How to Achieve Financial Success: A Story of Two Friends

The Introduction

Today, I am going to share with you a very interesting story about two friends who have different approaches to achieving success. Both of them have the same salary, but one of them manages to achieve financial stability while the other struggles with financial planning. This story will provide valuable learning opportunities, especially for young adults who are just starting their careers.

 

The Story Begins

Let's dive into the story of these two friends who started their jobs at the age of 25. They both had a monthly salary of 40,000 rupees and their expenses and savings were as follows:

• Rent: 7,000 rupees

• Travel expenses: 3,000 rupees

• Other expenses: 10,000 rupees

They both had 20,000 rupees left every month. When they started earning, they wanted to buy cool stuff.

Mr. A decided to buy expensive things like fancy watches, phones, TVs, and clothes. He bought everything on instalments, which means he had to pay some money every month.

But Mr. B thought differently. He started saving money for the long term. He put 15,000 rupees every month in a savings plan and kept 5,000 rupees aside for emergencies. This way, he always had some cash saved up for unexpected situations.

As you can see, Mr. A's total expenses amount to 20,000 rupees, leaving him with no savings. On the other hand, Mr. B's expenses amount to 15,000 rupees, leaving him with a surplus of 60,000 rupees Yearly. This surplus is crucial for building an emergency fund.

 

 

The Importance of an Emergency Fund

Having an emergency fund is essential because it provides a safety net during unexpected situations. Unfortunately, many people ignore the importance of an emergency fund and often rely on others when they face financial difficulties. Mr. B understood this and allocated a portion of his income towards building an emergency fund.

 

The Journey Continues

Both friends continued with their respective financial habits. While Mr. A spent his surplus on luxury items and unnecessary expenses, Mr. B remained committed to his investment plan and emergency fund. As time went on, their financial situations started to diverge.

 

Things were okay until they both got married.

Mr. A was still busy paying installments, so he didn't have much money saved for his wedding. He had to borrow more money for it, adding to his monthly payments.

But Mr. B had saved around 13 Lakh rupees in five years. He used some of this money for his wedding.

Later, when they became parents, they needed money for their kids' education.

Mr. A was still paying installments, so he couldn't save much for his kids' education or other important things.

But Mr. B continued to save money every month, even for his kids' needs.

Time passed, and they both turned 50.

Mr. A finally finished paying all his installments, but he had nothing saved for retirement.

On the other hand, Mr. B had saved a lot of money over the years. He could retire comfortably.

 

 

 

The Impact of Financial Discipline

After 20 years of their marriage, Mr. A found himself struggling financially, while Mr. B's investments had grown significantly. Mr. B had accumulated a corpus of almost 2 crore rupees, thanks to his consistent investment of 15,000 rupees per month. On the other hand, Mr. A had nothing left for his retirement.

 

Lessons Learned

This story highlights the importance of financial discipline and the power of compounding. It shows that no matter how small your income is, you can still achieve financial stability and success if you manage your expenses wisely and invest regularly.

 

Conclusion

As you can see, financial success is not determined by how much you earn, but rather by how you manage your finances. It is essential to prioritize savings, create an emergency fund, and invest in wealth-building instruments like mutual funds. By starting early and staying consistent, you can secure your financial future and live a comfortable life.

Remember, it is never too late to start your financial journey. Take control of your finances today and build a secure future for yourself and your family.