On one fine Monday morning in September this year when the world woke up, many found that their world was not the same anymore. That morning, the investing world started with an avalanche of news to digest. In the 72 hours leading up to the market, Lehman Brothers filed for Chapter 11 bankruptcy protection. AIG started talks with the Federal Reserve for a $40 billion bridge loan, as well as announced a restructuring plan that included sale of some business units and what followed next is a hard cold fact!
This worst-ever financial crisis which began in 2007 and is expected to continue through 2009 has already had a significant impact on economic growth by causing job losses, business closures and reduced demand for materials. While the scale of the crisis remains uncertain, the full impact on the real economy has not yet been felt and it appears that more bad news is still to come. With all the economic problems going on, finally people have started talking about saving money after years of excess consumption; perhaps a time has come to review our day-to-day-expenditure model and take some points from the people across the globe.
How an average Indian saves money?
Most of the Indians have large joint families and limited sources of income. This holds true if we keep some metropolitan cities out of the loop as a large part of India is still under-developed, untouched from the commercial boom, particularly in IT sector. With dreams of highly educated and skilled children and large families to support through limited sources of income, the habit of saving money is naturally imbibed in most of the Indians and this holds true even for Generation Y who still opts for money saving pre-paid buddy plans to talk to their flames overnight! So, at such troubled times, an average American can get some points from an average Indian on saving money.
Gen Y: Although most of the Generation Y insists on wearing original Adidas & Nike Sports gear and Tommy Hilfiger cargos, a significant fraction of students still shop out at local outlets which offer value for money, unless of course you are on a shopping date!
If you are a geek, getting your computer assembled with best parts of all brands from your local computer vendor is more cost effective than purchasing a pre-assembled system. If you are a music addict and a photography freak, just like the author of this article, then don’t shell your pockets out on an ipod and a separate digi-cam. Rather buy one of those Music Edition or Walkman series mobile phones which also offer great resolutions with their cameras – one of my personal secret mantra! Talking of mobiles, telecom companies keep rolling out many budget plans particularly designed for teens and those in mid 20’s – those who are natural customers for all night free minutes! For sure this breaks a lot of copyrights, but a lot of people across the globe fill their Walkman Series phones with downloaded music from free sites over the internet to cut down their entertainment costs! All photography freaks, students and all those who print a lot, are well aware of the big burn every genuine cartridge makes in their pockets and refilling your own cartridges is one of the most cost effective way to save dollars in your printing budget.
At the time of this financial crisis, most of the daily boozers have cut down on alcohol or cigarette expenses. Surely a wise move as this will also save them future healthcare expenses as most of the Indians do not have health-insurance! Also, a lot of students have started working part time on a job while they are still studying. This was uncommon in India earlier, but like Obama says – We all need a change!
Daily Commuting: If you commute daily to your office, a ride on metro or a public transport bus can save significant amounts of money on monthly basis. Most of the daily commuters in India use public transport more often than spending money on hiring a taxi. If you can not bring yourself down to public transport standards, then you can minimize the usage of your vehicle by going for car pooling with a few friends or colleagues at work. This can potentially cut your fuel bill by about 25% or more each month. In addition it will get you more disciplined in getting ready for work each day! If your standards do not allow you to use public transport or pooling cars, then perhaps you already own an Audi and you shouldn’t be worrying about financial crisis at all! Even for your Audi, you can save 10-15% on fuel by increasing your vehicle’s fuel efficiency by keeping your vehicle’s tires inflated at the recommended pressure, performing the oil changes on time and keeping the engine well tuned. You can also save on fuel by switching off your a/c when your car is running at low speeds. And any physicist will tell you that lowering your windows at high speeds will increase wind resistance and reduce fuel efficiency. So always run your car with the windows up on highways. Moreover, avoid busy roads as your vehicle burns more fuel when running on lower gears and upon frequent braking. If you are considering buying a new vehicle, don’t go for a used one. Although a used vehicle may cost you much lesser initially but its running and maintenance cost would be much higher than a new fuel efficient vehicle. Consider the fact that fuel prices will continue to go up significantly for the next 5-10 years. So, buy the most fuel efficient vehicle that will serve your family and work needs. Talking of fuel efficiency, you can also try to avoid using your car for buying grocery. This shall reduce fuel consumption as well as help in relieving traffic congestion. If you currently rent a house consider moving to a different location that is closer to your work and/or your children’s school. Not only will you save money but will also have more time to spend with your family.
Investments: Intelligent ones do not buy depreciating assets. Rather, they go for appreciating assets like gold or stocks. This is perhaps the best time to buy shares for long term investment as markets will certainly be bullish again. Along with stocks, most of the elderly invest in the options like fixed deposits, public provident fund, mutual funds, and real estate to create a future income for meeting small and large requirements, such as education and marriage of their children and their own retirement. They also deposit a part of their income in fixed-deposit accounts in post-offices which offer more interest for their money than other public or private banks. Further, most of Indians do not keep credit cards, of course that may not be a viable option in America, but you’ll never get into trouble if you follow one simple mantra – Use your card judiciously! Minimize the use of credit cards and try to pay cash wherever possible.
Winning the savings game is about succeeding in providing for the future without losing out on your present. When it comes to savings, the early birds always have an advantage over those who are off the blocks late. So, start saving now! But wait… Make sure you don’t become a saving maniac too! Save, but save graciously!
This Article is written by John C Arkin.
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