I have come across many people telling me that they will start saving and investing after their first promotion. I have always wondered at such people, because higher income need not lead to better prosperity. May be, some people think it is not logical but they will understand the reasons after reading this blog.
In our program, ‘Path to Prosperity’, we discuss the case study of a person from a very low strata of the society, who was able to provide for his children’s professional education without resorting to any borrowing. He had a whopping investment of Rs. 1 million! In fact, I am truly proud of him for using the wonderful ‘Power of Compounding’.
Just one month prior to meeting his person, I casually enquired a brilliant Chartered Accountant and a partner of an international firm, about his savings. This apparently rich person told me that his savings and investments were negligible because of his very high ‘standard of living’. Watch the phrase,’ standard of living’ and you know why higher income does not automatically mean better Personal Finance. People like this friend fail to use the ‘Power of Compounding’.
Some of the people belonging to the higher income group blow up a lot of money in luxuries. This goes against the simple way of funding luxuries in our blog titled, ‘Frugality vs. Liberality in Personal Finance’. This is a very valuable lesson anyone can learn from some of the rich people. Also, some people are ego involved when it comes to wants such as movies, flashy mobile phones etc.
At times, many of us wonder how some mediocre people have suddenly become rich. Well, we can only tell such people to read the above paragraphs any number of times. Do you now agree that higher income need not automatically lead to better Personal Finance? In any case, please ponder over this blog with your Financial Mentor.
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