Inflation is a big cause of worry for almost all of us. What we earn and how we spend is all related to inflation. Things that an average household can buy with the money that comes home at the start of every month is governed by inflation. But why has inflation become the topic of concern in the last two decades? Why was it not so much of a parameter to track earlier? These are the questions that can be answered by looking at our lifestyle habits today as compared to earlier times.
In Indian culture, most of the baby boomers and Gen Y has been bought up on the principle that says extend your legs as long as the sheet. Which basically translates into, buy only the things that you really need and afford. People were content with the means they had and worked harder to get things they wanted. Because, there was no other way to fulfil your wants. They had to earn it!
We had the fortune of meeting a veteran businessman, Mr Bansal, in one of the towns in India. A principled gentleman and a self made man. He told us about his growing up years and the kind of sacrifices and hardships they went through to rise up in life. A small town family with four kids, father working as an accountant and mother was a house wife. Now, there would be more than a million families fitting that description in the 80’s.
His father was the sole wage earner in the family, raising four kids with good schooling and providing good means is what every father works for. His mother made the best out of the money she got to run the household. He told us a few instances that shaped the lives of his brothers and himself.
The father used to deposit a portion of his income in a PPF account every month as safety funds for emergencies. The rest of the income was used in monthly supplies, new clothes on festivals and other household expenses. When the kids asked for new game or new cricket bat the first question asked was what’s wrong with the one they had. If the kids could convince their parents that there was definitely something wrong with it, he would first try to fix it. If the problem persisted, only then they got a new one.
He recalls, his mother had a habit of adding two cups of flour to a separate container before making the rotis everyday. Upon asking why she used to do that, the mother used to simply say just in case of emergencies. Say a few guests turn up without notice or there was a delay in getting the groceries for the next month, she could dig into this container without having to panic.
By the time Mr Bansal graduated, his father had retired and now it was upto the kids to create the lives they wanted to make for themselves. He recalls, how his father made a beautiful home outside the city upon his retirement. They loved playing with bricks and cement while the construction was in progress. He could use the money from his PPF and Gratuity to build this house even after raising four children. There was no home loan or car loan to be thought about at that time. The idea was to earn and save for everything that we wanted for us.
Mr Bansal says he never learnt buying something on credit. He would only buy things he can afford to pay for. This is a habit that he acquired from his parents. But he also worries about the next generation, they have all the means and money to buy whatever they want. Would they care about saving before spending?
Hearing, Mr Bansal’s story it got us to think about how savings is really built in our culture. Why people still prefer to buy homes when they have earned enough rather than taking a home loan. Why people still take public transport even when they can go by car. Why investing in gold is still considered as a smart investment option. It’s not only a matter of habits, but it’s our culture. Saving before Spending!