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The Art of Spending

Sanjib Saha

I GREW UP IN a middle-class family in Kolkata, India. Like most folks, my relationship with money was shaped by my parents’ financial habits. They were on different sides of the saver-spender continuum. My homemaking mother strove to live beneath our family’s means and never seemed to feel deprived. By contrast, my father—even with a modest salary from his government job—was focused on the art of spending.

At my mother’s insistence, my father bought most of our household supplies from wholesalers and cooperative stores, instead of the pricier local bazaar. Branded condiments and drink concentrates were missing from our grocery list, because my mother considered them overpriced. Instead, she joined a community food-processing center to learn how to make tomato ketchup, rose syrup and the like. She used to make enough for our family, as well as neighbors and relatives. My childhood friends still reminisce about the homemade mango-flavored drinks that she served them on hot summer days.

Meanwhile, my father had no problem paying up for convenience and life-enhancing extras. He wasn’t extravagant, but he wouldn’t be deterred by the price tag if he felt an item was worthwhile. Years before television became mainstream, he bought a black-and-white set for our home. A few years later, a basic refrigerator appeared in our kitchen to give my mother a break from daily cooking. To manage these expensive purchases, he’d set a financial goal and then save regularly toward the cost.

When I first started working, I continued to live with my parents and—similar to my father—made a few big purchases. I installed an inverter power generator to combat the frequent electricity cuts at that time. I learned to drive and bought a used car—our family’s first ever vehicle—for occasional commutes when public transport was inconvenient. Each purchase emptied my accumulated savings but was worth every paisa.

This balance between saving and spending, alas, eroded over time. My attitude toward money increasingly came to resemble my mother’s. Ironically, this change happened because I started earning more—thanks to taking jobs overseas. I had grown up in a city with an incredibly low cost of living. Faced with higher costs abroad, my resistance to spending kicked into high gear.

My first foreign assignment was three years in Mauritius as a software consultant. “You should seriously consider it,” encouraged my then-supervisor in Kolkata. The money sure sounded sweet. My salary and benefits in India would continue as is. The foreign firm would pay for housing, transportation and an annual vacation back home. I’d also get a generous cash allowance for living expenses. Overall, it looked like a great opportunity to boost my savings.

But I soon discovered that Mauritius was far more expensive than India. It wasn’t obvious at first. The currency name was the same and the quoted prices looked about the same as in India, creating the impression that costs were similar. Problem is, at the time, one Mauritian Rupee was worth almost two Indian Rupees. Effectively, things were twice as pricey. This realization proved to be a curse. From that point on, not only did everything look awfully expensive, but also this “career opportunity” lost its luster.

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I suspect that many folks who work abroad confront the same dilemma. Faced with spending money, a mental currency calculator pops up and converts the local price to home currency. The price back home then acts as an anchor as you grapple with the local price—and the result is an unreasonable refusal to spend.

On top of that, the temporary aspect of overseas living creates a strong deterrent to spending. After all, any money saved will have greater purchasing power once you’re back home. Sadly, this penny-pinching attitude can also mean you miss opportunities to enjoy your time abroad, which is what happened to me in Mauritius.

After returning home, I took another position overseas, this time in Ireland. The cost of living in Dublin was much higher, but it wasn’t a surprise this time and the compensation package was far more generous. I saw my new gig as a chance to make up for the fun I missed in Mauritius. My wife and I toured Ireland, the U.K. and mainland Europe. My parents came over to spend a summer with us and to travel in Europe. I didn’t save much during those three years in Ireland, but the money was well spent.

My next move was to the U.S. as a fulltime employee of a large software company. The initial years were uneventful, until two things happened: I went through a divorce and I decided to settle permanently in the U.S. For the first time, I had to think hard about my long-term financial future. My big realization: Unlike my old job in India, the burden to save for retirement was largely on me. To get my financial house in order, I had a lot of catching up to do. My anti-spending defense mechanism was triggered once again. I turned into a tightwad and scrimped shamelessly.

I used to rent a spacious apartment close to my work, but now it seemed like an unaffordable luxury. I decided to buy a small townhome. It lacked daylight and the location wasn’t great, but the downgrade didn’t bother me. After all, beggars can’t be choosers—and the place cost me hundreds less each month. My work schedule was demanding, often spilling over into the weekend. Still, I insisted on getting my groceries from an Asian store that was a long drive away but had low prices, and I made it a point to cook all my meals. My socialization was reduced to occasional get-togethers with close friends over homemade food. I survived without a cellphone. I got so miserly that I’d refuse to go anywhere that involved parking fees.

