Advertorial | YOLO — Why save for the future?

I was having a discussion with my friend where he was enthusiastically sharing his weekend party plan. He further said - my life funda is very clear. Work Hard - Party Harder. His social media profile is filled with his party photos, restaurant outings and vacations. He is always found with the latest gadgets and in-trend clothes. I humbly asked - bro, I hope you are saving also for the future. He paused for a moment, made a face and accused me of starting a lecture again. His point was - Who has seen the future? Covid has just taught us - there is no guarantee of life. Who knows when we will leave Mother Earth. So, the best approach is to enjoy the present. What’s the point of saving when we don’t even know whether we will be alive or not? Afterall, You Only Live Once, which in the cool lingo is abbreviated as YOLO. Today hotels are oversold, restaurants are full even on weekdays, there are more cafes in the city than medical stores; overall spending is on the rise. But there is a flip side to this theory/story.

It is true no one has seen the future. USA is around 5% of the world’s population but accounts for over 25% of the world’s consumption. It looks very glossy from outside as people seem to be enjoying life. But the reality is far different. To see this reality, we have to move away from the YOLO lens and wear a different lens. The other lens shows that over 77% of the Americans are worried about their personal finance. They are deep in debt and many have a negative net worth. Their condition is so precarious that they are even buying day-to-day groceries on EMIs. Individuals over the age of 70 are forced to work just to meet their basic requirements.

Instead of living at the extremes (miser or flamboyance), the need is to strike a balance and aim to be frugal in nature. We can neither ignore the past not the future. Often people strive to meet their present wants at the expense of future needs. Always have a plan to meet your tomorrow’s needs. Remember your current income is the source to meet your future needs and wants as well. SO, spend wisely. After, who knows you may live to be 100 years old as well thanks to the advancement in medical science. The average lifespan in India is expected to touch 80 years in the coming decade. The question now is – are we prepared to live that long?

On one side we have YOLO and on the other side we have YDED. YDED stands for You Die Every Day. If youth is all about fun, old age could be filled with sorrows if we don’t strike a balance early on in life.

Given the capitalist world we are living in, everyone around is encouraging to spend more. This is the reason why businesses are getting rich while the common man is becoming poor. How do we save ourselves from the clutches of such a capitalistic society? The answer to this lies in a simple solution called SIP.

SIP stands for Systematic Investment Plan. SIP is not just a process where you invest in mutual funds every month, but a process where you save, invest and more importantly spend less every month. When you sign up for SIP, you are removing YOU (the biggest hurdle between you and your wealth) from the path. It helps you to save every month and doesn’t ask you before debiting your bank. Over a period of time, you will be surprised by the quantum of money you have saved over the years which otherwise would not have been possible. In effect, SIP saved you from the habit of spending on things just to impress other people who really are not bothered about you at all.

To conclude, we live in a VUCA (Volatile, Uncertain, Complexed and Ambiguous) world. The next disruption is just around the corner and we may lose our only source of income due to this disruption. So, it is time to decide how we want to use the money we earn today. Mind you, it is not your income that makes you rich, it is your spending habits. There is a world of difference between looking rich and being rich. Which one are you is a choice you have to make; but whatever you decide, choose wisely.

Note: The article has been authored by CA Ashish Modani, CFP, Founder-SLA Finserv Private Limited.