Spend wisely for a Happy Life – PrognoAdvisor

Spend wisely for a Happy Life

There is no limit for spending money. But in order to live happily you have to spend wisely. The first thing you should understand is the difference between need and want. Need is the essential or basic requirement. Want is the desire. Buying a cell phone is a need. Buying a iphone is a want.

While buying car people usually take it as a status symbol and not think about the utility value. They finally end up buying either what they can’t afford or what they do not need. The value of a car depreciate from the day one it is bought. A car which is bought for Rs.10 lacs will fetch Rs.2 lacs after 10 years. This means that every year Rs.80000 or every month Rs.6667 is spend on the car even if it is not driven. Add the cost of fuel, insurance, repairs and loan interest to it. The total monthly cost could be more than Rs.14000 per month. It is more costly than the rent you might be paying for your house. Very few people keep cars for 10 years. If you change car after 4 or 5 years the total cost of ownership will be much higher. Just imagine if you have bought a car for Rs.5 lacs and saved the rest for five years. You will be richer and might be able to change the car after 5 years without hazels.

Many NRIs have built palatial bunglows. Nobody stays there and the property will not be maintained well. When they return they will have to spend a huge amount to renovate it. In some cases since they have invested majority of their savings in the house, they will be forced to sell it to get funds to live through retirement. While buying house, it is better to go for a smaller one or one which meet your needs. It will be easy to maintain. Moreover spending on self-occupied house is a dead investment. You can’t realise money from that to meet other goals unless you sell it.

Sanjeev Kumar Gopalakrishnan

Sanjeev Kumar G, an IBS Chennai Alumni, is a Certified Financial Planner (CFP) from India, since 2005. He has 22 years of experience and is an expert in various personal finance areas like portfolio construction, investment research, life insurance and financial planning.

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