If one spends smartly in a disciplined manner, it can actually yield great results in terms of saving. Read on to know about some smart tips.
You can save loads of money if you spend it smartly! Spending is an important part of your financial planning. However, when and where to spend, how much to spend and using the right instrument to spend are some of the key steps that can help you to spend wisely. Hence, smart planning can save you money and avert unnecessary spending. What is required is just that little extra bit of effort towards financial discipline. So, wise spending ensures you have that extra money at disposal which can be invested in building up a big retirement corpus. Let’s share some smart tips to help you save money on smart spending.
Plan Before You Spend
Planning is essential at every stage of personal finance. You should make a proper list of all the spends. Prioritise the items in order of its importance, i.e. most important item on the top and the least at the bottom. Now, assess how much money you have in hand to spend after you make investments, pay for Insurance premiums, clear the debts and other regular unavoidable bills.
Based on your fund availability, allocate funds for the items which are top on your priority list. For items which are lower in the list, check if you can avoid spending on such items. Your ideal target should be to spend lesser than you have apportioned to it.
Invest Before You Spend And Save While You Spend
More money in hand usually translates into an urge to spend more. So, the idea is to invest before you spend. You should always be aware of future financial targets to be fulfilled. Once you get your income, immediately use the money to accomplish the Investment goal. Thereafter, clear your debts. Now, use the money left in your hand to spend on the things you want to acquire for various purposes.
It’s always smart to avail discounts, do an online comparison and avail Credit Card cashback offers to save more. It is crucial to start saving or investing in advance for big-ticket purchases. For example, it always helps to start saving a year before any planned family vacation.
This helps you reduce the monetary load and let you earn return on that investment and then do the spending.
Do Not Spend More Than Your Financial Capacity
Spending more than your financial capacity can land you in a debt trap. Some people ignore their financial capacity while spending. Borrowing instruments like Credit Card and Personal Loans do lure people to spend more.
People sometimes do not think about the impact of such loans on their financial planning and they use these debt funds to buy things that are not essential. In such cases, repayment becomes a huge challenge as spending on necessary items may have to be compromised. Hence, you should spend money strictly as per your financial capacity. Credit Cards should be used to take benefits such as discounts, offers, cash backs, reward points etc. but not as a regular financial leveraging tool.
Similarly, Personal Loan should be used scarcely as a supporting tool when your regular income is delayed for some reason and never to fulfil the urge to spend.
Additional reading: Personal Loan Handbook: All Questions Answered
Watch Out Your Habits
It’s crucial to assess your spending habits at regular intervals. It will be more beneficial if you can have this assessment done by a financial expert. Many a times one may not realise but spending habits change and you tend to spend more than what is required.
You must adhere to your spending plan. If you have an urgent spending requirement which is other than your plan, then you should make the requisite adjustment in your complete plan to avoid the cash crunch later.
Try to invest money well in advance for achieving your spending needs, and avoid using the borrowing fund for accomplishing your spending urge.