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MONEY TRAP - 14 : Earning For Living

    IndianMoney.com Research Team | Tuesday, July 05,2016, 06:40 PM
 

There is a famous saying “You must gain control over your money or the lack of it will forever control you”. What does this saying mean? If you live well below your means, you will have freedom from financial stress. But wouldn’t it be better, if you could buy whatever you want and still enjoy freedom from financial stress? The secret…Just earn more money. Easy to say…tough to do…. But you have got to find a way out. How long can you live from hand to mouth? You will never have enough money to buy the things you need. Money to enjoy the good things you crave for. Money to lead a peaceful retired life. Want to know how to invest and lead a better life? Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.

Skill yourself

Remember your college days? You were constantly learning, as you moved from graduation to post graduation? Then you got a job in a good Company. You worked very hard…learning everyday…well, till the probation period got over. After that you just stopped learning. Why did you stop learning? You had no time….Felt learning was a waste of time…Had better things to do? Well whatever your reasons, you just stopped learning. Do you expect your Company to pay you more each year, while your skills remain the same?

Let us understand why you need to skill yourself (upgrade your skills), with an example. Akash and Anurag were classmates in computer engineering in a reputed college. Both of them were very good students and got placed in a good MNC IT Company. Akash and Anurag were both offered a salary of INR 5 Lakhs a year. Within 6 months, both of them got confirmed in the Company. After being confirmed in the Company, Akash started taking life easy. He was always enjoying himself…going out on parties… relaxing most of the time. He hardly paid any attention to the in house training, offered by his Company. Akash was not interested in up skilling himself. He just wanted to enjoy life. What was the result of this laid back approach? Akash found life very difficult in the Company. His juniors got promoted and Akash remained stuck in the same role. When the Company downsized, Akash found himself out of job. What was Anurag doing all this time? Anurag continued to remain focused, just as he was in his college days. Anurag paid a lot of attention to the in house training conducted by his Company. He learnt new programming languages and upgraded his skills. He was always logged on to websites, dedicated to teaching programming. His hard work soon yielded fruit. Anurag got a promotion and a hike in pay. A year later he was posted abroad. He was able to buy well…almost anything he wanted and lead the good life.

What do you learn from Akash’s mistake? Akash never bothered to up skill himself and paid a heavy price for it. He lost his job and was soon living hand to mouth. Anurag on the other hand, focused on learning the latest programming languages and this paid good dividends. Anurag was not earning for a living. Work had become fun.

Should you spend less or earn more

You love your job and earn a decent salary. But there’s a small problem…Expenses…They are eating up almost everything you earn. At the end of the month you are …broke. No money in your pocket. You resolve to do something about this. You will skimp on well, pretty much everything. No parties…No eating out…Use the cheapest mobile phone….No emergency fund…No money set aside for retirement…No movies and vacations. But saving this way, has its limits.

Let us understand if it is better to save more or earn more. Divakar earned INR 5 Lakhs a year and his wife Kamala, earned INR 3 Lakhs a year. In spite of earning a decent salary, Divakar was living hand to mouth. The home loan EMI and the car loan EMI, were eating most of his salary. Finding expenses too difficult, Divakar resolved to do something about this. Divakar and Kamala started cutting down on well, almost all spending. Parties and eating out were a distant memory. Dinner was cooked at home. Divakar and Kamala used the cheapest mobile phones around. They cancelled their internet service. They even skimped on their grocery. Well…they at least tried to. But saving this way has its limits. Kamala said that cutting down the grocery bill was not much of a saving. Divakar still bought a pair of good trousers and a shirt once each month. Perhaps he could cut down on this unnecessary spending?  This led to a lot of fights and finger pointing. There was now a lot of stress on their relationship.

What was Divakar’s mistake? Divakar and Kamala had taken cutting down on spending to the extreme. There is only so much you can go, while trying to save.

What should Divakar have done?

Divakar should have looked for ways to increase his income. He should have invested in his career. Perhaps a computer course, which would have made his job easier and helped him earn a higher pay. Divakar should have invested in himself. Divakar was the engine of his growth. Divakar should have tried to earn some more money, by taking up freelancing. His wife Kamala could also have given tuitions to students. The extra money would mean a better life.

IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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