to old ones. I also found a way to purchase new ones and make them look old (remove tags and wrinkle those) before giving him. He would wear those. Maybe he guessed a few times and asked me, “Are these actually used?” before agreeing to wear those. We had to apply similar techniques to his medicine, food, phone, and other stuff, telling him that the price was much lower than the actual. That’s the only way he will agree to use those. I know he had all the right reasons, and because of his sacrifices, only we had comfortable life and proper education to reach here.

While I was not too fond of this habit, I must admit I also like him on this point, questioning and deferring all expenses on myself. It’s in my genes with childhood habits. For the last several years, I have tried to counter it by being intentional about spending. We should not spend to compete with others but same time if you can’t spend on yourself, what’s the point of earning at all? I am thankful to my parents and grandparents, who told me to always live below my means, and that gives me confidence in uncertain times. Same time I also recognize that times have changed, and I have started spending a reasonable amount on quality clothing, food, and technology.

What is reasonable is still questionable but certainly, depriving yourself of a quality life is not the answer. I firmly believe that the only purpose of earning Money is to free you from thinking of Money. If it can’t serve that purpose, it’s useless.

Let me also quote Morgan again from his blog –

 “If you develop an early system of savings and living well below your means – congratulations, you’ve won. But if you can never break away from that system and insist on a heavy savings regimen well into your retirement years … what is that? Is it still winning?

Refusing to recognize that you’ve met your goal can be as bad as never meeting the goal to begin with.”

 Comment and let me know what you think on this point.

You can also find me on Sangtani.comGauravSangtani.com and Sangtani.Substack.com

[All Views in this article and anything I publish, are purely personal in nature and don’t represent the view of any organization I may be associated with]


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