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Keeping Up With Sharma Jis And Not Buying Luxury Car: Edelweiss' Radhika Gupta On Spending Habits Of Indians

Luxury goods have long been accorded as ‘status symbols’ - signaling wealth and accomplishment. But is there a hidden cost behind buying such items?

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Radhika Gupta, Managing Director and Chief Executive Officer of Edelweiss Mutual Fund | (Photo: Official X handle)
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While speaking on the topic of ‘Money and Mental Health’, Radhika Gupta, Managing Director and Chief Executive Officer of Edelweiss Mutual Fund recently presented a rather humorous but sensitive take on the spending habits of Indians.

Money and mental health are two of the most understated factors when we talk about financial literacy. What drives Indians to spend less or more than they need is a subject of broader discourse. Gupta in a video podcast broached the topic of what makes a person opt for luxury goods when cheaper alternatives for the same items are always available in the market.

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The Lure of Luxury

Luxury goods have long been accorded as ‘status symbols’ - signaling wealth and accomplishment. “We’re trying to keep up with Sharma jis’,” says Gupta talking about what mostly drives people to spend on luxury items.

Owning a designer car, handbag, or watch can feel like a rite of passage for those who have reached a certain financial milestone. In a consumer-driven society, the pressure to own high-end items can be immense, even for those who might not necessarily want them.

Buying certain luxury items comes with a hidden cost i.e. depreciation. For example, if you were to buy a luxury car, the moment it drives off the lot, its value can drop by 20 per cent to 30 per cent, a reality that many are not fully aware of or choose to ignore.

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Radhika, who currently drives a Toyota Innova, says despite her ability to afford a luxury car, she chooses not to, citing the rapid depreciation as a key deterrent. “A car is a depreciating asset. I don’t even drive, and if I drive it out of my home, 30 per cent of the value will be gone,” she says.

But is it wrong to spend on luxuries you desire? The answer is no. However, if the motive is to impress someone the result may not be that satisfactory.

The Problem of Money Comparison

Moving from a mindset of scarcity to an abundance of money can be tough. When learning to manage their finances a person needs to overcome the ‘fear’ of money. Gupta says there is no formula to move on from this rather it’s a journey. People in their 20s struggle with a lot of things such as careers, relationships, and identity - and when they realise their sense of purpose, they automatically move on from this fear of money.

Gupta says, “If you are fighting a relative battle, you will always be unhappy in life, I can guarantee you that.” The idea is to fight absolute battles and not try to ‘keep up with the Sharmajis’, she emphasises

Beat The Psychological Trap: Invest In What Matters

The pressure to conform to societal expectations, like driving a luxury car, often stems from deeper psychological insecurities. For Gupta, this was once the case. She admitted that 18 years ago, when fresh out of college, she felt insecure about not owning designer items. Society’s value system, which equates material wealth with success, can trap people in a cycle of wanting more and feeling inadequate if they don’t have it.

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Since consumerism is at an all-time high, the approach to wealth challenges the traditional narrative of saving more and spending less. While spending less is not the answer to financial woes, in current times investing has taken a front-row from savings.

Earlier, in a post on social media platform X, Gupta shared, "I have seen people in their 20s saying they don't need to work because they are busy doing F&O. Young women who say their lifestyle and handbags are funded by trading gains.” She further claimed that this type of liquidity is hazardous for individuals as well as the economy, and called for action against the same.

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The takeaway from Gupta’s shared experiences is that one should measure wealth by security and not status. Though one should always invest in what they want, even if it’s an item of luxury, before making that purchase, consider Gupta’s philosophy: Is it worth it if its value depreciates the moment it’s yours?

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