FINANCIAL PLANNING: Save more by cutting lifestyle expenses

Looking back at 2018, overspending remains the biggest impediment in reaching financial freedom. Most participants in my sessions were saving less than 25% of their salary and only a handful of them saved 40% or more, of their salary. Lifestyle expenses are the main culprit. A common complaint is how it is so difficult to save money, irrespective of the age group. Payday loans are becoming increasingly popular especially with millennials. Some payday loan companies are also positioning themselves as a "financial wellness partner" furthering financial inclusion. Seriously? Since when did such loans help in wellness of people?

The first step to financial freedom is saving more. This can only be achieved by cutting lifestyle expenses and it is only in your hands to do so.

Here are some ways to get on a spending detox:

Analyse spending – Have you looked through your credit card statements in 2018? With automatic payments set up, most people have stopped reviewing their statements. Start by collating all the statements and marking out all lifestyle expenditure done. Calculate how many months of your salary this is. Hopefully, this should get you to stop unnecessary subscriptions or food delivery every other day.

Keep emotions in check – It doesn't matter if a friend has a more expensive gadget or a colleague has a wider variety of clothes than you. Be what you really are and stop thinking of what people think of you. Peer pressure is present in almost every aspect whether it is vacations, material possessions or even choice of school for kids. You need to decide if you want to be cool or smart.

Get accountable – Whether it is with health or wealth, having someone to be accountable to, always helps. Having a regular money date with your spouse or partner or even a friend is a good way to ensure you are spending within limits.

Take a vow to :

Delete shopping apps – the "big day" sales have become a regular feature and you would always be able to find a good deal when you need to

Have no shopping weekends – there are better ways to spend the weekend than in a mall or online

Switch off notifications from shopping sites – keep yourself away from the temptation

Spend in cash – get back to the basics and forget about technology as far as money is concerned

Buy only what you need - stop buying more just because something is cheap or there is an offer of buy one get one free. Count the number of clothes you haven't worn in the last six months or the number of plastic containers bought on offers and see what you can give away.

Give a thought to the environment – Every lifestyle purchase has a negative impact on the environment. Wouldn't it be nice to contribute to a better environment by restricting our spending?

Remember, the way we spend our time and not what we spend on, defines who we are and helps us create beautiful life memories.

The writer is Director Finsafe India and Co Founder, Womantra