Money Tastes Like Freedom With These 5 Ingredients
Live below your means and you will never not feel rich.
I grew up in a well-to-do family.
I learned this quite late when I moved to a hostel for senior high schooling. Until then all my encounters with money ( liquid cash) were dismissed with remarks like ‘it’s not ours’, not mine, not my father’s, not my mother’s, it is just fuel to keep the wheels of our life going.
So I never got too comfortable with the fact that we as a family were doing well financially. I listened, believed, and moved on.
Only when I moved, with all the facilities and privileges that came my way, also came the realization. But nothing changed, my parents, being strict with money were also doing something similar with my pocket money. They were in charge until I started to earn.
Later when I graduated and started making money, my parents’ strict money spend policy came in handy and I got started with mine.
Here are some lessons I learned and observations I made:
1/ Align your goals with saving money from the get-go.
I began earning but right from my first salary, an education loan had to be repaid, rent was due every month, and food and necessities had to be addressed daily.
So it took me some time before I had disposable income to do fun and silly things.
Growing up with the mindset that the money is just fuel and not yours to own, worked in my favor in such a way that I never really wasted my money.
So while right from my first salary I had important things to take care of, saving money was on top of it all. Basically, I have been saving since my first month’s salary, even if it meant saving an amount as small as 20–30 dollars.
An arrangement I created for myself was to have a separate savings account just to accumulate that saved money. That money was for the future or an emergency, and I was doing well sticking to those conditions.
It took me some time but I saved/invested enough or maybe more.
A take away for you:
Save every penny that you can, every tiny amount matters.
2/ Every bank rep had something to sell given my lack of knowledge on market.
To be honest I got lucky with my patience and lack of urge to have money in my hands.
I invested in quite a few policies and ULIPs that the bank sales reps literally forced me into.
As I said, being not in hurry to get hands on my money brought in luck for me because all those policies would work great in long term scenario and so they did.
If you stay put, mostly your money will be safe.
Do your due diligence and make sure you are dealing with authentic bank officials, you will be good to go.
I was indeed treating my money like somebody else’s and was trying to be careful with it.
With that attitude and the right approach to building backup money, came a lot of freedom and confidence.
I never had to feel short of any resources or dependent on somebody else. Luckily my parents have always been that well-to-do couple, so thank god I did not have to share my money with them either.
Just knowing the number in your account is good enough to live confidently.
A take away for you:
To be patient and let your money stay invested for the long term.
3/ My monthly saving targets got scientific with time.
From my first salary till today, more often than not, I have tried sticking to the 50/30/20 budget rule.
It simply means 50% of your income should go to basic needs such as rent, utilities, groceries or debts, etc., 20% should be allocated to savings, and 30% to anything else you might want. But I have done some modifications that work for me.
- My 30% is allocated to savings/MFs/ policy premium payments etc.
- 20 % for emergency/ future desires/ indulgences etc.
- 50% as expected, allocated to rent, utilities, groceries or debts, etc.
With your salary increase, while the allocation % of each bracket remains the same, the amount in each bracket keeps increasing, and hence the returns earned on them.
Fun fact, it is likely that if you don’t have any debts, obligations, or over-the-top lifestyle, the 50% income allocation may not be completely exhausted and will be at your disposal like an added income.
To be honest, It took me some time to get used to this allocation because it is kind of strict to follow, but once you learn to live below your means and adopt a humble lifestyle this rule will feel like just the right way of approaching finances.
Takeaway?
Well, create a plan that works for you to manage your finances, and stick to it.
4/ Postpone the urge to splurge.
I needed new machines, a laptop, and a phone because both were very old and almost gave up on me a few times.
What did I do?
I tricked myself into postponing buying the new laptop for a whole 1 year.
I did have an office laptop in perfect condition and it more or less served my purpose except for a few restrictions.
I went ahead with buying the phone. I arranged my purchases in the order of priority and saved what could be for another year to 1.) create extra backup money and 2.) earn extra bucks on return.
I get it, it can be difficult to keep curbing the desire to get hold, so don’t hold back really, just postpone for a bit if you can. Very likely what you want to purchase will be there in the market.
And think about it, there is so much to do, a new phone, new clothes, travel, etc., and it can be practically non-viable to do it all at once for different reasons.
So set them in order of priority synced with your budget and urgency. When you pay attention to prioritization, you learn what you truly need.
Like I do not own a TV because I don’t see myself spending as much time in front of it. I do have a phone and a laptop which do the job.
Takeaway here is:
Prioritise your needs to postpone unnecessary spending.
When you pay attention to prioritization, you learn what you truly need.
5/ Life never stays the same and that’s the beauty of it.
I recently bought a car, within my budget. My parents had to pressurize me because I was ok driving a 13-year-old car that my father bequeathed to me. Honestly, I got used to it and it did the job.
Most importantly, I had started seeing things more for their utility than luxury, and when you do that, your ego takes a back seat, and you slip into a soundproof existence where you listen to what serves you the best.
I also live in a 3 bedroom flat with my dog because it was a bit far from the city and affordable. And it works for me, it is peaceful, ideal for my dog to explore around, and it gives me the kind of space I needed for both of us.
As a 30-something adult having your own space becomes your priority, a space that symbolizes your growth and experiences.
Now a few of my ‘friends’ did fret about my choice as how inconvenient this place could be, so I just shut it all out and sent them away. I get to choose my lifestyle, right?
Though there is a disadvantage, my friends and family still show up like it is some holiday home.
I have also been buying all the books I wanted to read, taking up upskilling courses, and learning French. Pretty much everything that I am curious about has become affordable if I decide to be.
Honestly, I did not think about the results but money got me started, exactly why I am writing this article at this moment courtesy Niharikaa Kaur Sodhi ‘s Summit’21.
Investing money in yourself, your growth, your personality, and yourself is the kind of freedom I am talking about. This freedom is so rewarding that you would never want to go back.
I have created my abundant mindset because the truth is I am abundant as a result of my deeds and decisions.
For me, my financial independence is the output of a few compromises and mostly smart application of the fact that ‘ I don’t own the money.’
Bonus, I can afford monthly donations.
No take away but:
All I am asking is, treat money with a lot of care, if possible, live below your means, and let the humble lifestyle do its magic.
So here it was, a little story that got me into the game of saving money and growing financially independent.
I hope you find what works for you too and live a financially independent life.
What can I say? Let’s grow richer together I guess?
Thank you for reading.
TC,
P.
