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J. Paul Getty was an American businessman and, at the time of his death, the richest man in the world. After World War II, one night, J. Paul Getty invited his three guests for dinner. The restaurant was the Cypress Restaurant. Upon arriving, Getty said, "Let's take a walk before going inside." A friend said, "Let's walk. I'm very hungry." Getty said, "Let's just walk because it's not 10:00 PM yet, and everyone here is charged 10 shillings after 10:00 PM. I don't want to spend an extra pound for 15 minutes." And this was when he was one of the richest people in the world.
Friends, today everyone wants to know how to earn, but out of a hundred thousand, only one person knows how to spend. If you don't know how to spend, then learning a thousand ways to earn will be of no use. Because if your bucket has holes at the bottom, no matter how much water you pour from the top, the bucket will never fill. In today's video, let's learn how to spend, when and how taking a loan is good, what bad habit you can become a millionaire by just quitting, on what income any car should be bought, and on what things you should never hesitate to spend. Today, we will talk about very small but very important things related to money.
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Friends, my first lesson regarding money, always remember, always learn to spend by weighing it on a scale. Remember, we become rich or poor not because of our earnings, but because of our spending. Today, I will tell you a very wonderful way to spend your money. Whenever you get an idea to buy something, assume you want to buy something, and that thing costs ₹5000. Okay, so first, weigh it on a scale. What to weigh? Suppose your monthly income is ₹40,000. Okay, and you work 8 hours a day for 26 days, removing 4 days of leave. That means about 200 hours a month. That means your hourly earning is ₹200. Now, just think that for the ₹5000 thing you are desperately wanting to buy, you have worked hard for 20 hours. Now weigh it on the scale, and if it feels like 20 hours of hard work is worth this ₹5000, then buy it. Otherwise, don't buy it.
The second method that can help you save your money is how to buy monthly household groceries. What is the biggest mistake middle-class families make? They just get up and go to the market to buy household items. Never make such a mistake again. Always go to the market with a shopping list. That is, whatever your needs are at home, first make a list of them. This benefits you by ensuring you only buy the things you wrote down from home and avoid buying unnecessary items. Never go to the shopping mall without a list. Remember, you never buy what you don't see, and always go shopping alone. Because if you go with your wife and children, you will always bring a lot of things that are not currently needed. Your wife will say, "Hey, listen, get this too." Your children will say, "My dad is the best." You might pick up two unnecessary items that were not needed. And whenever you go to the shopping center, fix a time, say, "I will buy all the items within 1 hour." When you have less time there, you will buy less. If you wander around, you will only buy unnecessary things. If possible, never go shopping on an empty stomach, otherwise, the Haldiram brothers will charge you ₹100 for just one namkeen. And if possible, shop not on the 1st but around the 25th, when there is less money, because on the 1st, money itself jumps out.
Friends, I have learned this: whether you have ₹100 or ₹1 crore, if your spending habits and methods are not right, you will soon go bankrupt. There are people in this world who can buy their own private jet, but still travel in economy class. Just remember, never cut back on expenses in three areas: health, education, and food. The person who saves money in these three areas will suffer a big loss in the future. If you eat lightly in the name of saving, you might fall ill, and the hospital will take all your savings at once. And if you are stingy with education, you will remain ignorant your whole life, because education is the biggest investment that gives maximum returns. And finally, never buy unnecessary items in the name of cheapness or sales. This is not saving, it is extravagance. Always remember, giving even ₹1 for something you don't need is expensive.
The third very important thing to learn regarding money is that you need to find legal ways to save tax. CAs can help you with this, because whether you believe it or not, tax is the biggest expense in our lives, which we have to pay. Ask a CA what legal ways there are to save tax. This is not tax evasion, it is tax planning. The government itself gives you the opportunity to do your tax planning. And the easiest and most important of these is taking insurance. Insurance should be taken by every person whose income supports the household. People, in their affection, get their children insured. In my opinion, this is not right. And also, only get term insurance. Any money-back insurance is never insurance; it has investment mixed in it. This makes a huge difference in the premium. Look, a 1 crore term insurance can be found from Policy Bazaar for ₹473 per month, while the premium for a money-back insurance policy is 10 or 20 times more. Therefore, keep investment and insurance separate and only get term plans. Go to Policy Bazaar, compare more than 20 insurance companies, and choose your preferred plan. You will get a tax benefit of up to ₹1.5 lakh under section 80C, and also a 10% discount and 24/7 claim assistance. So, remember my advice: keep investment and insurance separate, get only term insurance, and do your own investments. Do not fall for any kind of money-back temptation. I am providing the Policy Bazaar link in the description below, or you can also scan this QR code. And always remember that your insurance should not be less than 10 times your annual income.
The fourth most important lesson regarding money is: when to buy your car. Many people don't understand when to buy a car or what the correct rule for buying a car is. Because I have seen many people become poor after buying a car. They buy it out of envy, thinking, "If he bought it, how can I be left behind?" I will tell you a rule for buying a car, which is 20:4:10. This rule can be useful for you. 20 means that at least 20% of the total price of the car should be the down payment, and more is even better, but never less than 20% so that the loan is minimal. Four means never finance a car for more than 4 years. Although lenders will offer you a 7-year option, never do that. Interest will ruin you. And 10 means that the EMI should never be more than 10% of your monthly income. That is, if your monthly income is ₹1 lakh, your EMI should never be more than ₹10,000. The second rule for buying a car is that the price of your car should not be more than 50% of your total annual income. That is, if you earn ₹20 lakh a year, you should not buy a car above ₹10 lakh under any circumstances, no matter what. If you always follow this rule when buying any car, you will never have money problems.
