I came across a very good statement from one of the experts in Personal Finance, “I spend extravagantly on the things I love and be relentlessly frugal about the things I don’t.” What I like about this statement was that the author was talking about himself and not about others. Somehow, it triggered a few thoughts in me and hence this blog.
Let us first understand the above statement with an example. Supposing I like going on annual vacation, I will happily spend more on that than paying EMI (Equated Monthly Installment) for buying the latest car, which is not my liking.
I had the following thoughts on the statement of the expert:
- Even when I spend more on what I like, at the point of incurring the expense, I need to be aware of the present moment so that I get the right things. For example, I need to be fully present in my vacation so that I get the best of the same. Similarly I need to be fully present while buying my dress, so that I get the right ones.
- Instead of only talking about my liking, can I be sensible enough to include my family also? I will have two advantages; one I am being fair to my family members and they will love the very thought; second this is the only way I can have consistency in the execution of this simple formula.
- Even while spending extravagantly on the things my family and I love, I will keep our Financial Plan in my mind. In fact, I will include the expenses based on our liking in the Financial Plan itself. This way, I can satisfy my family’s preferences as well as follow our Financial Plan. In case our Financial Plan does not allow such expenses, I will discuss with my family members and take a call on reducing the expenses as a consensus decision only!
- It is likely that over a period of time, my family may like a few more things. As a good provider, I will look for increasing my income, preferably my passive income, so that I can happily provide for such additional expenses also.
Coming to things my family members and I don’t like, the process of ‘Need Analysis of expenses’ will automatically take care of such expenses. If an item of expense is one that as a family we don’t like, it will not figure in our need or want and hence may get eliminated automatically. So the question of being frugal will not arise for a person following his / her Financial Plan. What a concept!
Add this page to your favorite Social Bookmarking websites
