How to not spend your entire salary in a month

Pay-day loans amuse me. They offer you small amounts (₹3,000 upwards) as a loan (technically a personal loan) in a matter of minutes.

What’s amusing is not the loan itself, but the marketing behind it. It is a loan to fill in your mid-month cash crunch or an immediate payment for a vacation or a gift for your mother’s milestone birthday coming up in two days and so on. None of the probable spending events used for marketing these loans are even vaguely an emergency, they’re mostly impulsive spends; otherwise well addressed with just a tad bit of advance planning and saving.

Ours was always a savers' economy but the graph is trending lower now and things are changing fast. Not only are people spending their entire salaries within the month, but also continuing the spending spree on credit despite having no savings to pay interest.

The nudge to buy more

Who can blame you for over spending when the nudges are all around, hard to ignore. Any website you browse, app you open, anything you watch on television or any billboard on buses or roads or trains, every single direction you turn your eyes, there is an advertisement for you to buy something (whether or not you need it).

I was recently in a make-up store with a friend and she bought one lipstick (the cost of which would have bought a nice lunch for four). As she browsed, she was smoothly informed that buying one more product would make her eligible to get a third one for free. Buy two, get one free. Instant discounts, vouchers and in store deals are also nudges for us to buy stuff beyond what we really need. But there is no graveyard for the extra lipsticks on your dressing table. They just lie there and melt, maybe.

Think about it; does anyone in your friends’ circle have just one watch, even though we wear only one at a time? Most of us have multiple watches, multiple pairs of sneakers and several caps. Even my dog has three sets of leashes.

Spending has become irresistible. It’s not just stuff. It’s the chai and coffee through the day, the instant food deliveries and easy access e-commerce, which have become more of a habit now than any kind of real need.

Believe me, you can do without it all. But where do you hide to get away from the temptation that’s practically following you around?

Trimming the excesses

In COVID times, I ran out of storage space and patience. Going down to get five Amazon packages from the security console and finding space to throw those myriad cartons, was not my idea of fun. It didn’t end there, we also had to find space to store the newest useless material thing in our house; I was beginning to get very anxious.

That’s when I decided that something needed to change.

We were going to use what we had at home and only when the supply was zero were we to buy, this included groceries and crayons (between my two children, they had 7 sets of crayons, all half used).

We started reusing and repurposing everything in the house. A conscious decision to not swipe and buy made us search the lofts and cupboards where we found many unused things in perfectly new condition.

Just this one change, reduced our household Amazon bill substantially. Less spending but no compromise, because we found an alternative way. It also meant more saving. Using this concept in the kitchen meant experimenting with food and flavours. It was suddenly healthier, tastier and cheaper to have home cooked food. Keep the deliveries for once or twice a month indulgences. Our bellies shrunk, while energy and savings grew.

What should you do?

If you are in a situation where your over spending is making you anxious, let me remind you that you are still in the driver’s seat. What you need is a slight shift in behaviour.

Three simple shifts, done every month can help you transform this lack of control on your spending.

First, as soon as your salary hits your savings accounts, 20-30% intended as saving or investment, needs to move out. Set up an auto debit into another savings account from where you can manage your investments. You are saving before you spend and also investing for the future. The auto debit needs to happen on the day your salary arrives, leave no temptation to chance.

Second, for everything non-essential which you are buying online, leave the items in the cart for a day. Don’t press place order or pay. Go back the next day and have a look, don’t buy yet. Go back on Day 3 and do the same. On Day 4, you won’t need at least one of the items in that cart and by the time it is Day 5, you may have forgotten about the cart or changed your mind about all of the stuff in it.

Not all purchases are frivolous, but you will be surprised with how many of them actually are.

Technology may be working against you. So as a last step, put a limit on your daily online spend on non-essentials. If your monthly salary is ₹100,000, that limit could be say ₹500 and that gives you ₹15,000 total in a month. Bundle the spends you are not using. If you don’t spend for three days, you have ₹1,500. Don’t spend for ten days you have ₹5,000 bonus and so on. Anything unspent by month-end can simply get shifted to your investment account

These three simple steps will not only stop you from over spending, they will help you save. Managing your spending is less about the money and a lot more about your behaviour and self-control, keep that monkey in check.