Newsletter #26: Is there such a thing as too much savings?

As Indians, the habit of saving money is ingrained within us. We find different ways to save money, from bargaining with our everyday grocer to walking to work. Money saved is money earned. But have you ever wondered if this habit could actually be counterproductive for you?

This week I spoke to someone who is a part of our team at Wint Wealth. The person I spoke to is 20 years old and just moved to Bangalore for work. Now, for someone who is that young, you would assume that he barely has savings, but while talking to him, I got to know his unique perspective on saving and investing.

He saves about 60% of his salary after paying for rent in Bangalore, taking in the expensive cost of travel and other miscellaneous expenses. I was very impressed with his approach toward his finances but turns out he wanted to change his ways.

He is extremely calculative about spending his money. Although this increased his savings and ability to invest, it also took away from him some life experiences. When you are someone who saves a lot, you end up being very distressed when it comes to actually spending that money. This means even when you have chances to gain new life experiences, learn a skill or enjoy yourself, you compare that to the money spent on it and eventually choose not to go ahead with it.

This is what he wanted to work on. Even though he is happy to have so much money at his disposal, he wants to find a way to be freer with his spending.

At 20, he was compromising on his lifestyle to save some extra money when he might make way more than that in the future and could save it without any stress. Right now, he is using that belief to improve his spending habits.

This might confuse a lot of people.

Isn’t saving money a good thing? Of course, it is

Does this mean you should spend money on everything you want to? Definitely not

But I wanted to talk about our ability to not spend on ourselves. The things that bring you joy and you want to spend on to make your life richer. Of course, having some money at your disposal for emergencies in the future is necessary but don’t do that at the expense of things you enjoy.

Knowing how to balance spending, saving and investing will take you a long way. If you have not yet figured out your approach toward these things, I suggest you find a way. If you are an anxious spender, the allocations will help you spend more freely. If you spend a lot, you will know what to improve on.