Saving money is a great practice. It requires sound spending habits and dedication towards those habits. Frugal financial habits will definitely ensure you a thriving financial future. However, one might get lost in the quest to save more and cross the line from being frugal to being ultra-cheap and miserly. Money is no doubt a limited resource. All of us are aware that we must make financial decisions carefully. The choices that we make define our personality.
Let's say that you have carefully and satisfactorily saved up for your emergency fund. Well done! That's a fantastic achievement. Let's assume that you have managed to deposit the maximum possible amount into your 80C investments to save income tax deduction. Well, you should be proud of your commitment to saving money.
On the other hand, your friends have stopped inviting you to dine-out plans anymore as you either try to steer the group into a cheap food joint, or you try to split an entrée to cut down your expenses. That's where you need to stop and introspect.
Extreme scrimping is not a healthy practice. It might cost you dearly - you might lose your friends and be eschewed in your social circles. You might pay a heavy price in your pursuit to save money. Let me elucidate with a few personal experiences.
Hiya was a close friend and a jovial member of my college gang. KFC had recently opened an outlet next to our college, and the whole gang was excited to try it out, although it was quite heavy on our meager pocket money. Nonetheless, our spirit of gluttony was indomitable, and we decided to visit the famous food chain.
Hiya, however, threw tantrums over the pocket pinch. She had a 30% discount voucher from a restaurant which was 5km away. Much to the annoyance of the remaining members of the gang, Hiya insisted that we change our plans. When we refused to budge, she skipped the dine-out plan altogether.
A couple of years down the line, when we had all started working and were earning decently, we got invited to a friend's wedding. The plan was to chip in Rs.1000 each to buy a handy food processor as the wedding gift. Hiya prevaricated whenever she was asked to contribute her share. The day of the wedding arrived and passed; Hiya never paid her share. The rest of us had to cover up. Since then she has been avoided by all.
Moral of the story: It's not about failing to attend an event; it's about avoiding social events to skip the associated expenses. Yes, you need to save money, but not at the cost of your social life. Friends and personal relationships are more important than adding another Rs.1000 to the heaps of money that you have already saved up.
I have always been passionate about culinary arts. I love to cook and treat myself as well as my near and dear ones to yummy delicacies. I generally do not care about the expenses incurred. I shop lavishly for cooking supplies to the extent of purchasing expensive exotic ingredients.
There was a time when I happened to run into Hiya at the supermarket, and we decided to catch up while ticking off items from our grocery shopping lists. When Hiya saw me picking up some avocado (which is a relatively expensive fruit in India), she immediately hit me with a snide remark. Ignoring her, I continued to fill my shopping cart with a handful of pricey imported goodies.
Hiya commented, "I don't understand why you waste so much money on these useless things! Why would you want to buy two avocados for Rs.250 when you get four guavas for Rs.50? I wouldn't! Learn to save money, dude! Money doesn't grow on trees, you know..." I was highly annoyed and made a mental note to myself -“avoid this nosy lady in future!"
Moral of the story: You might be minting money in your savings, but that doesn't give you the license to judge others' spending habits; neither do you need to pass comments camouflaged as advice. Each person has different priorities. Let them decide how they spend their money. It shouldn't be your concern. Please don't be another Hiya.
Sheena lives in the apartment across the corridor. She often hangs out with me. We sometimes go shopping together. She is good with words. After a month or two, I started noticing that she somehow convinces me to take my car whenever we go out to buy groceries.
To make it worse, she insists on going to the supermarket 3 miles away because they offer better discounts than the one in the vicinity (yes, in my car). If we stop for tea or snacks on the way, she makes sure that we split the bill - even when the bill amount is Rs.50. If I owe her an amount as trivial as Rs.20, she makes sure to remind me of it every couple of hours; if she owes me money, she conveniently forgets about it.
Whenever she needs to refuel her own car, she drives across the town to a fuel station where she gets petrol for cheap - by Rs.2. The foolish lady is so obsessed with scrimping every penny that she doesn't realize that she isn't effectively saving much.
