Lifestyle conflict between now and later

Having said this,all of us have to take a stand whether we want to be “the consumer” or “the producer”? Here are guidelines that will help you choose.

Consumers —

The brighter side

Like they say,make hay while sun shines. If one can afford it now,why not? The “consumers” have it all,many friends,travel,parties,adventure and cuisines. They experience much more and their life is enriched. It is situation where when you look back at life you feel you have done so much. Each day was like a story and there are so many events to add to our memory bank.

Consumers —

The dark side

The cashflow falls like a bungee jump when times change rapidly,the boom gets over,once the existing job is gone and a similar one is hard to come by. Boom times do not last for ever. For eg,think about salaries to call centre employees,can they rise for ever? If they do,India will lose competitive advantage. During boom times people working in a broking firm have a party every day. Their stock is rising,their client’s stock is rising – everyone is happy. After a year or so of a crash,the company itself wants to reinvent itself if not shut down significant portion of business. But this does happen and will happen every few years. The cycle will keep coming and rolling. We don’t have social security in our country,so if we are bankrupt or have nothing left do you think the state will do anything for us? Family and friends will generally be of little help. It is very hard to travel by bus and train when you have been used to air-conditioned cars. When you turn back in life and put down your assets on paper you have a large balance of emotions and many a times huge debts.

Producers —

The brighter side

Producers always have assets,they are always in surplus. They have little or no loans,never have to borrow for education or wedding of their children. Their quantum of assets however depends on their understanding of finance,money,planning and investment. Some will produce a lot more than others but generally all will have substantial money at some point of time in life. Their balance sheet is full of positive cashflows for now and for the future. They have provisions to see them through bad financial times as well. Even if they have made huge financial mistakes like buying traditional endowments or traditional or Ulip pensions etc,they will all be still alright given the rules of their lifestyle.

Frugal living has significant financial advantages.

Producers —

The dark side

The producers sometimes forget to live life. Many opportunities and experiences are missed. Life is routine and everyday is just the same,for decades. Things happen however,but much later in life. By then the significance and excitement has dwindled if not altogether dead. Is the feeling of power so powerful to have a Mercedes when you are 60? What is the point of being able to go for a romantic holiday to Sicily or Bahamas if you have teenage children and parents to be taken along or worry about while on your holiday? Life is available but in very small doses. However,this is a matter of personal choice but what is the point of working so hard and earning so much money when you are just not going to use it ever? Be sure your generations will not value money inherited for free and it will get disposed/divested sooner than you can imagine.

Confusing? That is the way it is and that is the classic dilemma. Needless to say,either ways there is ample satisfaction and dissatisfaction for both “consumers” and “producers”. The question now is how to have only satisfaction and little or no dissatisfaction?

—Author is Director,Transcend Consulting
kartik@transcend-india.com