Our spending habits are shaped by our upbringing, our values and ethics, our view of the life we lead and the security it holds, and our expectations for the future. Some of us belong to the generation that grew up in scarcity and poverty and got introduced to plenty and wealth much later in adulthood. We are compulsive savers. We constantly think of the unknown tomorrow and stash away money for a future contingency, denying ourselves the pleasures of today. And then we age, and stare at our stash and wonder how we will spend. We are not quite used to making that bold decision. So how do we navigate that phase in our lives, my reader asked. So here I whip a list, as I consider her question.
First, identify what matters a lot to you and ask if you have allocated it the money it deserves. Many instantly think of travel as one of their interests to pursue in retirement. To some, what matters might be to meet friends and relatives as often as possible. These days it is hard to miss the aged uncles and aunties who take the trouble to attend every wedding or ceremony in the family. If travel is your interest, spend on the tickets, reservations, accommodations and such, to make sure it is comfortable. Be willing to allocate money to activities that interest you.
Second, if you have a hobby, you may not be serious about it unless you are willing to devote time, energy and resources to pursue it. If music is your passion, and you believe you must learn it formally, enrol in classes and pursue it with the seriousness of a student. If photography brings you pleasure, invest in a good camera and lenses, and do what it takes to pursue it seriously. If you think a new activity is what you will pursue in retirement, make a reasonable budget to spend on it, so you can enjoy it.
Third, if there are expenses you have postponed all your life, and now you feel you have the money to spend, bring them back to the table. Buying books that you love reading, indulging in eating out to experiment with various cuisines, attending exhibitions, shows and concerts that interest you, or buying yourself items of clothing and jewellery that you denied yourself in your saving days, can come back and be financed if you have the money.
Fourth, if there are expenses that will enhance your comfort, consider allocating money to those. You might want to invest in a comfortable reading chair, a back supporting couch, a better quality bed or blanket or pillows, and such little things of everyday use that enhance your comfort. You may want to engage a cab to travel rather than take public transport; fly instead of taking a train; and so on. These sound like trivial things, but I know of many elderly friends who would continue to pinch back on their own comfort from their habit of frugality even when it is not required any more.
Fifth, if you think you have more than you need, learn to give it away. There are many that can use that money very meaningfully. You may have made a difference to another life if you paid a hospital bill, a tuition fee, a coaching class fee, or if you bought some life supporting medicine, equipment or even provided clothing, footwear and such simple things. Support charities that work on causes close to your heart. If you can be generous with people around you, your vegetable vendor, security guard, liftmen, cooks and cleaning staff, drivers and others, support them. You have the time to talk, counsel, and get involved.
Make a difference to their lives. Why do people struggle with something as mundane as spending? Isn’t that a natural thing to do? Isn’t saving the more difficult habit to cultivate? In personal finance, we always emphasise life stage as a significant influencer of our money habits. Ask a very young earner, he would find his earnings insufficient to meet the long list of needs he has. At that stage in life, there is never enough time, energy or money as there is a long list of things to do.
As one moves to middle age, the large ticket spending drops. There is no house or car to buy, nor does the house need new things, at least not as much as it did when it was set up. But there are other financial goals to fund, such as education. If incomes move up as one advances to retirement, many have by then acquired a routine habit of saving and creating a retirement corpus for themselves. And then the children grow up and leave, and reach positions of comfort from where they can fund their parents, if needed. We then have elderly parents with wealth they do not know what to do with, or find it tough to now acquire a spending habit they are unaccustomed to.
Indulgent living as one advances in age, is not a common practice in India. Turning attention to oneself and to one’s own interests, desires and comforts, at such a delayed stage of life is difficult. There is also the fear of social reprimand, if one were to be seen as being indulgent at an age one is expected to give up worldly desires and live a simpler life. Many are unable to decide as they are torn between their personal desire and the societal expectation they perceive in their minds.
It is possible to carve out a life of great simplicity shunning consumption and embracing frugality in its entirety. One can divert wealth to other noble causes. But that choice needs to come from within and with willingness. If one were to desire the much delayed and denied indulgences in the heart, but force oneself to put up a facade of frugality and sacrifice, that can only create resentment. It’s a better idea to think about how to spend and go ahead and implement it than live in falsehood.
(The writer is Chairperson, Centre for Investment Education and Learning.)
