Indicates Caution from Warren Buffett for India's EMI-bound population
In the pursuit of financial freedom, the wisdom of legendary investor Warren Buffett offers valuable guidance. His rules for avoiding debt can bring peace of mind and lead to a life of prosperity.
Buffett advises to save before spending and use credit only for convenience. He views credit cards as tools to make payments easier, not as sources of extra money. However, he cautions that compounding works in reverse with debt, eating away at your financial freedom.
India, with its growing digital payments adoption and increased consumer spending, has seen a rise in credit card charges among salary earners. A recent study found that 93% of salaried Indians earning less than ₹50,000 a month are relying on credit cards to support their everyday expenses. This reliance can be dangerous, as credit card interest rates in India often cross 36-40% annually.
Buffett often said, "You cannot get rich by spending more than you earn." This advice holds true in India, where EMIs, once reserved for houses and cars, are now the default for phones, clothes, even vacations. Three EMIs can speak for a third of a monthly income before the salary even arrives, making it difficult to save, invest, and build the life one desires.
Debt, in Buffett's view, is not just a financial liability, it is a mental weight that grows heavier with time. It can linger for a long time, and what looks like a small EMI today can become the reason you cannot save, cannot invest, and cannot build the life you actually want.
Buffett reminds us to always have a cushion of emergency money. If you are not clearing your full bill when it comes, then you are already in dangerous territory.
The true festival is financial freedom, as the joy of living without the weight of EMIs and credit card bills on your back. This festive season, enjoy the celebrations with family, but do not build your happiness on borrowed money.
Buy Now Pay Later schemes have already seen one in four users struggling to repay. So, let us heed Buffett's words and strive towards financial freedom, one step at a time.
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