lifestyle inflation and Fire consequences

-

 In the year 2012, I moved to Hyderabad for my graduation. When I was not earning, obviously I was dependent on my dad for my hostel fee, college fee, etc. I survived in Hyderabad excluding hostel fee with 3000 rupees. Of that 3000, 1500 for daily transport to college from hostel, and I would go home twice a week that would cost around 200. Remaining amount would go to eating out and buying books and entertainment purposes(There is a weekly theatre attached to my hostel).

This continued for next 3 years and in 2015, I got placed in Infosys. My investment journey is listed here.

I noticed that back in 2012, 3000 rupees were enough to meet my expenses but now after started earning 20k-30k per month which is 10x of my 2012 expenses, I still feel that I couldn't find any amount left over at the end of the month. This is all about lifestyle inflation.

Your lifestyle will continue to grow as your income grows until you forcefully restrict it to stay at the same level. This will hold true if you started to earn six figure income in Indian rupees or six figure income in USD. This will have awful consequences, especially if you are an employee. Because you are just one step away from getting poor if you continue with your Lifestyle inflation and don't invest in assets.

I wish I knew this back when I first received my income. I didn't have anyone to guide me as money is a big taboo. The purpose of this blog will be fulfilled even if one early individual has seen this post and understood how things work and change his Lifestyle and control his Lifestyle inflation for good.

Comments

Post a Comment

Popular posts from this blog

Evolution of Money - Barter system

-
Image
As Humans have evolved over time, Money we transact in exchange of goods or service is also evolved. We will see in detail why was there need to go other system. Barter System: Barter System was in use as early as 6000 BC introduced by Mesopotamia and it was improved by Babylonian's. Bartering is trading services or goods with another person when there is no money involved. If you ever traded 'abc' object in return of 'xyz' object, you have bartered. Advantages: You dont need money to barter. you do not have to part with material items. Instead, you can offer a service in exchange for an item It is flexible. Anything can be traded for anything.  Disadvantages: The desired item only has the value in this medium of exchange. For example, you desired to have apple, you will transact only with the person who is willing to exchange apple. Item exchanged is not quantifiable. Example: 10 apples cant be traded for a single sheep/goat. It was long tedious process
Read more

How much you should earn for every 100 rupees you spend

-
Image
You might be wondering what is this article about. Common sense says that we need to earn 100 rupees to spend 100 rupees. This is not the case and banks and government trying their best to hide this from us. Remember, you will not keep everything you earn. This is not as straight forward as it seems. Let us know about this with a tasty example 😉. Imagine we need to buy an Ice cream which is of 100 rupees. Let the gst on that ice cream be 18%. So now the total cost of ice cream is 118 rupees. Let us imagine that we fall under 20% Income tax bracket. So for every 100 rupees you earn you will only keep 80 rupees of it and rest 20% will be deducted as Income tax. 100 rs x 80% = 80 rs Remaining amount = 118 rs - 80 rs = 38 rs For the remaining amount we need to divide by 80 and multiply by 100(because 100 after tax is equivalent to 80) which will result in 47.5 Now add this to initial 100 rs So there it is for you. To spend 100 rs you need to earn 147.5 rs
Read more

Evolution of Money - Coinage

-
Image
Bronze age brought world of opportunities to human race. Sophisticated tools made his day to day task easy. Humans were on a journey to make things simple. Out of that quest, Coins were brought to life. Chronology of Coins and its usage: Money in the form of small knives and spades made of bronze was in use in China during the Zhou dynasty, with cast bronze replicas of cowrie shells in use before this. The first manufactured actual coins seem to have appeared separately in India. The first ruler in the Mediterranean known to have officially set standards of weight and money was Phedion.  Minting occurred in the late 7th century BC amongst the Greek cities of Asia Minor, spreading to the Greek islands of the Aegean and to the south of Italy by 500 BC. The first stamped money (having the mark of some authority in the form of a picture or words) can be seen in Paris. Advantages of Coinage: This system solved all the problems of the barter system With coinage, now individuals c
Read more