[V.Narayan]

Originally Posted by xcentrk

In hindsight, I see most of the IT employees living paycheck to paycheck middle class life and we are one step away from bankruptcy if there is no help from family or friends or have assets.

Originally Posted by xcentrk

I mentioned most, not all. Let me explain in detail for you.

I'm not talking about employees who earn >50L. I'm talking about majority of people who earn less than 20L(between 7-20L), which is the median salary for most IT employees.

Thank you for bringing this up. Seems to be a function not so much of salary but of having forgotten the skill and the will to save sensibly. Our parents' generation {saying this bearing in mind I might be the "parents generation" for some here} lived off salaries that were far smaller in real terms than what we earn today and yet managed run the home, to educate us and build a small house/flat for themselves. Between 1999 & 2020 a whole generation of young people grew up in India who had never seen an economic setback and assumed that wages, increments and bonus are a given. The trend of living beyond our means is what leads a significant majority to this dilemma of living from pay cheque to pay cheque.

[androdev]

Originally Posted by V.Narayan

.. Seems to be a function not so much of salary but of having forgotten the skill and the will to save sensibly. Our parents' generation ...

The benchmark for a modest living is very different now compared to our parents generation. During my parents time, nearly all the peers had similar living standards and similar financial priorities - so there was no shame in reaching home drenched in rain, taking 3-night delayed train to go to Delhi or sending your kids to govt/aided schools. Vacation/holiday meant just visiting relatives. No friends called you to dine out. I feel it's very easy to live like the immediate peer group around you.

The peer groups now are very diverse - no young person is in control of what's considered normal - it's just the way things are evolving. Many young people are supported by their parents and can afford a better life. It's only human to aspire to live as well as your immediate peer group. Nothing greedy or out of line - just reaching home without getting wet in rain and not having to live in a dumpster. A personal vehicle, a smart phone, a rental place that's not too shabby, etc. have become bare necessities yet very unaffordable.

I agree there are many young folks who are living off credit buying latest gadgets and stuff but it's a fact that fresher salaries are exploitative. I can't think of any solution though because we know what happened to companies like BHEL that offered beautiful townships, company accommodation, sports facilities and generous salaries.

[AltoLXI]

Originally Posted by V.Narayan

Seems to be a function not so much of salary but of having forgotten the skill and the will to save sensibly.

Availing loans has always been there from times immemorial. Having said that when one pays in cash, the natural instinct kicks in to have control on the spending. A lighter purse becomes very much obvious. Credit cards came into picture and people had no qualms in spending as if there is no tomorrow. This is what happened in USA and is taking roots here as well. If you remember, the credit card as a concept was alien to us during our younger days. And we thought credit cards were evil.

Walking to a shop is a cumbersome task. Half the people would rather postpone/not buy things they want. Even if one wanted, the things would not be available at the shops in the vicinity. Then came the internet, websites peddling goods, online banking, cash on delivery so forth and so on. The whole world became a market place and the laziest person could buy all the stuff without stepping out of house.

Then arrived the social media, extolling the virtues of buying villas, exotic vacations, nice cars, designer clothes, seducing people to buy stuff / experiences which they could barely afford. Short of money - what are EMIs there for?

I still cannot fathom how the future world would look like. I feel sad when the young generation, nicely named Millenials and Gen Z, falls into the mad consumerism trap. The saving skills may not have been forgotten, rather was made to be forgotten so that the mill of consumerism grinds along.

But maybe, just maybe, I am an oldie who does not know how to live in this world.

[Chetan_Rao]

When it comes to spending, budget creep is an insidious but very real trap.

You start off wanting to spend X, until someone points out you can have something 'better' for 'just' 10-20% more, and within a few iterations, you're now looking at buying something that costs 2X (or even more). Easy credit availability and YOLO get tossed in as sweeteners to get over any 'BUT you can't really afford 2X!' scruples tugging at your math-wielding mind calling for sanity.

You might live once and credit might be cheap to avail, but it's expensive repaying it, and the bank doesn't take YOLO bucks.

[SLK]

All this is true for most developed countries. It is only when both husband and wife are working at similar income levels that in the UK and US most households would have a comfortable living. Of course there are exceptions, but pretty much same as here, not everyone works in a Google/ Microsoft/ Apple.

