Spend or save: Four critical steps to help you decide

New Delhi: Most of us struggle from the start of our independent lives with the decision of whether to live a luxurious lifestyle or save a substantial amount of money. It is quite common to have a strong desire to strictly save your money by the end of the month but end up purchasing a few things you enjoy, even if they are not entirely necessary. For example, when a person goes to the supermarket to buy groceries, he or she may also buy non-essential foods. However, frugal living without making unnecessary purchases can leave a void in your life.

This is the battle we all face between living the life we intend to live and imagining a financially secure future. We can identify our daily acts that result in zero savings at times if we pay attention to our behaviour.

Here are a couple of examples:

Learn to cook

We sometimes spend a lot of money on unnecessary expenses, such as eating out every day. We may overlook that while a person may spend only Rs 200 on lunch every day, the total for a month is Rs 6000. Instead, we can devise a method of eating what we can cook. This would allow us to occasionally treat ourselves to a fancy dinner.

Ordering take-out from a restaurant can be five times more expensive than cooking at home. If you thought buying a meal kit with pre-cooked ingredients and recipe instructions was a good way to save money while cooking at home, you should reconsider.

Develop a savings habit

Savings are essentially a hedge against potential future debts. You may not have thought much about saving when you first started working (and even if you did, there wouldn't be much left over from your meagre salary), but as you start getting raises and seeing your friends invest large sums, you may have tried to start saving some money of your own.

Make a monthly commitment to saving a certain amount of money from your pocket. Estimate your monthly expenses and set aside a specific amount from your income every 30 days.

A recurring deposit account may be useful in doing the same. With reference to such an account, an individual is required to deposit a certain fixed amount every month for a predetermined period. This will compel the individual to save a portion of their earnings rather than spend them.

Stop spending unnecessarily

We have a bad habit of squandering money on unnecessary purchases. Especially when it comes to self-care. Self-care is essential after a long day or week, but it is also critical to understand how much money one should spend on oneself.

Always be mindful of where you spend and how much money you spend. Resort to mindful spending to completely control your spending habits. Instil the habit of spending money on things you know are worthwhile rather than regretting it later. This procedure starts with some self-reflection and a few loose guidelines. Then, depending on your preferences, you can be as specific as you want with your budget.

Buy only what is necessary. There must be a distinction between discretionary expenditure and critical needs. Before you consider your expendable income (the money you can safely spend), make sure you've covered the necessities, including your savings goals. When you know how much is left over, you can plan how you'll use it. This is the exciting part! It encourages you to spend your money on things that make you happy and satisfied rather than things you'll forget or throw away.

Evaluate your finances

Anyone can quickly lose track of where their money has gone. It is best to keep meticulous records of all expenditures. This will help you determine if your expense limit has been exceeded and reassess your spending for a given period.

Regularly reviewing your finances is a good idea, especially if you're planning a major purchase, such as a new car or home, or if your income or expenses have changed significantly. Fortunately, most of the information you require is easily available.

The aforementioned strategies are useful for spending wisely. Inculcating habits like these will eventually allow you to live a comfortable life, even if you may not be steeped in luxury.