Picture this: You open your social media account and start scrolling. You pass by countless ads of your favourite brands and online shops. They look so good that you start adding items to your cart without a second thought. First, it is a new dress for the weekend, then some overhyped skincare products, followed by a new gadget on sale. You hit the “Buy” button and check out. But once the package arrives, you realise you have made another impulsive purchase, and the cycle of spending continues. Sound familiar?
With technological advancements, online shopping has become a temptation that is hard to resist. People swipe their cards straight away to make purchases, and it’s becoming easier to fall into the spending cycle. This situation calls for the need to take a step back, assess your finances, and carry out actions to save money. But that does not mean sacrificing the things that bring you happiness. By just modifying your spending habits and following basic spending rules, you can live your best life and save money at the same time. Let’s find out how.
- Change your habits
Take note of what you are spending your money on and how often. Is it a daily coffee trip to a big cafe? Do you buy clothes every weekend? The key is to identify the patterns and categorise them into needs and wants. Then, create a realistic budget and make changes in your habits. If you are used to buying coffee every day, try brewing your own at home. If you eat out daily, try meal planning and cooking at home. These small changes will add up and help you save money.
- Utilise all features of your savings deposit account
Don’t open a savings account just to make purchases; use it for financial security. There are many other benefits of savings accounts, such as discounts on paying rent, groceries, and utilities and access to investment options like recurring deposit, fixed deposits, and mutual funds. Also, an online savings account helps you check your monthly statements, track your spending patterns, and make automatic bill payments, all while earning interest on the balance.
- Build an emergency fund
Saving money is not just about putting money aside for future expenses; it’s also about planning for emergencies. Unexpected expenses can impact your budget, so you should have an emergency fund. Keep this fund separate from your regular savings and use it only for emergencies like medical bills or urgent vehicle repairs. One way to build an emergency fund is to open a bank account separately for that purpose.
The higher your savings bank interest rate, the more your emergency fund will grow. So, contribute to your emergency fund regularly and cover a minimum of 3 to 6 months of living expenses.
- Start investing
You can invest in mutual funds with small contributions via a systematic investment plan (SIP) and automate your payments through a savings deposit account. By automating your SIP investments, you can ensure that the money is deducted before you have a chance to spend it. Automation can help you stay committed to your savings goal and avoid the temptation to spend unnecessarily.
Besides the tips mentioned above, there are other rules to stop the spending cycle. Create and stick to a budget, limit dining out, negotiate bills and purchases, prioritise savings over luxurious expenses, and seek financial advice. It will take discipline and commitment to break the spending cycle and save money, but the financial security you will get is something that would make the effort worthwhile.