On the occasion of the World Savings Day on October 30, this question pops up in my mind. With the prevalence of EMIs for everything, from phones to two-wheelers to even railway tickets, it appears that everyone is buying things on a loan. With Diwali round the corner, we have also started to see advertisements asking for just Re. 1 to be made as down payment and the rest to be paid to buy anything from televisions to washing machines.

Though there are a number of buyers who are purchasing to catch up with the Joneses, I see a lot more who buy just because something is available at a discount. When Amazon says you can buy a Power Bank for just Rs.999, one tends to buy four of them so that the rest can be used a gifts for friends and relatives at an opportune time!!!

Marketing guys are doing overtime particularly this season when you are able to get many things free when you buy something.

Many are following this trend. Warren buffet had once said: “If you buys things you do not need now, soon you will have to sell. It is not what you eat, but what you digest that makes you healthy.

It is not what you earn, but what you save that makes you wealthy. Saving is the first step to lead a financial life that has less stress and negative surprises. Many among us believe that the portion of our income that is left after all the monthly expense is for savings.

The Formula: Income – Expense = savings will always lead to failure.

In my consulting experience, I have had people saying there is an urgent need for money and it is for
children’s school fees, car insurance, down payment for the house, etc.

Little do they realize that these expenses can never become urgent, as there are events that happen
every year or one for which you should have planned for many years.

The formula for Financial Wellness is:

Income – Savings = Expense

In this method, all that one has to do is to start a Bank Recurring Deposit for the school fees and the car insurance. These are typical savings that will not create stress at the last moment. And by linking these deposits to the salary account, we typically follow the above formula.

For the house down payment, an SIP (Systematic Investment Plan) would have created a corpus that you can use as the foundation.

To enjoy financial wellness, savings is very important because money saved is money earned. In fact, savings is the first step on the path to financial wellness. Not creating a surplus, whatever may be the income, is just a sign of not being responsible to one’s financial welfare.
However, the financial plan for one family or person will not suit the requirements of another. One has to devise a plan that is suitable for one’s unique life situations. So savings is a science and also an art.

Start today on the path to financial wellness. Start saving today. Drop by drop of THRIFT could make the nation lift.

Yogeshwari Satchidhanandam, Zen Consulting Group, Coimbatore.

Disclaimer:The views expressed above are the author’s own.