Austerity@20

Living at $2/day

Tushar Jain
Jul 22, 2017 · 4 min read

“When life gives you lemons, make lemonade and sell it.”

If somebody asked me which year shaped me the most, I would say, “2014, undoubtedly!” As the Index in a book tells you what lies ahead, I‘ll tell you my lessons from that year: saving to invest, persistence and being ever ready for failure. I would talk about the first one in this write-up. It was my final year in college and I thought of doing an experiment by cutting down my expenses as much as possible. Another reason for doing it was that I had started feeling guilty for asking money from my father, though I was already on an extremely tight budget which had serious constraints. I decided to spend just the amount that was needed.

At the beginning of Indian Financial Year 2014 on 1st April, 2013, I started noting down every expense that I would make. Yes, Every! The idea was to cut the amount I was spending by carefully tracking the unnecessary expenses. To put some numbers forth, my rent was INR 4,500 and my total budget for a month was INR 9,000. I had initially set the monthly budget at INR 12,000 but as parsimonious as I was, I brought it down. So with the remaining INR 4,500, I had to manage food, travel, internet and any and every outing that I took. I broke that amount into daily budget, which came out to be INR 150/day ($2.32).

Meals alone took away about INR 90/day ($1.39) so I was left with just less than a dollar. I mostly walked so that I could save on that part. I would usually save the remaining INR 60 ($0.93) for the point I would want to use them, like having an Ice Cream. A Bus ticket to Home costed INR 55 ($0.85) at that point. I curtailed the number of times I would go home in a month from 3–4 to 1 at max or I would take a lift from an acquaintance whenever possible. I barely ever went out with friends as it was risky. There were times when I would surpass the daily budget due to some reasons, due to which I would have to do either of the following:

the unhealthy solution: skip a meal, or

the riskier one: borrow from the future me.

Even after some reckless moves here and there, I saved INR 430 ($6.67) at the end of the first month, since I was pedantic about meeting the budget. I was amazed! I knew I had been extremely stingy while setting the budget and having saved after that was delightful. At the end of the second month of this practice, I ended up saving INR 840 ($ 17.69). Now, I was in a dilemma — what to do with so much money? My Birthday was round the corner so I thought of treating my friends with the same, but then I realised 2 things; firstly, this amount would not have sufficed and secondly, it did not feel like the right use of my hard earned money. Hence, I dropped the idea.

The dilemma still existed! I was still left with some unused money and I knew a similar amount would flow in the next month and the one after that as well. I thought of donating the same, but then I was too greedy to be able to do that; I rather wanted more! I thought of cheating and hence, went to watch a movie. Unfortunately, I did not like it as much which left me with a terrible feeling. This is when I realised the problem: Liquidity. I had to lock the extra money as soon as possible or else I would somehow persuade myself to spend it. It felt like my Eureka moment! It has been almost 4 years now and 2 habits since then have stuck around:

  1. Noting down every expense that I make. Every!
  2. Investing every spare bit of money.

The 2nd portion has evolved a bit with time. Since I work full time now, I save before I spend. Hence, from my paycheck, the first deduction goes to my Monthly Investment plan and after all the expenses have been made for the month, the remaining amount goes to my Equity portfolio.

It might seem to you that I missed a lot in my life because of a stupid experiment and I think I did, indeed. However, the biggest benefit of this exercise was that it made me extremely low maintenance. I barely long for much now and can easily lead a very simple life. It forced me to cook to be able to meet the budget and I think that has made me a lot more independent. Let me reinstate, the idea behind this experiment was never to save money; rather it was to see how much did I need for survival. I think I pivoted from that hypothesis and hence, believe that I could cut some more flab. However, I am glad I could do it and I will always cherish the test, I passed.

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