I have no clue how frugality works for you, I can only say how it works for me. However frugality is not about being frugal in everything that you do. If you take care of frugality in the big building blocks, you need not worry about minor things. For example in the generation that went for its first job in the 1950s and 60s, most of their income went towards looking after their parents, food, day to day living and children’s education. Now for those seeking a job (say 2018 graduates) things are obviously going to be very different. If they do come from prosperous families (double income of parents, only child) they CANNOT be expected to behave in the same way as their grandparents did or even their parents did.

However, their problems remain the same. Even if they are willing to spend on experiences (Goa, Venice, Switzerland) and gadgets they will still need to put some money away for their goals. Nothing wrong with spending, but if you want to quit your job to design an app that is going to change the world – you will have to do the initial funding, right?

If you are a girl who wants to set up her own business – remember it is twice as tough as it is for the guys. So you will need to be worried about frugality. Most of us are frugal in one part of our lives so that we can splurge on something else. I know one guy who would save aggressively to fund his camera (and accessories) buying. Just about making choices, right?

What should you really take care?

1. Housing: We are all choosy are we not? So from suffering in a stuffed co-share in Bandra (still paying a bomb) to an airy flat in say Vashi for the same price, you have to make the choice. Whether you are renting or buying make sure that you don’t buy too big (don’t fall for the broker’s pitch), or in a very expensive location (Bandra vs Mira Road). And surely don’t make a down payment which is LESS THAN 40% of the total cost of the purchase (brokerage, stamp duty, etc. all included). Obviously nobody will sell their house and move into a slum or a chawl, but keeping housing costs low is a great step in Compounding.
2. Eating Out: When eat in a hotel vs eating at home, you are paying for ambience, stale ac air, service, rent, interest, etc. which makes up 95% of the cost. That is a big killer. The more meals that you eat at home the healthier you will be (your mom told you this, right?), let me be your dad and tell you…”the more meals that you eat at home the WEALTHIER you will be!! It will put more money in your hand for compounding. Remember the title of my book? Retire Rich – INVEST Rs. 40 A DAY. The skill is to start early with small numbers – the big change will happen.
3. Transportation: Of course Ola and Uber have made it cheaper to travel. However, in a country with subsidized public transport there is NO WAY that private transport can ever ever compete. The trick is to optimize your life such that your car needs are minimal — Take the bus / train / share a cab to work, ride a bike, or even walk for your daily commute.  Try to limit your car driving down to just shopping trips on the weekend and irregular road trips – if you will not use ola, uber, auto, etc. .  You’ll end up spending far less on fuel every month.  Oil changes and other maintenance will be much farther apart due to the lack of wear and tear on your vehicle. This lack of wear means you can keep your car far longer without needing to replace it as often. Rather than replacing your car every 6 years, you can replace it every 11. No I am not joking. I have friends in the 5-9 crore net worth and either not owning a car or using it 4 times a month and keeping it for 14 years!

First take care of these 3 expenses – and then will give you another dose of compounding…..