3 Different Personalities in doing savings – Which is best?

Different characters in doing savings3 Different Personalities in doing savings – Which is best?

Last week, I met a few of my friends and had chat about how each one are working on saving money. Though everyone had their own life experiences, I could make out 3 personalities which I felt worth sharing with all of you. The healthy argument is about how you define savings. Is savings = income – expenses or expenses = income – savings? How far second approach is practically possible? Read these 3 life changing examples. Though my friends agreed to post their discussion on this website, I am using dummy names in this article.

Also read: Does copy paste works in choosing an investment idea from others?

Character # 1 – Rajeev – Fulfills majority of dreams by taking loans – Very little savings

Age 38 – Married and have 2 kids – Works in MNC company. He owns a flat which is taken with home loans, holds car which is taken with a car loan, complete furniture at home (pays EMI amounts to the furniture world). His total income goes for EMI’s, housing hold expenses and he saves very little. The current savings can be utilized for emergency fund only. Sometimes his expenses shoot-up and he uses this emergency fund. Rajeev indicates that he is spending for a happy life. He says he is fulfilling his family dreams now without compromising. Though I agree that he and his family is happy today, there is no financial planning exists now.

Character # 2 – Madhu – Fulfills some of the dreams – Does not like to have debts – Does good savings

This character resembles the majority of what I do. Madhu is normal investor, but fears to take any major loans. Madhu invested in a modest house, but not much invested in real estate. Madhu invests in various mutual funds, few stocks and invests in fixed income options. Madhu thinks that 50% to 70% of funding for any major investment should be done through own funding and balance through some loans. Always thinks about happy future. Never into any financial troubles. Well planned in monthly expenses and within budget. Always believes in expenses = Income minus savings.

Character # 3 – Madhumitha – Fulfills some of the dreams – Believes that she can build strong financial ground and create wealth for future. Thinks that we should be happy today and in future. Money not hurdle for happiness.

I like the way she plans her financial life. First time right is what Madhumitha believes. She brought one dream home. Believes that we should not be dependent on single source of income. Though salary is major source of income, she created few sources of income from Bank FD, Corporate Deposits/NCD's, rental income etc. Strategy is not to buy high value properties, but to create such properties with smaller amounts. E.g. Buying 1 Crore property is different from buying at Rs 30 Lakhs and seeing that such property appreciates to Rs 1 Crore. Always thinks that each and every rupee saved  is invested creatively and produce high returns. Once the necessary insurance cover is taken through term insurance plan, believes that savings are invested in real estate, mutual funds and other investment options. Other than real estate, she takes advice from me. Madhumitha says child insurance plans and ULIP's are not good products which are created for the benefit of agents and insurance companies only. Considering term insurance plan and balance invest in investment options where you can create wealth is what she believes. Madhumitha strategy is that if I stop working today, my life style should not stop. It should continue the same way it is today. Since financial life is under her control, she says she would define what saving she want to do for that month or year. She believes savings = income – expenses, but there is no point in keeping such savings in your bank account even for one day, but you should invest in high return investments.

Also read: How become millionarire/crorepathi – 4 Life changing lessons I learnt

Conclusion: I am not saying that one should consider any particular character here. While Madhumitha takes investment advices from me, I learnt some best practices from her which I feel we should go through and try to implement. There could be best personalities than Madhumitha.

Readers, what do you say about these 3 personalities. Do you belong to any of these groups? If yes, share your experiences with us.

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3 Different Personalities in doing savings

Suresh KP


  1. Hi Suresh Sir,
    Nice article. I think factors like family background, income and lifestyle also affects saving and investment habits.

  2. I believe in being thrifty and conservative and as the FIRST PRIORITY – planning for living under a roof that I can call my own which has been paid off (even if taken on a home loan) rather than live in a rented roof and at the mercy of a landlord.

    My first priority once earning – therefore – is to plan + invest for a home – even if its a single room barsati – followed by a combi of Madhu and Madhumita options based on specifc circumstances and plans one has for his / her life. And without cutting corners or being miserly – if one can target maintaining a fixed monthly EXPENSE on a YoY basis (in line wih inflation) and live within that without crossing the laxman rekha – even if one has to tighten their belt or needs sacrifice, then so be it.

    My formula would be Nett Income MINUS Investments (in order of long/mid/short term) MINUS Savings (liquid contingency) = Expenses (Fixed +/- 5% variable / month ) and if anything still left over, then go party (you deserve it !!!) without any second thought or inhibitions. . 

    It is possible as am able to do it – the only regret is that I dont get the chance to party as much as would love to but end of day am happy have no debts or loans to worry about, and the practice of thrift + self discipline helped achieve financial milestones without major sweat or undue worries. Must admit its a continuous challenge and above is not easy to practice but good things dont come easy – moreso when self discipline is involved – but then as the saying goes – you make or break your own future. 


  3. I hate people like Rajeev; according to me, they are pseudo rich persons without any plans & living their life on loans. During the time of retirement, they will find that their savings are not enough to continue their rest of life.

    Regarding Madhu, I cannot understand what is her strategy & again feels that persons like her keep struggling throughout their whole life. They have a much higher funds compared to people like Rajeev at retirement but remain unhappy throughout their life.

    Madhumita is great & I believe that Madhumita is another name for Suresh. Isn't it?? Hahahaha!

    There are another kind of person; the government employee limited to medium to higher rank of administration & police. They don't think of investment rather try to hide their black money in some form. Agree or disagree?? Hahahaha!

    Another point, the above 3 categories mentioned by you are limited to salaried employees & will not include businessman.

    I am also against ULIP & Child Plans; one can get higher income by just keeping your money in FD & renewing every year as bank offers higher interest rates for a 12-15 month (Around 400 days) period.

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