Let's learn the fifth lesson regarding money, friends. You can become a millionaire by just quitting one bad habit. Just by quitting a habit. If you are fond of smoking, fond of blowing smoke, and you smoke just one cigarette a day, then let me tell you, you are smoking ₹2 crore worth of cigarettes in 40 years. ₹2 crore worth of cigarettes might sound strange. Let me explain today. If you smoke one cigarette a day, it means you are burning about ₹40,000 worth of cigarettes in a year. If you invest this ₹40,000 wisely every year, where you get a growth of just 10% compounding, then after 40 years, you can get more than ₹2 crore. Yes, your mind will be blown. Let me explain with an Excel sheet. You can see an Excel sheet on the screen. In the first year, we invested ₹40,000, which we saved by not smoking. We invested that ₹40,000 in the stock market, mutual funds, anywhere. It gave a 10% growth, which is ₹4,000. So, at the end of the year, we had ₹44,000. In the second year, we added another ₹40,000 to this ₹44,000 because we didn't smoke this year either, so we had ₹84,000. Then we got a 10% growth of ₹8,400, so the total at the end of the second year was ₹92,400. In the third year, we added ₹40,000 again because we didn't smoke again, so we had ₹1,32,400 to invest. A 10% growth is ₹13,240, so at the end of the third year, our capital was ₹1,45,640.
Friends, in this way, if we don't smoke every year and keep adding ₹40,000, keep adding, keep adding, then with compounding, by the 35th year, sorry, by the 34th year, you will have a capital of ₹1 crore. And if you look carefully, after the 36th, 37th, 38th, 39th, 40th year, when the 40th year comes, your wealth will be over ₹2 crore 14 lakh. Yes, you are seeing it correctly. What is in front of your eyes is your money, and your savings, which you saved only when you decided to quit this bad habit and not smoke. This is called getting the best of both worlds. Your health improved, and by doing one small act, not smoking, you can get ₹2 crore in 40 years. What could be an easier way to become a millionaire than this? So, my brother, you can become a millionaire by just quitting smoking. What could be an easier path than this?
Now, the sixth rule of money, and that is the rule of debt. You must understand this. Debt can be good and bad. The biggest difference between rich and poor people arises from this. A rich person saves today's money for tomorrow, and a poor person spends tomorrow's money today. Just as it is written under cigarette packets, "Smoking is injurious to health," similarly, it should be written under every loan advertisement that debt is harmful to your financial health. The worst thing, if anything, is credit card debt. You must watch my video on credit cards, which has been watched by over 30 lakh people. Today, credit cards are the most ruinous item. Remember, never buy anything on credit that you cannot buy with cash. Buy now and pay later. This has ruined everyone. Most people get trapped in debt because they look at the present, not the future. People's thinking is like this: the thinking of today's generation is, "Eat, drink, have fun. Who knows about tomorrow?" But friend, tomorrow always comes, and the fate of such people is terrible. I will tell you a very simple principle of debt: never pay interest on anything whose value depreciates over time. That is, you can take a loan to build a house, but never for a wedding lehenga.
Some debts are good, like in an advertisement, "Some stains are good." For example, a loan taken to build a house. You took a loan of ₹10 lakh and constructed three to four rooms. Now, if you get a rent of ₹15,000 per month from it, then the annual interest on ₹10 lakh at 8% is ₹80,000, and your annual income from a monthly rent of ₹15,000 is ₹1,80,000. So, after paying the annual interest, you still have a saving of ₹1 lakh per year. This is good debt, you should definitely take it. Bad debt is a losing deal. Taking a loan to travel, going to Singapore on a loan, wow! Taking a loan for show-off. "He has a car, so I will get one too." Wow! Taking a loan for entertainment. These are very bad things because you are mortgaging your future earnings and digging your own financial grave. Never do this.
Now, the last and seventh most important lesson that you must learn is: stop showing off. I beg you with folded hands. Will Rogers used to say that many people spend the money they earn to buy things they themselves don't want, and in this way, they want to impress people whom they themselves don't like. Friends, humans are creatures who show off. From their bodies to their cars, their homes, their success, their wealth, they show off. Whenever there's an opportunity, showing off is in human DNA. Many desires are suppressed in your mind. There is a list of showing off somewhere in your mind. As soon as money comes, the dam of patience breaks, and you start buying absurd things. Whether you have noticed it or not, let me tell you, as soon as your salary increases or money comes from somewhere, you start thinking of changing your lifestyle. "Now I should buy a new phone, my old one is old. My old sofa is old. Now I will buy an AC like Suresh has." As soon as money comes, you start showing off. Why do you have such an enmity with money that as soon as it comes, you start pushing it away from yourself? Note that rich people never try to impress others as much as poor people do, because rich people don't need to prove their wealth. And poor people spend their entire lives trying to prove themselves rich. Therefore, never buy anything in life to impress anyone. And if money comes suddenly from somewhere, be cautious. If you sold a farm and got a large sum, or sold shares and got good money, don't immediately buy a Scorpio. At least put that money in an FD for three to four months and don't even look at it. Because experience says that after sudden money comes, people start boiling. Suppressed desires of the mind start jumping out again. In 95% of cases, money that comes suddenly disappears within 3 years, and people end up in a worse condition than before.
Friends, definitely follow these seven rules mentioned in this video and definitely write in the comment box which rule you liked the most. If you liked the video, please share it and subscribe to the channel so that you get notified for the next video. Take care of your money, and money will take care of you. I will meet you soon with another video. Until then, take care of your health. Thank you so much. Jai Hind.