Moral of the story: Your miserly habits shouldn't become a burden for your acquaintances. If you scrimp to save while forcing others to pay on your behalf, you will be considered cheap and labeled as an opportunist; people will avoid you.
On the other hand, you should always be on the lookout for attractive deals and discounts but rationally calculate your profit first. Does it make sense to waste time and drive a long distance to get a petty discount? Don't be Sheena.
Mr. Shah is an abominable miser in the neighborhood. He doesn't contribute to any community event; he "borrows" his neighbor's Wi-Fi; he also uses his neighbor's telephone to make long calls. It is rumored that he shoplifts as well. People run away if he is spotted on the streets. His "friendly" neighbors felt so harassed by his actions that they relocated to another locality.
Moral of the story: Dishonest actions are highly censured by the society. You cannot afford to stoop so low in order to add to your personal wealth. If you cannot afford something, you must not adopt unethical ways to get it. Don't be Mr. Shah.
My colleague, Arnie, is a chartered accountant. He is a talented guy, extremely self-driven and motivated. I understand his passion and interest in money. However, his craze to save is a complete obsession. He invests all his free time on investing in the right stock and share.
He devotes a couple of his working hours on the same. You cannot have a conversation with him without being harangued about savings. He doesn't take his eyes off his phone while he is in a social gathering. He also has some mention-worthy bargaining skills which often escalate to the level of a fist fight.
Some people laugh at him, some are annoyed by him, and some simply ignore him. He is perceived as an aberration in the office.
Moral of the story: Thinking about money and savings isn't a bad habit. If you look for coupons, discounts, and sales and also bargain a little to save a penny here and there, you are completely normal. Saving more and more can be quite thrilling.
However, when your urge to save crosses the line and becomes an obsession, you should spot the red flag and step back. Be smart with money, but don't allow those green notes to dictate your life. Don't be Arnie.
I happen to have another spectacular colleague: Mrs. Sen. She is an avid shopper. If there's a sale somewhere in the city, she knows, and she goes. If a guy on the street is distributing flyers serving as discount vouchers to a new store in the locality, Mrs. Sen collects at least ten of them.
If you are looking for the cheapest food joint in town, Mrs. Sen knows it, and she frequents it too. Mrs. Sen buys a lot of things from street vendors and flea market. Can you expect those goods to be of premium quality?
Sadly, no. Her clothes fade within a couple of washes, her home appliances often visit the repair shop, and her son can't keep a toy intact for more than a week. Most of these items are regularly replaced and repaired by Mrs. Sen.
Moral of the story: Cheap goods aren't a great bargain if they give up soon. If you have to replace or repair items regularly, you aren't effectively saving much. Grabbing a discount and buying things on sale can save you some bucks, but don't let it govern every purchase you make. You will profit more from better quality goods in the long run.
Well, this isn't really a story. It's a confession. I am not a "shopping mall person." I rely on e-commerce to get my clothes and essentials. These smart e-retailers send out emails, SMS and push notifications offering attractive deals - "Shop for Rs.2000 and save Rs.150 on shipping charges", "Shop for Rs.3500 and get 10% off on your total bill", "Buy 4 shirts and get the 5th one for free", and the list goes on.
My super saver brain says, "Oh that's a great offer! You will get five things if you pay for four. Grab it!" I end up buying those shirts that I do not really need. Moreover, I spend Rs.3000 on shopping while my budget had Rs.2000 allotted to such purchases. In lucid words, I waste more money while trying to save more.
Moral of the story: Don't fall prey to such beguiling offers. Retailers are smart - their interest lies in their own profit, not yours. Don't be me. I am trying my best to drive this point across into my brain. Sticking to your budget is necessary. Avoid such budgeting mistakes.
These are the warning signs to tell you that something is amiss in your financial habits. I am quite sure that most of us have encountered the likes of such misers in our daily lives. If you know such people, understand the mistakes they make and learn from them.
If you identified yourself with one of the persons in my anecdotes, it's time for you to analyze your financial habits and work upon them seriously. A frugal attitude and approach towards finances can help you save money in a healthy way.
No one likes to be around a miserly money-hoarder. Our social and interpersonal relationships are more important than a hefty bank balance - the quicker you realize this, the better off you will be.