How to manage difficult times ?

Hike of petrol price from Rs 40/- in the year 2009 to Rs 78/-per litre now (whopping 95% increase over a three year period) is a bolt from the blue to many middle class families. Abhay is worried a lot now days.

The family budget has gone out of control due to rising costs . The school fees  for  the son Subodh and  daughter Malini has gone up by more than 18% this year. The default in credit card payment has added to the problem. The monthly savings for the higher education, marriage of children and for retirement is facing discontinuance due to shrinking surplus income.  He finds it hard to convince his family to forego the weekly outside dining. Sunita , the home maker, is watching the situation at home in desperation.


Abhay and Sunita approached a SEBI registered investment adviser for a possible way out  of the difficulties. After a lot of number crunching, the financial planner suggested to either increase the income of the family or to control the expenses. Abhay Company’s  sales has declined and the chances of his  promotion or  increase of his salary  is remote and there is no possibility of higher increase of his salary for another 3 years.The industry is facing problem and he may not be successful in changing his job. Both Abhay and Sunita had decided  after the marriage,18 years back that sunita will focus on home and children.Now she may not find a job. The only alternative is to control the family expenses and they were given the following austerity tips:

· Save money on transportation: Instead of using own vehicle for going to office, a pool car or travel by train is preferable.

· Do not waste electricity: The monthly electricity bill which was Rs 1100/- last year has increased to Rs 1800/- now, although consumption of units remains almost the same. The family can switch off lights, fans, air conditioner and other electrical equipments when not in use and bring down the consumption of units. One should start using eco-friendly CFL bulbs and power-saver tube lights. Also use electric/electronic equipments with energy saving ratings.

· Look for bargain deals and discounts: They can bargain on grocery by bulk purchase and look for discounted prices on dress and apparel, electronic items and go for festival discounts.

· Get the mortgage costs down: The banker can be approached to revisit the terms and conditions of the home loan. The EMI can be reduced and the tenure can be increased so that the monthly burden of EMI can be reduced. In case the loan interest is very high vis- a-vis the competitors, Abhay can either refinance the loan or switch over the bank which will be charging lower interest.

· Bring lunch to work:The cost of dining out has also increased due to inflation. Carrying lunch to office is advisable not only from cost reduction point of view but also from health point of view.

· Lower phone and utility bills:The family can review the call packages and select cost effective schemes for the mobiles. For internet at home, a broadband connection instead of individual dialup connection can be preferable.

· Watch movies at home: Movies are now available through DTH (Direct to home connections).The family can visit multiplex to watch the latest movies on weekdays instead of weekends

· Exercise at home: Instead of visiting Gyms, the family can exercise at home .Daily walking is also a good option.

· Restrict Usage of plastic money: The family is fond of weekly visits to Malls and purchase life style items by credit cards. The purchases of less useful items can be avoided and credit card payments can be paid before the due dates.

Both of them took it seriously and discussed with their children about the need for austerity. 

Recession or stagnant growth is global issue. Adviser approved by SEBI can definitely guide you to overcome this difficult time. 

Last modified on Friday, 16 August 2013 13:45

Prakash Praharaj

Shri Prakash Praharaj has a passion for excellence. He has been awarded two gold medals for securing top positions both in Graduation and Post Graduation in Commerce. He is an MBA with specialization in Finance and marketing. He has been awarded Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is a Certified Financial Planner from the Financial Planning standards Board, India (FPSB), affiliated to FPSB, Denver, USA and Certified Personal Financial Adviser from NISM. He is also a SEBI registered Investment Adviser vide Reg. no. INA 000000045 dated 2nd August 2013.His book "Your Every day guide to Personal Finance and Insurance" has been published by CNBC TV 18 in August 2015.


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  • Sandesh

    posted by Sandesh

    Monday, 22 July 2013 07:12

    helpful article


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