The math of a six-figure income and the four-figure cost of living of a tightfisted bachelor did its magic. Not only did I pay off the mortgage in less than three years, but also I began saving for other goals. Still, my extreme thrift started to feel unsustainable.

Fortunately, it ended when I remarried. The role of husband and stepfather brought much-needed balance to my lifestyle. The biggest financial change: We needed a house in a better school district and a kid-friendly neighborhood for my stepdaughter. For me, reopening the spending floodgate was a big decision, but I realized it was a necessary step to start this new chapter in my life.

I credit my wife for her gentle nudges. She helped me to change my spending ways and overcome my anxiety at opening my wallet. I resumed spending generously on hobbies and travel, this time without any guilt. In a strange way, she and I have become what my parents used to be, but with a role reversal. I still resemble my mother in keeping a close eye on our savings. My wife reminds me of my father, who knew that spending well is equally important. Together, I feel we strike the right balance.

Sanjib Saha is a software engineer by profession, but he’s now transitioning to early retirement. Self-taught in investments, he passed the Series 65 licensing exam as a non-industry candidate. Sanjib is passionate about raising financial literacy and enjoys helping others with their finances. Check out his earlier articles.

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Gordon Mitchell
Gordon Mitchell
4 months ago

I found no financial wisdom in this article. It is just the author’s autobiography, which is of no interest to me.

Sanjib Saha
Sanjib Saha
4 months ago

Thanks for sharing the feedback, Gordon.

My two takeaways from my own life-story so far are as follows. First, in addition to saving well, it is also important to be able to spend well and enjoy life as it comes. Second, when two life partners belong to opposite sides of the saving-spending spectrum, it can be, but doesn’t have to be, a source of conflict. It can be a good thing in bringing the partners closer to each other on that spectrum and striking a healthy balance for the family.

Gozo Rabat
Gozo Rabat
4 months ago

This is an engaging piece.

That said, I always cite my go-to mantra, “Pay Yourself First.” I have been fortunate-enough never to need to budget, by virtue of always setting aside a fixed percentage of any income (while also avoiding any consumer debt). By setting aside 10% of any earned income, and 50% of any windfalls such as gifts, I have always had, in even the darkest economic times, a “Nest Egg” that I could dream of self-indulgences with.

The money was always kept far-enough out-of-hand that I could not redeem it spontaneously. As a result, the pile just kept growing and growing on its own, until retirement.

My realization that powered this was the discovery that almost no one earns more than enough money to live on. This being the case, if you reduce your income before you get it, then your paycheck becomes what it is: what you live on.

(I also advocate, for people who get periodic raises, that you ignore your first raise and stash the increase. From then on, you may take each previous raise as your periodic increase, while your savings amount also grows.)

I apologize for harping on this idea so often. I do it because so few of my fellow Americans have noticed this fact, which I hope to make obvious:

As I say, once you realize that No paycheck can ever be exactly the right amount, you might as well find a way to spend less, rather than more.

It works almost like magic. And if you’re lucky with this, you might get away without ever needing to worry about a budget!

Regards,
(($; -)}™
Gozo

Sanjib Saha
Sanjib Saha
4 months ago
Reply to  Gozo Rabat

Thanks, Gozo. Great advice. I agree that “pay-yourself-first” is an extremely powerful, yet surprisingly underappreciated mantra.

Langston Holland
Langston Holland
5 months ago

“scrimped shamelessly” – That may be the first time those words ever bumped into each other – brilliant! Thank you for the background Sanjib, you help people more than you know with such openness. And thank you for coming to America.

Last edited 5 months ago by Langston Holland
Sanjib Saha
Sanjib Saha
4 months ago

Thanks so much for your kind words, Langston.

SanLouisKid
SanLouisKid
5 months ago

A friend of mine went to pick up a girl for a date and stepped into the hallway bathroom. He noticed the soap bars were actually several soap bars squeezed together. When a bar was almost used up, it was pressed into another bar to get the last bit of use from it. Discovering that he said, “That’s the girl for me!” and married her. It turns out they were both frugal and very financially successful (and had a long, happy marriage). He went on to write and lecture on personal finance. I guess he learned a lot about squeezing soap together from her.

Sanjib Saha
Sanjib Saha
4 months ago
Reply to  SanLouisKid

Nice story :). Thank you for sharing.

John McHugh
John McHugh
5 months ago

Coming to the end of this I chuckled, thinking, “Wait! What happened next (with the author’s relationship with money)?”

Good one, thanks. 🙂

Sanjib Saha
Sanjib Saha
4 months ago
Reply to  John McHugh

Thanks, John. The relationship is still evolving :).

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