Representative image of online shopping.
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We live in a world where people are encouraged to spend more. Plastic money and easily accessible loans have made it effortless to indulge almost instantly. Whether it’s a significant transaction or small, you can secure a loan immediately to fulfil your needs. Earlier, loans were used only for sizeable investments, like a house or to start a business. Loans these days have become a tool for instant gratification, allowing you to buy even everyday products - be it a mobile phone or apparel of choice.
While we ape the Western lifestyle, by this, we do not have the comfort of social security offered in those economies. To exit this trap, we need to look back at our earlier generations that laid emphasis on savings for a secure future.
Saving does not mean sacrificing needs today for an unseen tomorrow. It is all about spending your money wisely to avoid unnecessary expenses. Doing that enables you to meet both ends - have enough money to stay happy today and tomorrow. If not kept under check, your spending habits can derail your plans. Discipline in spending can help your build wealth.
Prudent spending
A disciplined approach to managing your money can help you achieve your financial goals without falling prey to the vicious loan cycle. Here are a few things that you can do:
Prefer cash payments - Digital payments are good but not for all purposes. Cash payments make you more conscious about your spending. You remain budgeted when you carry limited money in your pocket while out shopping. However, with digital payment, the realisation happens too late.
Avoid impulse buying - Delaying your purchase decision allows you to pause and rethink before spending. It stops you from a purchase that you may regret later, giving you sufficient time to evaluate the cost and quality-related reviews of the product.
Set a saving and spending ratio - Usually, we consider the amount left at the end of the month as savings. However, it should be the other way around. Evaluate your monthly expenses and allocate a certain percentage to savings before spending. This practice ensures that by meeting today’s needs, you don’t compromise on tomorrow’s necessities.
Refrain from brand loyalty - Often, we believe that established brands guarantee quality. So, we end up paying a premium, although other brands might offer similar products with the same features at a reasonable rate. A bit of research in such cases can be a cost-effective choice for your wallet.
Use credit card wisely - Most credit card offers a 50-day interest-free period for borrowing, which seems attractive. But if you overspend and fail to repay before the due date, you pay hefty interest with a late fee, adversely impacting your credit/Cibil score.
Avoid traps - We often see various attractive ‘buy today, pay tomorrow’ sales promotion schemes. Easy access to loans is also widely prevalent. Flaunting can trap people into spending beyond their capacities.
As a generation, we struggle to balance between the conflicting mantras of ‘Saving Money’ and ‘You Only Live Once.’ Instead, try this - ‘Save money and money will save you’ - for a sound financial health.
Remember, safeguarding finances in the spending economy is a gradual process. It requires a lot of discipline, but with a few mindful choices, you can build a financially strong future without sacrificing the financial freedom you enjoy today.
(The writer is Head - Online Business, Axis Securities)