When a person has to create wealth, his money should get invested and compounded. Yes, that is the theory.

However, when a person starts compounding it gets addicting, and then the person cannot do anything else. I am now seeing people who just will not spend, but try to invest every rupee that they have.

This is exactly where GOAL BASED INVESTING helps. For example to meet all your needs you need to do sip worth Rs. 55,000, but you are doing Rs. 90,000 (happy problem, I know) you have to know in YOUR HEAD THAT the extra that you are doing is just for creating an extra cushion.

However, the sip and compounding addict will come up with:

• what if I lose my job at 52 instead of 60?
• what if I cannot invest more after a few years?
• what if my expenses go up?
• what if the equity returns are 9% instead of 12% that I have assumed?
• what if there is a medical emergency not covered by medical insurance?

all are valid.

However, if you keep compounding your money (and are addicted to it) the very purpose of earning money is being lost. Your family will hate you for being such a penny pincher.

Funnily, all these excuses (or reasons if you want to sound positive) are RIGHT. However, it is the spirit in which it is said that it matters. It should not become so much of an obsession that the people who have a reasonable right to your money get frustrated with your penny pinching.

I know of personal examples of people whose families HATE the head of the family for penny pinching BEYOND reason. However, there is a huge difference of opinion among generations too. I have a friend who has NEVER eaten a pizza. Never ever. He is about 3 years elder to me and I know the family well. He says it is because of health reasons, his family feels it is because of monetary reasons. I intervened and said ‘order it, and let the others eat’. Yes it took him time to accept that his money can be spent on ‘unhealthy food’.

Similarly using public transport for ecological reasons and economical reasons are different.

Once you are a particular age (whatever) your family prefers that YOU take a taxi or a flight and not a bus or a train. Sure as a 74 year old you can argue that you travel by train to prove to yourself that you can, but it makes your family worried. Some of these arguments and fights are unnecessary and avoidable.

Remember the more you leave, the more your family is going to spend AFTER your death. No. You will not be able to stop them from spending money AFTER you die. I am sure you also know that.