The generation we belong to, finds it so easy to complicate matters and mess up a perfectly fine and stable financial life that can be easy to manage and live with and build wealth.
A few days back I was out and about at a mall. I saw a kid with his parents crossing a toy store and the kid had all sorts of demands and tantrums and what not to get his hands on one of the toys. It felt pretty usual; I mean Kids, they ask, they demand and so what is wrong with that? Well, nothing really, but something else struck me there. It was that all of us belonging to today’s earning generation are no different from that kid. We are just like that kid who needs to have it all that is new and on display at the stores, heck even online; in fact more so what is online, and just like the kid we do not think of anything else except to just own stuff.
Anyway, we are a generation that according to me is a lucky one. Yes, yes economy and recession and market crash and all is a part of our generation, but still I would say we are lucky, the generation that follows may not be that lucky nor the generation that just retired was that lucky. The way I see is ours is a ‘Transitional Generation’ as in we are the one that has seen the most transitions in terms of technology, jobs, market trends, fat pay cheques and lot more. We have seen the old norms and also seen them being challenged and new ones taking their place. We have seen how doing a job too can make you rich and also setting up a business has become easier than before. The technologies of our days have changed immensely and it is an important factor in bringing about the change we see today. We have even seen the economy rise and then take a dip and again stabilize. We have seen the worst inflation as well. All these changes, the learning curve and the experience won’t be so much for the generation to come. But one most striking thing that we have seen is how easy it is to own things.
Yes, we want to own every damn thing that is there within our reach or at least so we believe it is in our reach. We believe we can own things that are actually Not Affordable. We are so disillusioned by the ‘Affordability Myth‘ that we feel that car can be ours, and that home is certainly gonna be our humble abode when it is actually not. Heck, every offer on goods and stuff selling has to be made the most of, whether we need or we don’t. We overestimate our earning potential. And, why not? EMI, everything is available on EMI and credit card swipes. Who cares about bad credit scores or debt traps? We do not care till the time we are in a debt trap and nowhere to go but to cut down heavily on our spending and to some extent down-grade our lifestyle. Because till then we always feel; “income is bound to grow at x% every year”, “I will change jobs and get paid more”, “I am irreplaceable for my company, so what are they gonna do without me?” Well, we know what happened to all that line of thinking in the past few years. Things change, $#!t happens. Nothing is permanent like it was when our parents used to have jobs. They knew their jobs were kind or permanent, they knew although they will not earn that much, but whatever they earn they could predict. We do not have that luxury and yet we only live on cloud nine, arguing that life is to enjoy. Well, it is and surely should be and has to be absolutely enjoyed, but at what expense that is the question we fail to find an answer to and keep splurging our finances really bad.
Again, the other issue is bad investment decisions. People of the previous generation also invested in equity and earned thousands and lacs as a result. However they were also conservative and more attentive to their finances and knew how to manage their own money. They had debt investments too in terms of bonds, PF, FD and so on. They had the sense and patience that we lack. No doubt the biggest stock market scam did take place then, and hordes of people lost their money too, but by and large the way our parents and their parents handled finances was much better than the way we do. We take finance for granted, they did not. We talk about saving, they actually saved. We only know one thing, fast money! That is it. For them it was more of consolidating and being patient and they did manage to a do pretty decent job at it. Recently I was talking a friend who had a relatively new job and started to make money and all that he did was invest in equity and that too, direct equity and not via mutual funds. He lost a lot of his capital and had the same story as a lot of other young professionals these days. My only question was what happened to diversification? What about dividing money between debt and equity. Yes, you are young so more of equity and less of debt, but then equity needs to be long term. So many individuals these days feel only Fast money is worth living for; when in reality they are delusional at best. Concepts like PPF, RD, FD still hold true and are great as a part of investment, but heck, it is too slow for people’s liking I guess.
We have a lot of opportunities and avenues to really have a strong financial life. We know that jobs are unpredictable, and so it is more important to mix caution with pleasure and while living the life fullest never forget that tomorrow you may be having a memo in your hand. I am not a pessimist and I firmly believe we have one life to live. All I am saying is to be balanced. Be balanced in your spending, savings and investments. Do not just put blinders and keep running like a horse and follow the trail of others. You are different, your needs are different and so you do not need all that is out there. Stop relying on credit and stop believing the agent advisors and take control your finances on your own. You will make mistakes, but you will learn too. Oh Boy! I just sound like a person from the past generation, I guess…