Have We Forgot That Aspirations Must Match Our Income?!

Published: January 31, 2017 at 10:31 am

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A few years ago, I overheard some lab staff talking. A middle-aged person, soon to retire, was talking about the preparations for his daughter’s upcoming marriage. His aim was to outdo the reception arrangements he had observed in a recent marriage. I was invited to the event and found that it was extremely lavish for the income slab that the person belonged to.

More and more people around us want to blow up their net worth and their salaries on things that are disproportionately expensive.

Someone I know (who is not so well to do) hosts a lavish birthday party for their kid just so that she “fits in” better. Another has got a car because that is a sign of moving up the “status” ladder when the take-home pay after deduction of home loan EMI is barely enough to cover expenses.

It is not a “kids these days” problem. It cuts across age groups. Human beings have always gauged and benchmarked by how wealthy and how happy other people are, by the kind of clothes they wear, the vehicles they drive etc.

What is the role played by social media here? Today we can connect with people we barely know and immediately get to know what they buy, where they eat out and holiday. Has this not made such “benchmarking” so much easier?

Has it now become easier to con ourselves into thinking that doing/buying certain things (we cannot afford) will make us happy/happier?

From what I see, it is the low-income group that wants to project itself as having the means to live the “good life”. They want the goodies that the middle-class can afford. The middle class want to “get ahead” themselves and so on.

No wonder that the gap between the rich and poor is getting wider with each passing day: The 80/20 rule: Making sense of richest 1% Indians owning 58% wealth!

I hate to state the obvious, our aspirations or how badly we want something must be proportional to our income. There is a big difference between wanting something and wanting something now.

If I earn only Rs. 20,000 a month, wanting to feel cool with an Apple iPhone 7 now is plain stupid. Not everyone can have everything in life. I put a small sum away each month and maybe after a few years, could afford an iPhone-7 or a second-hand iPhone-13.

If we don’t make enough (or at least the means to do so in future), we will have to settle. If we don’t have that maturity today, life will teach it to us the hard way tomorrow.

Photo credit: thetaxhaven (flickr)

A thumb rule for common sense (duh!)

Suppose a family has an income of Rs. 40,000 a month. Mandatory monthly expenses in a metro should be about 50% of that. Assuming no loans, they would need at least 10-20% each month to finance their future (aka invest). So they can comfortably make instinctive purchases with anywhere between 5% -10% of the monthly income.

Any optional expense above 10% should be postponed and purchased only after enough has been accumulated each month – aka “delay gratification”.

“But what if I am never able to purchase it that way?”.  “But what if the item becomes more and more expensive and I never catch up to it?”

Tough luck dude! Aim for less! Not everyone will get everything. We need to remind ourselves about this from time to time.

There is a perfect Tamil proverb to represent the title:

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Viralukketha Veekkam

This means the swelling on a finger would be proportional to the size of the finger (the little finger would not (should not) swell as big as the thumb would (should)).

Can someone please let me know the English and Hindi equivalent?

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Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
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  1. Extremely topical.Many people bankrupt themselves in the name of customs and traditions.Aspirational life style is actively promoted in TV serials etc.
    Live within your means is best policy.

  2. Well Said Pattu Sir! Reminded me of the quote from the movie “Fight Club”-

    “We buy things we don’t need with the money we don’t have to impress people we don’t like”

  3. In Hindi the proverb is : जितनी चादर हो उतना ही पैर फैलाना चाहिये meaning limit your expenses according to your earnings.
    Well written Prof on an importance topic.
    Those who do do when asked why you did usually ans “You live only once” or peer pressure.
    How to counter that?

  4. I saw this first hand when my maid threw a birthday party for her daughter which cost 3x her monthly salary! And you know what, you just can’t reason in such scenarios, I tried.

    I think people who need to learn this, don’t want to listen to these messages. Not sure how to solve the deeper problem…

  5. Thanks for your usual innovative article everytime.

    Two quotes inline with

    1) As a short man(Poor) try to walk with Tall man(Rich), either he will Die or ill

    2) Spread your Leg as Your Capacity.

    With Regards,

  6. It’s recommended that you stay in a neighbourhood where you are among the wealthier families. That way you can easily spend according to the neighbourhood standard, and there is not much pressure to “keep up with the Joneses”. And you end up saving a lot. If you move neighbourhoods as you “move up” in life, then that pressure never stops

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