I am stunned, or at least shocked when I talk about money to some people. I really wish we had some magazines like MoneySense who did surveys and gave us some macro numbers on how people spent their money.

I met this guy earning well and having literally no cash in his hands. Around 32 years of age he is now preparing to receive his first kid in the world – and he was struggling to pay for the delivery charges. Never mind that his office will reimburse the money, he has to pay about Rs. 50k to the hospital (assuming I did not ask him what amount).

I rarely write about how a person should spend etc. – I am more on the wealth side. I prefer writing about how people should save and invest..but this was shocking. How can a 32 year old with a 31 year old wife – each earning about Rs. 10L a year not have even Rs. 100,000 in cash / mutual fund with easy access? Beats me.

They have had vacations in South East Asia, Europe, and Middle East. None of them came cheap – I know for sure that the Europe trip must have been darned expensive because it included 4 days in Switzerland and the whole trip was about 15 days. They drive a Honda City and a Swift Dezire, live in a rented house, do not support their parents. The wife has some ULIP (tax saving!!) and the husband believed in paying all the taxes. No savings whatsoever. Money earned, all spent.

Last year they donated Rs. 55,000 to a charity I know, and that is where I met them. Seriously, they cannot afford the charity. They need to put money away to buy a house, now for the kid, and generally create an emergency fund, and of course a retirement fund. She is a banker (oops!!) and he is in the IT space, both industries known for their fickle minded HR policies. Frankly the have another 15 years in which to put together this money, and their salaries, though good, are not really astronomical. Their parents are not so well off – but they are not dependent on these kids as of now. However on probing I found that parents could exhaust their money – they do not have any indexed pension, and worse, they have no medical insurance. This couple used their credit card the last time that they had a medical emergency BUT STILL DID NOT GET MEDICAL INSURANCE for their parents.

Their monthly expenses (to this old man) were stunning: Cook Rs. 9000, Maid Rs. 3500, Petrol Rs. 12,000, Electricity Rs. 6000 on an average, eating out is 8-10 times a month, and the bill is Rs. 2k*10 so say 20k a month, movies, shopping….). Of course all this is a guess, and they have not kept records. It should not be difficult to construct the expenses..all expenses have been paid by credit card. Though they thought they were earning well and spending well, they were actually living far beyond their means. Corporate travel meant a hired taxi, air travel and luxury hotels. Even when they went on their personal visits, they used the same combination. They started staying in 4 and 5* hotels (corporate discounts meant they paid much less than the rack rates, but still these are expensive)..so they did not really consider saving!

Their travels were more as a tick box item. They have not seen anything in India. Both are from South, have not seen, say the Taj, but have seen the Eiffel Tower and Big Ben.

Honestly, I do not know where to put the finger on….but yes they are headed for the Poor House soon if they do not change their spending habits…Hey to invest you need money. Money comes from saving. Saving happens by spending sensibly.