(This column was first published on Value Research India.)
As I write this on the last day of 2014, I have my new year’s resolution in place. Just like last year. And the year before that. And the year before…basically ever since I became an adult (in the physical sense) and learned about the wonderful idea of new year resolutions. It is such a nice concept—you promise to do something good or different in the coming year, something that you should have been doing anyway, without waiting for the year to change. But, there is some merit to resolving to change for the better in a new year; you are, after all, letting the past go by and seeking a fresh start.
This is what I tell myself as a year draws to an end and I feel obligated to make resolutions for the coming year. Most of the times, my resolutions are as clichéd as the mandatory ‘What are your NYE plans?’ question we ask each other. I have either resolved to be happier or to procrastinate less or to eat healthier or to make sure I follow my resolutions for at least more than 2 weeks. (This has rarely ever happened.) My resolution for 2015 is just as clichéd as these ones, but it has an interesting twist to it – I need my wife’s permission to follow through with it. Calm down with the raised eyebrows, my new year’s resolution is very straightforward – I just want to save more money. I’m sure you now understand why I said I would need my wife’s permission to go through with it.
It is a common stereotype that women are spendthrifts and men are not. And like most stereotypes, it doesn’t always make sense. But it’s pretty true in our case. My wife shops with a passion unseen in even the finest of sportspersons. Her idea of a perfect date is a visit to the mall where I end up playing the multiple roles of a porter, advisor and ATM. But thankfully, my wife does understand the importance of saving as well. She shops mostly at sales.
Jokes apart, to save more, to save as much as you can, could probably be the most significant resolution that one can have. Money saved is money earned. Inflation might be controlled to a certain extent, but its trajectory will always be upward in our lifetime. So whatever one saves can help one stay prepared for rainy days, seasonal as well as unseasonal. For me, the best way to save has been through SIPs in equity mutual funds. An automated savings plan has helped me resist the temptation to spend. And when the SIP is scheduled within the first 2 weeks of the month, it makes it easier to save. The amount gets invested before you can even think of spending it. And to save more I increase the SIP amount every year.
An SIP instils discipline in your finances; it turns you into an obligatory saver. And as compared to the other resolutions you’ll take, an automated savings plan is the toughest to break. I can’t think of a possibly more remunerative new year’s resolution than this.