“Wow! So, our extended weekend plan is all sorted,” Simmi squealed in delight, “on Friday, we would go for the movies, followed by that pool-side party at Taj; on Saturday, shopping at the Mall, followed by a quick lunch at that new restaurant; and on Sunday, we will go for the brunch ….” She went on and on.
Sitting on the canteen table in her college, and surrounded by her gang of friends, Simmi was making exhaustive plans for the weekend. It seemed as if she was in a race to live life to the fullest in the least possible time.
Hailing from an upper-middle-class family, Simmi never really faced any scarcity in life. Her father worked at a senior managerial post in a big MNC, and her mother ran a successful boutique. Naturally, Simmi’s pocket money was quite handsome, and she spent all of it well before the end of the month. Although out of funds by the last week of the month, Simmi would still go on dinners and movies and road trips, as someone or the other would lend her the money. She was clearly spending way more than her means, and gradually, the amount of money she owed to her friends was swelling up.
Addicted to a spendthrift lifestyle, Simmi never felt that she was in financial trouble. Opposed to that, she always thought of herself as a rich girl.
‘And a lavish lifestyle is the right of a rich girl, isn’t it? She would muse.
But all this was to change when she met Tanvi, who was from the same college but a different stream. One of the professors, a member of the organising committee of the college fest, paired the two girls to conceptualise and organise a quiz event.
Tanvi and Simmi, though very different, got along pretty well. Both were intelligent and creative. However, as much as Simmi wanted, Tanvi would rarely join her and her friends in their regular movie or dining or shopping outings.
One day, Simmi insisted that Tanvi must join her for dinner in an expensive restaurant.
“I can’t go out with you guys, sorry,” Tanvi declined politely.
“You always bail out, dear. Come on; it would be fun. I enjoy your company,” Simmi was persistent.
“Thank you, dear, I, too, love hanging out with you and your friends, but this dinner outing would be too expensive. I can’t afford it,” Tanvi said smilingly.
“What!” Tanvi almost screamed in surprise, “Come on Tanvi, we all know that you come from a rich family. Although you never say this, we all know that you hail from one of the richest families of this city. You live in a palatial house in the most expensive locality, and you are dropped off to the college in a Merc!”
“That is all true, Simmi, but all this wealth is not mine, it is my parents’,” Tanvi replied humbly.
Simmi was still confused. She even thought that either Tanvi is a miser or she didn’t like her or her friends and is lying to avoid going out with them.
Suddenly, she was angry and blurted out what was going in her mind.
Tanvi patiently listened to her friend’s accusations and calmly responded, “I don’t blame you for thinking like this, Simmi. But none of it is true.”
Tanvi sat down with Simmi and explained to her that though her family is wealthy and there is a lot of money at her disposal to spend the way she wants, the financial discipline deeply ingrained in her since her childhood prevents her from spending on unnecessary things.
“My father comes from a long line of wealthy businessmen. How do you think they managed to safeguard their wealth and passed it on from generation to generation?” she asked a confused Simmi.
Tanvi further revealed that all the children in their family are taught the lesson of financial literacy from a young age. They are trained to differentiate between needs and wants and expenditures vs investments.
“We are taught how our money can earn more money for us at a faster rate,” she added.
“So, you mean that being rich doesn’t mean spending a lot of money?” a baffled Tanvi asked. The very foundation of her financial orientation was shaken.
“Of course not! How can you still be rich if you have squandered all your money on things you want, but don’t need,” exclaimed Tanvi.
“My friend, rich people don’t spend. They invest,” she summarised.
Simmi was now in a great turmoil. No one ever explained this secret to her. The revelation by Tanvi also made her think if she really was as rich as she thought? Probably not. Her parents earned a decent amount of money, but their living expenses were very high, too.
It didn’t take Tanvi long to admit that chronic illness or loss of business or job can put her family in great financial stress. They do not have any investments to fall back upon.
Tanvi sat quietly next to her friend, giving her the time to think and reach her own conclusions.
After a long while, Simmi spoke, “Tanvi, you opened my eyes. I spend like there’s no tomorrow; and to be honest, all these outings and shopping doesn’t really make me happy. I keep falling in recurring debts to support my lifestyle.”
“I know, friend, I have seen you happy ideating, forming plans and creating something,” Tanvi encouraged her friend.
Tanvi also shared that instead of spending money on more clothes and shoes and movies, she invested her money and time in more fruitful pursuits such as participating in the college events, signing up for exciting workshops and adding personal skills.
“You know what, I am sure my pocket money would be lower than yours, but still, I save a portion of it and invest in mutual funds through SIPs,” added Tanvi with a proud smile.
Simmi was impressed with Tanvi’s money management. However, she had no clue what mutual funds or SIPs were.
“Investing money in traditional instruments such as FDs and PF give far lesser returns than mutual funds,” explained Tanvi, “a mutual fund is a collection of small investments made by thousands of investors. This pool of money is further invested in the stock market by a qualified financial expert. Over time, riding on the ups and downs of the stock market, your investments grow significantly higher over a long period.
“You may make a lumpsum investment in mutual funds or invest through SIPs or Systematic Investment Plans, which are monthly instalments – starting from as low as Rs 500.”
Tanvi told her friend that she has been investing in mutual funds for a long time, and thanks to the power of compounding in mutual funds, before she turns 25, she would already be a millionaire – without her father’s assistance.
Hearing this, Simmi, too, was inspired to cut down her expenses, invest regularly and build a large corpus in coming years to taste financial independence.
The very next day, Tanvi introduced Simmi to her financial mentor, who helped Simmi figure out her life goals and set her on a path of regular investing …. and financial independence.
Dr Celso Fernandes and his team at Nave Marg Financial Consultants, are on a mission to spread financial literacy among the people of Goa. A popular speaker, financial mentor and author of four much-loved books, Dr Celso, is creating a positive impact on hundreds of lives by helping them attain financial independence.