Tuesday, April 3, 2012

Money, Money, Money....Money!

One of the first things you learn when coming into a desi culture is that having money and spending money are two different things entirely.

In the US, the more you have, the more you spend. Savings is a personal issue and everyone is different. Some people put a percentage of their income into savings accounts and others invest their money either in the stock market or special bank accounts or real estate, etc. But, regardless of how they're managing their money, in most instances if they make more money then they spend more money. They buy more expensive items or better quality items, eat at fancier restaurants and drive nicer cars.

That's not typically the case in India. Some of the wealthiest people in the country are the most frugal. It's a fascinating phenomenon but the higher classes (under the Indian monetary class system) are some of the cheapest people you'll ever meet. Sure, they can afford bigger and better houses than others but you will see them out on the same street purchasing the same cheap food from the street vendors as lower classes. They're also typically the first people to start the bargaining process in their local bazaars. They strive to save every rupee they can just like everyone else.

In my neighborhood we have a very interesting mix including some very poor citizens, poor, lower middle class, upper middle class, and high class families (by the monetary standard). It's the middle class people you see doing the most bargaining. I had the fortune to overhear some ladies haggling the veggie wala the other day. He quoted 10 INR for a KG of veggies and they counter-argued back with 9 INR. I watched to see which houses these ladies went into. One entered into the house of a lawyer. Another walked down the street to one of our bazaar stores.

This isn't the only case of having money but not spending it that I've witnessed. It seems quite common for people here not to spend money unless they absolutely have to for small items. They will go without a lot of things they consider luxuries then turn around and spend a fortune on something big. I think everyone is aware of how big Indian weddings get. Sometimes families spend lakhs upon lakhs for these weddings when before there was ever a wedding to think about they would refuse to pay 10 INR for a kg of veggies. (Yes, I think weddings are a big deal but they are a serious waste of money when everyone is trying to outdo the last wedding they attended.)

Another example is non-veg households that will go without any meat at all for long periods of time citing how expensive it is but then turn around and drop a few crores on real estate. Another example I've noticed is how a man won't purchase clothing for himself but then goes out and purchases a new 40-inch flat screen LCD.

This is very different from the US where if we need clothes, we go buy clothes. If we've had a rough day we'll pick up take out food on the way home instead of cooking just to save the money. We also each plan our own weddings and the majority of us are not trying to make it a bigger show than our neighbors weddings. We choose to live comfortably every day rather than continuing to suffer day in and day out to save up a little extra money. Sure, we go without some things but not everything all the time which seems to be the trend here.

It's very fascinating to see this trend. Especially when the wealthy and middle class shop only in their street bazaars and refuse to go to national chains because they're expensive. Even more interesting is the prevalence of "you paid how much? I could have got it for you cheaper." Another common phrase is "knows the real price" meaning an older family member knows how much something should have cost and so you've obviously paid too much. (As if there's not accounting for inflation that should matter.) Everyone seems to be focused on how to get things cheaper. It's all about saving the rupees.

I've been experimenting with the Indian concepts lately. I'm saving all of my money to go home on. As I've stated, I intend to engage in riotous living when I get there. Everything I've missed this last year is going to be made up for in those short 2 months. It's going to be expensive. I'm also going to purchase that new laptop I've been wanting and a new camera while I'm home. So, in anticipation I've been saving money like an Indian lately. It's not easy at all but with the 75,000 INR I've made this month I'm well on my way. I'll pick up another 2 lakhs before I leave. The family is also giving me a large sum of money to travel with. I'll continue working while I'm home picking up another 3 lakhs or so. And I'm not spending a penny until I get there. It's going to all be worth it.


