Let’s understand this with a situational analysis. In case I am paid INR 300 per day and I spend 200, saving 100 for future contingencies. Now, post 10 days I can afford visiting a doctor and shed 1000 that I saved. Not just for risks, we save for inflated benefits too. I could have bought a school uniform and books for my daughter with the saved 1000.
Yes, these are too common facts and we have learnt these from our ancestors. Yet, are we moving on the right track? 200 for a movie ticket, which comes out to 400 for 2 and 1000 for 5, and most of our movies are a hit. Ranging from glasses and shoes to cars and cellphones we possess, we are competing with the never-ending competitors. MNCs, which have helped Indians fetch handsome salaries, have on the contrary extended money to the hands of untested.
The other effect is the enhanced purchasing power of one section of the society, which has lured sellers to extract more profits at same cost; however which in turn has let down those with restricted pays. The wide gap is bound to widen further with unjustifiable spending habits.
Let us also know how our spending and savings affect the overall economy of the nation of which, we are a part. The corporate entities and the government too access available savings through banks and capital market by either borrowing or issuing shares/ bonds. Imagine the trouble when financial institutions do not have enough funds (savings from households) to meet the nation’s financial needs.
Sub-optimal economic growth, sub-optimal job creation, and subnormal living standard in comparison to nations with better savings performance are the outcomes. Then, with inflationary powers you are bound to save nothing even if you wish to.
Imagine a distinct scenario now. Low saving households eventually enhance the burden on the government to provide social welfare services, limiting the government’s capacity to spend on infrastructural development viz. roads, railways, schools, hospitals, and ports.
This in turn affects the growth of the industrial sector that demands proper infrastructure to prosper. Savings, thus is one of the most vital pillars of the economy and households are its key constituents.
I ran across these
lines somewhere and found it interesting, ‘Do not save what you are
left with post spending; rather spend what is left post saving’.
Herein too, start early, make sure that you comprehend your future
financial needs, and entrust your money to reliable financial