We Indians are LUCKY!
Save Money. Secure your future. This is the top money lesson that especially that Indians born in 70s, 80s and 90s have learnt from our parent. Our parents have normally grown up in an India who was very different from what she is now. Due to the environment in which they grew up in, they have generally focussed on saving for the future – living within their means and accumulating wealth. Most of us have grown up in households that were never extravagant spenders.
This means we are aware that saving money is a part of life. We have been taught via both demonstrations and lectures that some part of the salary has to be saved. We have also seen that you don’t need to spend like a king to be happy. This is the only lesson anyone needs to learn about managing money. Investing and growing your wealth is secondary. If you do not save, you do not have anything to invest.
We Indians are UNLUCKY!
Our parents saved so that they would have a sense of security about the future. If we fell into some misfortune the wealth they had accumulated would save us. This same sense of needing security, did not allow them to dream further. They believed they had to work until they were 60 and by then they were so used to working that some continued to work even after. I would say only half of them actually enjoy life after retirement.
We need to break out of this mindset! What if you did not need to work? Would you still continue your current job or would you pursue other passions and interests? Maybe experience snowfall for the first time ; maybe go learn skiing ; maybe learn scuba diving. As Mr Money Mustache (another financial independence blogger) asks
” If you take money out of the equation, would you still continue to do what you do now? “
Quitting your current job and pursuing your passion is a very tough decision. Especially if your passion is going to cost you rather than earn you money. And the more years we continue working, the more we get sucked into the cycle of earning and spending. It becomes much harder to break the habit and routine of doing your daily job. It is not like you are unhappy 100% of the time. If you are unhappy, you need a change irrespective of whether you retire or not.
Easier said than done, you say! The first and tougher decision is to first decided that you want to retire early and then building your habits around that. The financial aspect of it is much easier. What defines how your wealth builds is your savings rate, unless you win the lottery or a KBC show. I will cover the mathematics aspects of this in the next post.
Savings rate is defined by how much you earn versus how much you spend. If you save 100% and spend nothing, you can retire today. If you save 0% and spend everything, you can never retire. Most of us are closer to 0% than to 100%. The closer you move yourself to 100% the faster you retire. To do this, you either need to increase your income via alternative streams or reduce your expenses.
Alternative income streams will need you to spend more of your off-work time on them. This means you get even less time to do what you love. This is still an option since it allows you to retire early. Reducing expenses means foregoing/stopping habits you have cultivated. Can you reduce watching movies? Can you reduce eating out? Can you go out to free places like beaches or park rather than spend money at the mall? Can you postpone buying that new gadget or buy a cheaper one? Not everyone will have the same way out to reduce expenses.
Starting reading about people who have retired early – understand what they have gained when they left their old consumerist selves behind ; understand how they defined what they really want in life and went about achieving it. A journey to financial independence is more about a journey of character than a journey of reviewing your accounts.
There are a couple of the blogs that have inspired me as I start on my journey of self discovery
What do you want out of life?
What would your ideal life be?
Do share your thoughts in the comments. Let us inspire each other to a fulfilling life.