This post is a continuation of the previous
blog post where we had calculated the monthly survival rate which one needs to
pursue his or her dreams. However, what we did not mention in the previous blog
was that the monthly survival rate was based on the amount that is based on
perceived needs, which can be reduced with effort.
In Part I of the blog, the cash flow
requirement (known as the monthly survival rate) was explained as
being the numerical total of the following expenses:
-
Rent
-
Groceries
-
Medical Expenses
-
Transportation
-
Clothing
-
Utilities (gas,
electricity, internet, phone)
-
Social Expenses (dinners etc.).
Now we will analyze that how much of these
expenses are actually needed and how much are the expenses that are
based on the social strata to which he/she belongs. The results may surprise
you and you will realize that following one's dream is easier than one might
think!
Let us briefly analyze each and every expense
in detail and see where they can be reduced. The following is the expense wise
analysis:
Rent
What is the amount you spend on rental for
your home whether it is in the form of mortgage for a home or a tenancy agreement?
Do you really need the space according to your family's needs or are there
areas where you can reduce the rent for e.g. fewer rooms, moving to a cheaper
area etc. If you can make way with the lower rent, then make that move ASAP to
reduce the fixed expense load of a rental.
Groceries
What is the amount you spend on groceries? Does
your grocery contain various processed or branded foods or a higher meat intake?
You can reduce the expense by buying raw fruits and vegetables more and
substituting meat with vegetables, which will also improve health and
ultimately save health costs later.
Medical Expenses
This is an unavoidable cost and which one
should ensure that the best health treatment is obtained. However, to minimize
your health costs one should adopt a healthy lifestyle of a good diet and
exercise regimen.
Transportation
Analyze your monthly expense in
transportation expenses. What is your current mode of transport? It can be any
of the following:
-
Walking,
-
Buses,
-
Taxi,
-
Rickshaw,
-
Personal Motorcycle or
-
Personal car
Try replacing your current transport modes
with cheaper alternatives for e.g. if your house is near your work place try
walking to work or try to use public buses (the cheapest alternative) in favor
of Taxi, Rickshaws or personal automobiles. Carpooling with colleagues is also
a favorable option to bring down transport costs.
Clothing
This is an area where one can save a ton!
Usually we spend a lot on clothing and fashion items which we rarely use in the
long term. Thus, buying clothes from Zainab Market (a great place to shop in
Karachi) instead of branded outlets can save a ton of money!
Utilities (gas, electricity and
telephone)
This is another area where one can save
money. Analyze your family's utility requirements for e.g. are you using air
conditioners a lot or are you using land-line to dial your mobile phones which
can cause higher phone bills? Small changes to the lifestyle can save up on
utilities for e.g. reducing air conditioning usage.
Social Expenses (dinners etc.)
This is a huge area where Pakistani society
wastes most of its money. The primary
reason for this expenditure usually is to fit in and be accepted in the social
circle. Analyze your expenses and see how much of it is wasted and consciously
stop these expenses.
THE SOLUTION
Using the revised numbers now calculate the
amount that you actually need in order to pursue other meaningful
passions and not to mindlessly keep on working for the sake of lifestyle
maintenance. The following table will be a good aid to see how much you can
save up by changing your spending habits:
Expense type
|
PKR per month Currently spent
|
PKR per month needed
for suvival
|
Difference (which can
be saved)
|
Rent
|
XXX
|
XXX
|
XXX
|
Groceries
|
XXX
|
XXX
|
XXX
|
Medical
Expenses
|
XXX
|
XXX
|
XXX
|
Transportation
|
XXX
|
XXX
|
XXX
|
Clothing
|
XXX
|
XXX
|
XXX
|
Utilities
(gas, electricity, internet, phone)
|
XXX
|
XXX
|
XXX
|
Social
Expenses (dinners etc.)
|
XXX
|
XXX
|
XXX
|
Total
(monthly survival rate)
|
XXXX
|
XXXX
|
XXXX
|
Now this saved amount must be invested
to ensure that a stream of cash flows is available for one to pursue his
/ her dream with a free mind (for a two year period as mentioned in the previous part of the blog). The following are examples of investment options
to name a few:
-
Gold,
-
Silver,
-
Mutual funds,
-
Saving certificates,
-
Stocks etc.
Investments will help lock in your savings so
that your long term goals can be achieved.