  1. you put your finger right on the spending habit of the middle class Indian: money shall be spent in excess ONLY when it serves the purpose of impressing others, so yup in communities where clothes quality and brands aren't well known enough, the money will go on a giant LED TV that will sit all so proudly in the living room for all to see, never mind that most will never even use half the function said "smart TV" has.
    I've seen countless time how some people will sepnd a fortune cladding their home in expensive marbles, brag about a architect friend from abroad designed the staircase in their new home and brag about the italian leather sofa in their living room, but be more than a formal guest and you get access to the rest of the home and you get to see that they still sleep on the rickety bed they had for 30 years and a mattress that has so many bumps and holes it can't be healthy for their back. as a professional in that particular field I know a mattress has to be changed every 10 years...not done here.

    Most people do treat food like something to cut cost on so they can put more of a show buying labels and goods to brag about. In cities like Mumbai in posher area the problem is priorities, suddenly the market has opened, there is a wide array of goods on offer, but salaries can't just buy it all, and people end up having to make choices, it's a though thing to do.

  2. Wow sounds like you got a great paying job for being in India and from home to boot !
    Easily spent when you get back here for sure ... considering all the things you have been missing out on . Best to continue saving like an Indian I wish I could get a better grip on it
    and yes it is amazing to see sometimes world over that the people who have the most money are some of  the cheapest .A quality I despise in a person but I guess that's how they got so much :(  I noticed we spend lots of money on our homes here less so in India
    I think Indians spend more on their clothing than we do . Food is also a big one for us I don't think we would  choose not to eat certain foods to save money usually people will buy what they can afford for the most part to add comfort to their lives .

  3. Yeah its tough lol. I know it's worth it though. I'm sure after this I may never want to see another roma tomato but it's worth it. lol.

  4. I did land a very good contract. I only work part time for that amount of money. If I was in an office or had more to do when I took breaks I might work a full day and make more but it's so hard to sit here and just write all day with nothing to do in between articles but eat or look out at the street below.

    I think you're right about the clothes. I used to buy designer merchandise like Liz Claiborne and Nine West for $10 a piece and here you're lucky if you find anything in a cheap brand for that price. So I'm looking forward to doing some real shopping and buying nice cloths without spending a small fortune for a change.

    Normally I do buy a lot of imported goods because it's all the sanity I have here but I've cut that back to just a few things for the last couple of months. It's going okay but I'm growing to hate tomatoes lol.

  5.    Indians are now earning much better income due to international companies setting up offices here. This was not the case even 15-20 years back, when salaries were tiny, and people spent frugally to meet their demands and support their extended families. 
       The generations which were exposed to this scenario, like our parents and before, continue to live and think in the same way - old habits dies hard, I guess. 
       And just because they or their children are making good money now, does not mean that the 'New Rich' know how to spend to ease their lives. They still try to save in real estate and investments, and the odd wedding to show-off to friends and family :o)
       But many young urban Indians are enjoying their hard earned incomes on travelling, hobbies, investing on art/paintings - something which would have appalled our society a decade earlier! 

  6. You're right. It's good that they save so much but a little sad they don't do much for themselves and suffer without affordable comforts so much. Shoes is my big issue. I feel so bad for my MIL because she has trouble walking and she's not old enough to have trouble like that. I'm certain she would be much better off with better quality shoes but I can't convince her to even let me buy them for her. It's not just her money she's saving, it's mine lol. I'm working on a sneak attack to get her good shoes though. I just have to figure how to get her to take them and like them without seeing the price tag. :D

  7. Reminds me of our neighbor...they spent 45,000 on one ceiling fan...one horribly ugly ceiling fan.  Then 5lahks on a modular kitchen (9months ago) and it still has the plastic wrapping on it...but they don't have any curtains for their house and an old sofa sits in their living room.

  8. Wow, that's crazy. I can't imagine spending that much on a fan, not even in the US. Leavng the plastic wrap on things cracks me up. I understand the concept but it's just hard to get used to. FIL kept his plastic wrap on the TV for almost 2 years until dust got stuck to it so bad (from the humidity) that the remote sensor couldn't get a signal anymore.