Spending, Saving and Investing: It Is All About Striking The Right Balance

On one hand financial planners will tell you that you need to have so many months of monthly expenses in an emergency fund, you need to cut down on discretionary expenses and so on, and on the other hand, there are companies willing to give you a loan to go on a holiday, buy an iPhone or a fancy car. How do you strike a balance? 

In fact, striking a balance is not easy. We all succumb to temptations and there are a lot of temptations around. So, we tend to spend more than we can afford to. But there are some people who have mastered the art of spending money meagerly to the point of being miserly. None of these extremes are ideal. 

“We act as a brake if you are an accelerator, and as an accelerator when you act as a brake,” says B. Srinivasan, director and founder, Shree Sidvin Investment Advisors. He says that if the client is spending more than he or she should, he would ask them to cut down on spending and save and invest more, but if the client is just saving and spending nothing, he would encourage the client to spend and enjoy life. “One always needs to strike a balance,” adds Srinivasan. 

The Fintech platform Multipl helps people do exactly that. The concept is of ‘spendvesting’. “Our income is distributed towards needs, wants and savings. The 50-30-20 principle says that 50 per cent of our income should go towards needs, 30 per cent towards our wants, and 20 per cent for long term servings, wealth creation, retirement and so on. With spendvesting, you are now investing for your needs and wants as well,” says Paddy Raghavan, Co-Founder, Multipl. 

So, it is important to have an idea of where you stand when it comes to your finances. It is important to strike a balance. So, while you plan a trip to Europe, you also need to plan for your retirement and other future goals. Consulting a financial planner can help you on this journey.