Trim wasteful expenses to boost up savings [Budgeting]

Have you ever wondered where has all the salary you’ve earned has gone? The majority of people and employees, in particular, feel that they have enough money during the beginning of the month (or) year. But by the end of it, most of us wonder as to where all the money had gone.

Wasteful expenditure is one of the primary reasons for this. Fixing this will automatically improve our savings.

Further, most of us think that savings need to be goal-based. Morgan Housel in his book Psychology of Money says that savings need not be done only when we are planning for a goal to be achieved. Given the uncertainty of life, there are changes odds going against us anytime, and saving just for saving’s sake is the best thing to do.

And savings can come to our rescue in times which we have never imagined in our wild dreams would occur. Of course, Investing is inevitable the moment one has to protect the saved money from inflation and increase the returns.

How do we know if the expenditure is wasteful or useful? Budgeting is the answer that helps us identify the areas of wasteful expenditure, to be precise, the areas where we overspend in general.

Below are the top 5 areas that I have identified, where there is a high probability of overspending.

Subscriptions

With the digital world that we are into, almost everything is available at the tip of our fingers. Be it food, clothing, entertainment, etc. And with the increased availability of digital services, subscription-based business models have become popular and the subsequent rise of OTT platforms, digital service avenues, etc has increased consumer spending exponentially.

There is nothing wrong with subscribing to an entertainment channel or a dating app or for that matter a food delivery app. The problem is subscribing to all the available options thinking that we might use all their services. It is prudent to use fewer subscriptions and gaining the maximum out of them rather than spending lots of money on multiple subscriptions for a single purpose. For example, opting for either Amazon Prime or Netflix, or Disney+ is suggested based on individual choice but opting for all would be a wasteful expenditure on one’s monthly income. 

E-Commerce

Global e-Commerce sales found to be around 30 trillion dollars in 2020 as per UNCTAD. And according to 99Firms e-commerce statistics for 2020, it is estimated that more than 95% of all purchases to be conducted via e-commerce by 2040. Online purchases are not a bad choice Perse. But there are few ways in which wasteful expenditure is seen.

Buying cheap quality products, buying additional warranties, or buying in large quantities are few areas one needs to be cautious about. Further online shopping has become an addiction these days for a few. Unnecessary purchases, running behind offers and discounts, ordering food in excess, etc. are making a dent in one’s savings. Having control over the purse is a must to focus on savings and investments. Using cash to some extent can be a possible solution that psychologically provides time to ponder over wasteful expenditure before making purchases. But emotional and financial control is a permanent solution to improve one’s monthly balance sheet.

Plastic Money

Plastic Money refers to the credit cards, debit cards that we use for buying goods and services. Increased usage of cards and credit cards, in particular, has increased reckless spending for most people. This hassle-free mode of payments has lowered down the decision-making time before spending whether there is a need for a product or service. Hence increase in impulsive purchases. Again as mentioned earlier, using cash is the best option to avoid wasteful expenses in such scenarios.

Loans and EMIs – Over Leverage

Over leveraging has pushed many people towards bankruptcy, not just individuals but businesses as well. Availability of a lot of options for credit today is aiding it. Credit is like Salt. If used in limited proportions can make our financial life tastier. Otherwise, it has the potential to play with our Blood Pressure. Over leveraging i.e., opting for loans and EMIs more than what one can manage, can push oneself to bankruptcy. Avoiding or keeping them to a manageable limit can save both one’s health and wealth.

Health expenses

Despite many having a habit of regularly saving money, not planning Health and Term Insurance is something that can wipe out our savings in a flash.

With mundane and sedentary lifestyles, food habits, adulterated food consumption reasons there is a high chance of falling ill. And considering the uncertainty of life, Term insurance can come in handy for families.

Healthy lifestyle choices can save more along with regular saving habits. Apart from these, this planning for health and term insurances can act as a hedge for our already saved money.

Conclusion

Saving money might be a regular habit for many but keeping wasteful expenditure at check can aid it, strengthening March towards financial independence.

Avoid wasteful expenditure and improve your savings as Getting money is one thing and keeping it is another.

Good Luck…!!!