Lifestyle inflation: Making more, spending more?
Finance
Take a note of how much you save in % of your salary/pocket money, and how much you expense it. Now try comparing your numbers to an estimate to when you didn’t have a fixed source of income in schools or college.
Has your preference for a private mode of transportation increased with an increase in your income? Has your frequency to go out to restaurants/parties increased when there was an increase in your wealth?
Subconscious spending
Lifestyle inflation is when an individual starts spending more of his income on spendings when their income increases. It’s something that happens to all of us unknowingly - as one grows in their career, one tends to spend more money as they start to earn more. Without realising, it can affect net savings-in some cases saving even less when earning more!
Causes
There are no “technical” reasons as to why lifestyle inflation happens. Experts believe that when people earn more, the feeling of “deserving” a better lifestyle at the expense of an increase in their ability to afford it, leads to one swirling into a spiral of an “expensive range of products.”
Another reason that experts argue is to “show-off” their increase in wealth to their peers/families etc. With expensive tangible items, it becomes abundantly clear in the social circle when one earns more.
More common than you think
Even though salary increases when one gains more experience, that behaviour is often not seen in saving.
How to prevent it?
Financially plan your goals - keeping financial goals in an emergency, short term and long term targets are imperative to keeping a check on one’s spending behaviour.
Be conscious of your spending - taking note of how much you spend, there are multiple apps that track your spendings, and help you prioritise how much you spend
Don’t fall into the trap - never seen before deals, more credit cards, recommended ads and more are all after your hard-earned money. Don’t fall prey to them!
Tangible effects
The problem with lifestyle inflation is- it's very hard to revert. Once you are accustomed to a larger house, more expensive car and a better phone, and EMIs start to pile up, it is often too late to realise the deep hole one has dug for themselves. Not only that, but it also highly hampers the short term/long term financial goals one might have!
The more money you save, the larger your financial moat will be. Be sensible to your financial planning, and look at higher salaries/promotions as a growth opportunity instead of pay raise.
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The 3000 kg heroin consignment at the Mundra Port - Afghan terror funding?
Current Affairs
Four weeks ago, in by far its largest seizure, the Directorate Revenue Intelligence (DRI) seized two containers carrying 3000 kg of heroin at the Mundra port in Kutch.
Pegged at a value of INR 21,000 crores by officials, the consignment was imported by a Vijaywada, Andhra Pradesh based trading firm from Kandahar, Afghanistan. The shipment/cargo arrived at the Adani owned Mundra Port from Bandar Abbas Port, Iran.
The importers and the exporters
Suspecting the frequency of “talc” imports by a new firm, the high-quality heroin was found in two containers that were being imported as “semi-processed talc stones”.
The trading company is owned by a Chennai based couple, Machavaram Sudhakaran and Durga P B Govindaraju. They were importing the containers from a firm owned by Rajkumar P from Coimbatore, who with “foreign suppliers”.
Case transferred to NIA
While the investigation is still in process, the DRI has arrested eight people involved, including four Afghan nationals, one Uzbekistan woman, the owners of the trading company and the holder of the Import Export Code (IEC) used for the import.
The Enforcement Directorate and the Narcotics Control Bureau (NCB) are also investigating the case. On 6 October, the Ministry of Home Affairs (MHA), transferred the case to the National Investigation Agency (NIA).
“A terror funding probe”
Agencies are probing if there is a narco-terror link, as this was sent to India from Afghanistan after the Taliban’s takeover. So far, the NIA has already conducted two raids regarding the case:
Raids in Vijaywada, Coimbatore and Chennai, at the premises of the suspects and the accused
On October 9, at five places including residential premises and godowns in the NCR region
The investigators have apparently gotten hold of various incriminating evidence during these searches.
Section UAPA invoked
A criminal complaint has been registered under the Narcotic Drugs and Psychotropic Substances (NDPS) Act and the Unlawful Activities (Prevention) Act (UAPA) sections. The investigation has revealed that the trading company owners were small players who were being paid a small commission of INR 10-15 lakhs for using their containers for smuggling. They were receiving information from people based in Iran and Afghanistan.
The UAPA section covers punishment for terror-related crimes.
Adani ports role in this?
Adani Ports and SEZ (APSEZ) clarified that their role is limited to running the operations of the port.
“The law empowers the Government of India's competent authorities, such as the Customs and the DRI to open, examine and seize the unlawful cargo. No port operator across the country can examine a container. Their role is limited to running the port.”
Earlier this week, it also announced that from November 15 Adani ports will not handle any “EXIM [Export-Import] containerised cargo originating from Iran, Pakistan and Afghanistan.”
Management at Mundra Adani port to be investigated
However, a special court for NDPS in Gujarat requested the DRI to probe into whether Adani’s Mundra port management received any profits from importing these consignments. The court also questioned the consignment’s arrival at the port in Gujarat, despite it being far from Andhra Pradesh.
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