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Money and self-control: Spend smart, save more

Last updated on: October 14, 2010 18:28 IST

The willingness and the ability to save money is the secret of building wealth. And to save money, you need to spend less than you earn. Though it looks very simple, it is not very easy to implement.

There are plenty of ways to help you start saving money even on a very tight budget. Saving money or spending less is all about the personality, belief system and values of a family.

Spending less and saving more are lifelong living skills that need time to develop. Unless you have written financial goals, you will lose your focus and go after consumerism and materialism.

To save more, you obviously need to spend smart. To spend smart, you need to understand you own spending patterns and emotional urges.

Consciously you need to track all your expenses on a daily or weekly basis. This way you will be able to find out what influences your spending pattern.

Ramalingam K, an MBA (Finance) and certified financial planner, is founder & director of Holistic Investment Planners (P) Ltd (

Money and self-control: Spend smart, save more

Last updated on: October 14, 2010 18:28 IST

Spending money has got many influencing factors. But all these influencers can be classified into five broad spending influencers.

1. Emotions

Your emotions play an important role in your spending pattern. Positive feelings like happiness, fun and joy can influence you to spend more on entertainment and gifts.

Negative feelings like envy, jealousy, shame, stress, depression and frustration can influence you to spend more on smoking, drinking, buying things you don't really need, relaxation and healthcare.

2. Traditional thought

This is because of you belief system and your thought process. Like somebody saying 'I need to buy a silk saree every year for my wedding anniversary'. Or, 'I have to bust crackers in Diwali.'

These are all the classic examples of how your traditional thoughts will influence your spending pattern.

Money and self-control: Spend smart, save more

Last updated on: October 14, 2010 18:28 IST

3. Society

Society in which you live will have more influence on your spending. For example, you have to buy a car as all your colleagues come to office in their own car. Or, on the occasion of your kid's birthday, you need to arrange gifts for all his/her classmates. Or, you should be watching this movie, on a first day first show.

This influencer is caused by friends, colleagues, neighbours, relatives, and club members. At times, even advertisements and promotional offers like a discount sale can make you to spend more.

4. Habits

Habits formed when you were growing up can make us spend impulsively. Generally this will be for our sensual pleasures. Spending on movies, music, eating out, smoking, drinking are the best examples for this influencer.

5. Commitments

This includes paying off your debts and loans, commitment towards family like school fees, buying groceries and other provisions, paying rent, paying for medical insurance etc. You are committed to pay these expenses.

Money and self-control: Spend smart, save more

Last updated on: October 14, 2010 18:28 IST

By tracking and analysing your each and every expense, you will be able to identify the influencers that make you spend money. Here are some strategies to overcome these influencers and spend smarter:

1. Control your emotions

Instead of spending money, you can control your emotions by doing something else like doing yoga or meditation, watching comedy shows on TV, going to a temple or beach. You need to solve the root of the emotion. You need to do an introspection and keep a balanced mind always. A balanced mind is key for spending smarter.

2. Self talk

You need to consciously change your thought patterns to come out of traditional thinking.

'I don't really need a saree for every wedding anniversary'. 'I am not a kid; so I need not burst crackers on Diwali'. Such auto suggestions will change your thought process and help you to be able to really prioritise your expenses.

3. You are unique

You were born original, do not die a copy. There is no need to feel bad if you don't get to spend or buy things like your friends or people around you. You are unique and special in your own way. You need to discuss with your family and friends about 'How to live happily by achieving compromised spending patterns'.

Money and self-control: Spend smart, save more

Last updated on: October 14, 2010 18:28 IST

4. Learn and unlearn habits

The unwanted habits that make you spend more can be unlearned. Good habits which make you spend smarter can be learned. Habits can be learned and unlearned. But you need to know it is not a quick fix. It involves a process and a commitment.

A habit is an intersection of knowledge, skill, and desire. Knowledge is 'what to do and why to do it'. That is we need to spend less to save more and become richer. Skill is in how to do it. Desire is the motivation, the want to do. What are we trying to achieve by spending less? How is it more important to us than spending more? In order to make something a habit in our lives, we have to have all three.

5. Unwanted commitments

You can't avoid certain commitments like groceries, schools fees. But you can definitely discontinue unwanted commitments like the club membership in which you are not actively participating in and not getting any real gains out of it; the chit fund you have impulsively enrolled in with a jewellery shop.

Money not spent is saved. These above strategies will work only if you truly have a desire for future financial success. You need to be disciplined and persistent in the course of implementing these strategies. The more you practice smart spending, the wealthier you become.