It’s said that life can take unexpected turns, and nowhere is this more evident than in the financial world. The story of Anil and Manoj, two friends who started their careers together, illustrates how small decisions made at the start of a career can have a huge impact over time. This is a story of how two people with identical starting points ended up in vastly different financial positions just 15 years later.
The Early Days: Same Jobs, Same Salaries, Different Mindsets
Anil and Manoj, both aged 25 at the start of their careers, secured jobs with a monthly salary of ₹20,000. With similar educational backgrounds and identical career opportunities, you’d expect them to be in the same financial situation today, right? Not quite.
While Manoj lived by the motto of “enjoy life now,” Anil had a different approach. He believed in the power of saving and investing, even if it was with a small portion of his salary. This simple but significant difference in mindset created a financial gap between the two that only widened as time passed.
Manoj’s Spending Spree: No Saving, No Investment
For Manoj, the first salary was a license to spend. From moving into a bigger rented room to buying a fancy bike and dining out regularly, Manoj’s priority was living the good life. Parties with friends and frequent indulgences meant he was spending most, if not all, of his income. His logic was simple— “I’ll start saving later, right now is the time to enjoy.”
As his salary grew over the years, Manoj’s lifestyle expanded, but there was one thing he neglected: savings. Even after receiving multiple pay hikes, his financial portfolio had little to show for it. At 40, Manoj found himself with only ₹6,43,119 in savings, despite earning nearly ₹1 lakh per month in the later years.
Anil’s Smarter Approach: Saving and Investing Early
Anil, on the other hand, took a more calculated approach. While he, too, enjoyed his life—traveling, spending time with friends, and indulging in small luxuries—he always made sure to set aside a portion of his income for the future. From the very beginning, Anil saved ₹5,000 out of his ₹20,000 salary each month. He understood that early investments could yield substantial returns in the future, and he prioritized putting his money to work for him.
Unlike Manoj, who postponed his financial planning, Anil began investing in mutual funds through a Systematic Investment Plan (SIP). Starting with ₹5,000 per month, Anil gradually increased his monthly contributions by 25% every year. By age 40, Anil was investing ₹22,500 per month, and his early start had put him miles ahead of Manoj in terms of wealth accumulation.
The Power of Compounding: Anil’s Wealth Growth Over 15 Years
Now, let’s break down how Anil’s financial planning paid off. For 15 years, Anil maintained a disciplined investment strategy. According to SIP calculations, his initial monthly investment of ₹5,000 would grow to ₹82,73,559 in 15 years, assuming a 12% annual return. With a 15% return, this amount could reach ₹1,14,84,996. Over time, his total investment of ₹24,75,000 turned into a sizeable corpus that made him financially secure.
In contrast, Manoj, who started investing only at the age of 35, managed to accumulate just ₹6,43,119 in 5 years. This stark difference shows how starting early and sticking to a consistent investment plan can yield significantly better results over the long term.
Why Did Manoj Lag Behind?
The simple answer is procrastination. By delaying his investments for 10 years, Manoj missed out on the early growth years that could have dramatically boosted his wealth. While Manoj enjoyed his youthful indulgences, Anil was quietly building a financial safety net. Manoj’s late start meant that even though he was saving now, he couldn’t make up for the lost time.
Manoj’s spending habits in his early career left him with no savings buffer for emergencies or future needs. Now, even though both friends earn around ₹1 lakh per month, Anil’s net worth is significantly higher. With over ₹1 crore saved, Anil can afford to buy a home and a luxury car, and he is financially prepared for future family responsibilities.
The Importance of Starting Early: Building a Wealthy Future
Anil’s story highlights a critical financial lesson: starting early matters. By saving and investing as soon as you begin earning, you take advantage of the power of compounding. Whether it’s through SIPs in mutual funds, fixed deposits, or any other investment plan, the earlier you begin, the better your returns will be.
Manoj, on the other hand, represents the common mindset of delaying savings for a “better time.” But as Manoj’s example shows, the longer you wait, the more challenging it becomes to catch up. Anil’s financial discipline put him on a path to wealth accumulation, while Manoj is now trying to close the gap by investing larger amounts to meet his financial goals.
Understanding the Role of Lifestyle in Wealth Building
Another key takeaway from the story of Anil and Manoj is the role lifestyle plays in wealth creation. Manoj’s high-spending lifestyle prevented him from building a substantial savings cushion, whereas Anil found a balance between enjoying life and preparing for the future.
Lifestyle inflation is a common problem for many young professionals. As incomes grow, so do expenses, but without a strategic saving plan, financial goals often take a back seat. Anil’s decision to save 20% of his salary consistently allowed him to enjoy his present while securing his future.
How You Can Start: Simple Tips for Early Investments
- Start small but stay consistent: You don’t need a large salary to begin saving. Start with whatever you can afford and increase it as your income grows.
- Automate your savings: Set up automatic transfers to your savings or investment accounts. This ensures that you save before you spend.
- Invest in the right places: Whether it’s mutual funds, stocks, or fixed deposits, ensure that your money is growing. Consult a financial advisor if needed to choose the right investments.
- Increase savings as you grow: With each salary hike, increase your savings. A small 25% increase in investment each year can lead to significant returns in the long run.
- Track your expenses: Keep a close watch on your spending habits and avoid unnecessary lifestyle inflation. Budgeting can help you manage your finances effectively.
In the end, the story of Anil and Manoj is a reminder that financial success is not just about how much you earn but how smartly you manage and invest your money.
(In this article, Ravi and Sohan are fictitious names. The purpose is that time does not wait for anyone, so everyone needs to make financial decisions in time. So that one does not have to face financial difficulties with age. You can decide for yourself whether you want to become Anil or Manoj financially.)