The only thing that doesn't work in our country are the interest rates, they eat into your future earnings like a tax.

[xcentrk]

Originally Posted by androdev

The benchmark for a modest living is very different now compared to our parents generation. During my parents time, nearly all the peers had similar living standards and similar financial priorities - so there was no shame in reaching home drenched in rain, taking 3-night delayed train to go to Delhi or sending your kids to govt/aided schools. Vacation/holiday meant just visiting relatives. No friends called you to dine out. I feel it's very easy to live like the immediate peer group around you.
.....
I agree there are many young folks who are living off credit buying latest gadgets and stuff but it's a fact that fresher salaries are exploitative. I can't think of any solution though because we know what happened to companies like BHEL that offered beautiful townships, company accommodation, sports facilities and generous salaries.

The discussion is mainly about IT salaries. Considering the low salaries, I believe we have to save as much as we can.

We cannot say we don't invest money citing peer pressure. This is like you are killing yourself because your neighbor is doing so. Aspirations and lavish lifestyle is two different things. My cousin who is working for 14 years getting 22L PA as pay and he is struggling now, because of the loans he took. He took loans without any plans on how to close them and in the end, it caught up with him. He is paying 80% of his salary as EMIs. And he has no savings except meagre PF that his company is giving. He used to go to lot of vacations, bought house, took car loan and whatnot. I still remember how he closed his Credit Card. For a card with limit of 1L, he paid around 1.25L and closed it after lot of struggle. This is the kind of people we are discussing about and I feel everyone should save. No excuses in this regard because expenses are not what it used to be.

[am1m]

Originally Posted by Chetan_Rao

When it comes to spending, budget creep is an insidious but very real trap.

It just happens, yes. There are times when I catch myself thinking who pays 150-200 bucks for a cup of coffee in a city where the best filter coffee is available for 20-30 bucks?! But what happens is the areas that the different sections of society frequent become separate. Physically and socially. And when you're always surrounded by people like you, doings the things you do, you think that's normal. I'm acutely aware that there are whole families that live quite normally on just a fraction of what I spend as an individual. But at the same time I also feel like what I have is not enough/never enough. Just depends on which part of the city I'm in.

[subraiyr]

Originally Posted by Chetan_Rao

When it comes to spending, budget creep is an insidious but very real trap.

Maybe I am too old and reminiscing about a life long long ago, but anyway here goes

Spend, daily, weekly, monthly, and annual spending have increased multifold. We can keep saying it has not, but the truth is it has. It is a function of demand and supply. Our supply of disposable income has increased giving us the freedom to spend more. Also, the availability of goods/services has increased as well. This in turn has pushed us to explore more

For e.g. - festival season is one time of the year when our spending bumps dramatically. In earlier times, buying clothes was relegated to key festivals - maybe Diwali, Birthday, New Year, and that's it about it. Today, every weekend seems to be time to visit another mall and then come back with hands full. And this is common across product categories.

Also, in all fairness, how many of us have more than one vehicle - car, bike, cycle etc. I am sure our parents survived with one vehicle and upgrades came by replacing existing vehicles.

Parents had a smart philosophy. There were a number of chit funds and the first thing you would do with your salary was to put money in these funds and then play around with the rest. Today, it is the other way round. We spend and spend and then what is left goes into savings

Warren Buffet had a similar philosophy. "Do not save what is left after spending; instead spend what is left after saving."

I will stop here as i can go on and on with examples, but given that the thread is more to do with IT industry salary dont want to deviate much

[JithinR]

Originally Posted by Chetan_Rao

When it comes to spending, budget creep is an insidious but very real trap.

.....

You might live once and credit might be cheap to avail, but it's expensive repaying it, and the bank doesn't take YOLO bucks.

All i do is keep a copy of the income tax statement generated by my company on hand. If I am thinking of making a big purchase and I am lucky enough to take as look at the statement, I immediately remember how much I hate paying taxes and how I don't want to pay them more in the form of GST.

Recently this saved me when I was contemplating buying a phone with a 25k budget (to replace a 5 year old Android 8 phone) and I ultimately ended up buying a moto g54 (a decent phone for around 12k after all offers).