Who Increased Your Financial Commitment?

Financial Commitment



In our life, at various periodical changes, our financial commitments tend to increase. Our grandparents would have told us that they have survived a month peacefully without any EMI, Loans, Credit Card, Debit cards, etc. with their monthly income of just Rs.10.

This might be a sufficient amount to feed a family around 1940-1960. Now, coming back to 2020, even after earning the monthly income of Rs.1 lakh, our commitments have a to-do list that has been not touched for many years. Various factors decide the incremental growth of financial commitments.

  1. Inflation.
  2. Being Rich vs Acting as Rich.
  3. Television and its Advertisement.
  4. Flaws in Investments.


        The primary factor for the increased personal financial commitment is Inflation.

          Inflation is termed as the price hike of goods and services which we indulge in our daily life over every year. So, for every twenty years, the value of any particular goods will increase almost 10 times. The average inflation rate in India is about 7-8%, so the value of the currency falls.

          Inflation has its pros and cons depending upon an individual.

·       SCENARIO 1: If the currency has been parked with tangible assets like stocks, lands, gold, etc. which tends to increase along with the inflation rate, this is a good sign of Inflation

·       SCENARIO 2: The other scenario is, that when people have their currency in their hand or invested in any sort of asset, have to lose the value of the currency, which is always a negative for people

Most of us, come under the second scenario of holding money in hand or in the bank, so the currency value falls which eventually adds an increment in personal financial commitment

Please find the historical inflation rate of India from 1960 to 2019 in the below image.

 So, handle the inflation wisely, and don’t let your financial commitment rise above your shoulders.

Being Rich vs Acting as Rich:

This is ultimately worst, where people don’t know that they are the main reason for increasing financial commitments. We can partition people into two categories.

  1. People who are rich by themselves.
  2. People tend to be rich but they aren’t.

Being Rich

          Have you ever noticed the world’s successful and richest people wear the same type and color outfits? Does it mean that they don’t have enough money to get some colorful dress, which most of us spent on a single occasion?

One of the most successful investors in the world is Warren Buffets, who holds a net worth of $580 Billion, still lives in the same home which he bought a long ago for $35,000 and he still drove the first car that he bought. The reasons are

·       They value their money and time because they believe both of them are valuable assets.

·       They spent or invest in the first.

·       They invest in the acquisition of knowledge.

·       They don’t research on updates of electronics, automobiles, etc.

·       They will be as simple as they are a brand, so they don’t wear branded shoes or branded shirts.

·       They don’t wear any type of ornaments to show that they are rich.

·       They know perfectly, how to use inflation and economic market crashes in favor of them to grow their money

Acting as Rich:

          This is the category where most of us come under. We try to show our wealth through our outfits, cars, ornaments, updating on gadgets, appliances, etc.

·       The people who come under this category are the prey of their financial commitment.

·       We people spend a lot on dresses for our marriage reception, which we won’t wear again in life.

·       We buy a car, bike, mobile, appliances, etc.  Just to portray to others that we are rich enough, we don’t think about necessity.

·       Recently, when Apple launched the iPhone 11 PRO, most people bought it for more than 1 lakh rupees. If we ask them,  for what reason you have bought the product, they fail to answer about the features of the product. The only answer that comes from them is the name of the brand i.e Apple, and its pride.

·       We wear ornaments to show that we are rich.

·       We never invest for us, rather we invest and spend completely to make the rich get richer.

·       We never develop our skills, knowledge, and don’t ever think of what inflation is doing in our life.

These are the attributes that cause a great financial commitment and we work for those commitments and neither for us nor for our generation.

Television and its Advertisement:

         While reading this topic most people will be frustrated. What? Television Are you kidding? Here are the facts to say again we all have messed up somewhere.

We people have never noticed that television and its advertisement are the main source and gateway for many of the unwanted products in our home. If you have noticed,  Well!, you will become aware and will able to handle your financial commitment and will never let it reach your shoulder.

In the last few decades, only television has a portion of our house. In the beginning, most of us couldn’t handle our commitments and ran to buy all that we saw on television.

People use more techniques in handling advertisements to reach, each and every age group by its graphical and emotional connection with people who see the advertisement.

We are the one who initiates the habit of drinkingBOOST and serves it to our children, without knowing what it is and what are the side effects it provides. We just drink for Sachin and Dhoni who promoted us as they drink the same for their fitness. They aren’t.

Flaws in Investment:

·       Over the last 20 years to date, there are many products that have risen as the theme for investments.

·       Taking policies without knowing T&C: Many cashback and endowment policies have landed in everyone’s home in some way. We opted for it, thinking it would give us more yield after 20 years, but the fact is it yields only 3-4% of return and our inflation rate is at 8%. This will add us to financial commitment for sure.

·       Lack of Knowledge in Investment: Till the year 2008, real estate was the place that gave a multi-bagger return, but most people still invest in real estate, without the knowledge that the real estate market is over-valued.

·       Thinking Mortgage as Investment: Most people think owning a house is an investment. It isn’t, rather it’s a consumption, and anyhow we need a home to stay. Buying a home for a loan is complete madness, and it eventually raises the financial commitment.

·       Investing somewhere, without any knowledge about its safety, the risk associated and returns calculations will be considered a flaw. Investment done on someone’s recommendation is termed as a flaw in investment.


·       Financial commitments are increased because of our personal decisions and unawareness of the market and inflation growth.

·       Understand inflation, and make inflation a tool for your financial success.

·       Understand the exact difference between being rich and acting as rich. Acting like rich will never make you rich. Don’t live to please others.

·       Don’t buy any products by seeing the advertisements or by seeing any Models forecasted on television. These Models never use the products, but they promote them. They just earn.

·       Invest wisely is an important tool to keep your commitment under your shoulders and ultimately live your life peacefully.



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