Spending money with discretion

Most people some times do things that border on the ridiculous. Take an example of Mr.X, who drives his car to the market to buy vegetables, and burn up a lot on fuel, even when the market is located within 10 minutes walking distance. He do not of course neglect to bargain with the vegetable vendor. Result: he spends Rs 40 on the vegetables and Rs 15 on the fuel. The worst place to live is living just beyond ones means. A character from the armed forces in a classic book mentions that he took a fighter plane all the way to another to buy tomatoes and sold it to their mess. It is an exaggeration fit for only fiction, but in real life there are some people who are comparable to the fiction anecdote.

Take another case of Mr.Y a young gentleman who drives regularly to the gym, just a kilometer away, to keep himself trim. If his basic goal is to keep fit, why not just jog to the gym and back? He ends up spending on the fuel and the gym membership, when walking and stretching exercises would do the trick just as well.

Fiscal prudence is all about following common sense principles doing the right things and doing them right. It comes from the datum principle that spends should come from income and that one should not burn up capital for day-to-day needs. Take a train when that will do; there’s no need to fly of you have plenty of time. Train journeys are relaxing and romantic. No point in keeping a car in a crowded neighborhood; better to take a taxi when needed to get around. Spending money judiciously takes guts, though, because one may have to act against the accepted practices of the day.

Sometimes it seems as though people are following in the footsteps of profligate governments, whose fiscal deficits are here to stay. Economists have even given it a positive spin saying a growing economy should run deficits to build the country at a rapid pace.

There are times when it pays to pause and reflect. Grandfathers managed to raise a “pride” sometimes even nuclear families consisted of a dozen people with their modest resources. They also had a lot of fun, interacting with their family and friends, watching plays, going to fairs, attending weddings, their own kind of fun. Sure, they did not have fancy wheels, lounge bars, iPods , saunas and Jacuzzis, or other fancy stuff. They had clean air and water, and Nature was bountiful enough to take care of them. Their needs were well within their means. Loans were frowned upon and they just lived by common sense.

One can that coveted LCD television in the electronics store on EMI. But if it is really needed can it be purchased on EMI without adversely affecting some other goal. If one feels he really must have it, can he fund it from savings? If so, can he pay off the loan taken to buy it comfortably? Will the EMI hurt his options? If his answers are honest and open then he can act wisely.

Indeed, we keep getting answers but we often ignore or override them. We don’t give due credit to our innate good sense which guides us. Many of us buy cars within a few months of starting to earn, book a luxurious flat, buy all sorts of goodies for our home, and go on holidays much sooner than we probably should. All of these things can be bought on loans, and loans are easy to get today. Repaying them can be a crushing burden on many of us. We then realize, suddenly, that we need a new job, one which pays us better.

The next generation will learn by our example. They watch our every move. Putting on a façade of well-being isn’t going to fool today’s children as they are smart enough to see through it. Pretence will only make them jittery and unsettled. And worse, if they are too used to the good life, they may not be able to get off the disaster train. In conclusion discretionary common sense must precede expense.