With financial awareness today, we all realize the importance of saving for the future. We all save in some or the other way. What is required, is striking the right balance between spending today and saving for the future. And this is important as we neither wish to compromise on the lifestyle & aspirations today nor in the later stage of life.

Well think about our parents, they restricted their expenses by postponing their aspirations and saved every bit they could. Today they are spending the surplus available and are content with the same. Being in their shoes, we need to question ourselves; would we be satisfied delaying our gratification? Probably not.  We all enjoy the instant pleasure of buying a luxury car, vacationing at Disney land with our children or moving into a bigger house. Postponing these by a few years may reduce the satisfaction and happiness we derive.

Does that mean we spend lavishly today and not worry about tomorrow? The answer is a big No. To strike the right balance is the key, the big question- How much is enough?

Below are some tips to be able to realize your dreams today while being prepared for the future

List your goals (Explicit & Implicit):- What is important is listing down all our future requirements. This is easier said than done. We generally tend to miss a few things like if we have a car, we would replace it every 3-5 years. Shifting to a bigger house will mean additional cost of interiors and a higher maintenance cost year on year. With an addition in the family, apart from education cost, the regular expenses would also go up.

Know your earnings potential:- It is important to not go too conservative or too aggressive on the inflows. Having worked for a few years, we understand the industry and the growth opportunities to be able to make a sound judgment. Note that in every industry the income growth rate stabilizes/ normalizes over the years.

One would argue that there will be higher increments in income with say a change in job. Yes, that’s true but if our income grows by 20%, our savings might just grow by 15%. This is because, with every jump in income, we aspire a better lifestyle which comes at an additional cost.

Think long-term:- With the stressful jobs that most of us are into, we may want to look at a second innings where we are financially independent to take the diversion in our work life. Putting a time frame to this shall help know the time in hand to prepare for other goals.

Plan your retirement:- In the post-retirement phase, we not only require funds for our daily expenses but also to take care of increased medical bills. Certain ongoing lifestyle needs like vacation and changing the vehicle every few years would still continue. In fact, the frequency of vacations would only increase with more time and lesser commitments. Further, by this time the need for convenience in traveling gains importance which comes at a higher cost.

Consider relevant inflation rate:- Another important criterion is to take into account the different inflation relating to different expenses/goals. Eg. Medical expenses will grow at a different rate than the daily expenses.

Protect yourself:- While we ponder on the above, what happens if life throws a Googly and the plan is washed away in a storm? One part is to protect ourselves through various protection plans. We do renew our car insurance every year but postpone insuring ourselves and our home. Life, health and home insurance can protect the risk and encourage us to look at the brighter side of life

Review yearly:- Having analyzed all this, the biggest fact is; life may seldom work as planned and hence it is important that our plans are flexible and can be altered as per changes in the life situation and this is what will keep us going.

Make the choice:- Lastly, it is all about making choices. Choice of driving a Baleno all your life v/s driving a two-wheeler today for a Mercedes at 60. Choice of having one luxury trip every three years or short vacations every year. Choice of passing on an Estate or spending well in our lifetime.

Save right and feel free to Spend the rest:- Let’s prioritize, make choices, spend some time evaluating the above (or hire a professional) who knows, it may end up telling us; go for an extra outing per week or an additional international vacation per year.

Let’s find what’s in store for us. Explore our financial world. Have our financial plan in place. Balance our current and future life

Happy Spending!