Tuesday, June 4, 2013

Survival with this inflation with minimum wages.... Everyone is facing same

I am not the only person, who is experiencing this huge gap in earning and expenditure.

"Education courses worth Rs 7 lakh to cost Rs 56 lakh in 15 years” said a Times of India headline today. Education costs are going up for sure. Just 10 years back a Bachelor of Pharmaceutical Scientist degree cost Rs 20,000 for a four-year course, and now the same course cost around Rs 6 lakh. In fact, the ToI report notes that over the last 15 -20 years, the cost of education in India has gone up by as much as 14-15 percent, compared with the general rate of inflation of around 7 percent.

Now let’s just take a look at house hold items, a loaf of bread cost Rs 9 in 2004-05, in 2008-09 the same bread cost Rs 13, today it costs Rs 22. LPG cylinder in 2004-05 cost around Rs 251, by 2008-09 it went to around Rs 350, today subsidized LPG costs Rs 450. A Mumbai-London air ticket cost in 2004-05 was around Rs 19,990, in 2008-09 around Rs 27,000 and today around Rs 32,400. Clearly, everything under the sun is becoming expensive, why wouldn’t the cost of education?

And if that’s not enough to blow your mind off, sample this calculation. Suppose you are 30 years old today, with a monthly household expense of Rs 50,000, and a monthly saving of Rs 20,000. Assuming your investments earn an interest of 8.5 percent with an inflation of 7.5 percent, you would be able to save a retirement corpus of Rs 3,09,55,836. Don’t be too impressed with the number. To maintain your current life style you would actually need Rs 6,17,99,684. That’s Rs 3,0,8,43,848 less.

This clearly shows that be it cost everything has gone up, even the cost for your child’s education — a short term financial goal — or retirement needs — a long term financial goal — you will surely need to put aside some serious money. And that’s not at all, you will also need to do some major financial planning.
Day by day, cost of ‘surviving’ is going beyond our scope. And each head earning in the family is at same level, which was before 2 years. Virtual growth can be seen with day by day gradually; however it’s linked with ‘loan’ term, which is ticking needle in the life. Life is revolving around EMIs, daily expenses and making adjustment with fixed income which is stiff, failed to grow.

If I put down all counts in numbers, I feel afraid to live and think of other source of income to fulfill the liabilities. No change in earning, it’s constant Rs. 100/- from last 2 years.

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