Hot money in hand makes different people behave in different ways. There are misers who would never love to part with the money; there are calculated spenders who plan and account every penny they spend to avoid wasteful spending; and there are spendthrifts who feel restless till the money in hand is exhausted quickly in useful or wasteful ways. In the present day culture, the last category of people seems to far out-number other caterogories.
It is not practical to ensure a 100% wasteless spending of money always. We all have our weaknesses, temptations and instantaneous loss of common sense that lead us to spend money once a while in wasteful channels and we regret later for having succumbed to such momentary weaknesses. A patient understanding of the effects of wasteful spending will definitely keep us in good stead when we come across another temptation. Let us now see some such effects of wasteful spending:
a) Unwanted accumulation of junk
Many of us spend wastefully on short living “latest electronic gadgets”, latest fashion wear and decorative and eye-catching artifacts. Anything too latest has a tendency to become outdated too soon. What is prestigious to own and boast off today loses its sheen and prestige value tomorrow. Result? We throw them away into the cup board and go about shamelessly wasting money on newer attractions.
Over a period of time, the house becomes a junk yard. Most of the items have no resale value and they can’t be discarded even in garage sales.
b) Constant stress on earning more money
A penny saved is a penny earned. On the other hand, a penny spent uselessly forces you to work more to earn more – for two reasons: one, you need your pennies for spending on essential things, that you could have obtained if you had not spent them money uselessly; second, your habitual spending on useless things create you a craving for more money for useless spending in future too.
This constant craving for money makes one restless in life. At one end, you want to “enjoy the life in full” by spending; at the other end, you slog your life out to earn that extra money. This naturally creates tensions and contradictions in life, leading to loss of mental stability and physical health.
c) Debt trap
As long as your spendings are within your earning limits and you have a regular saving habit, some amount of wasteful spending can be tolerated. But, if wasteful spending becomes a habit, then over a period of time, spending beyond earning limits becomes an acceptable lifestyle for you. Credit cards come in very handy to lead you to overindulgence. Like an undiagnosed cancer, the debt keeps accumulating in your life and the day will not be far off when you wake up to the dangerous reality of a financial ruin in your life.
d) Health hazards
Wasteful spending in junk foods, in consuming aerated soft drinks, in dining out with friends, in frequent parties of celebration (say, birth days, valentine days, to celebrate a promotion in office etc), extravagent tours, travels and outings lead you to uncontrolled and indisciplined eating. Poor eating practice is one of the prime causes of health breakdowns.
Getting caught in debt creates lots of mental agony and its consequence shows in physical health. High blood pressure, acidity, peptic ulcer, migraine, physical fatigue etc are some tell-tale signs of loss of physical health on account of mental stress caused by debt.
So, it is obvious that to lead a peaceful life free of unwanted tensions, it is always prudent to lead a simpler life by reducing expenditure.
Tips to minimize expenditure
Any attempt to reduce your expenditure should start with a record – your “account notebook” containing record of your past expenses. If you do not have the habit of writing your accounts, then it will be a somewhat difficult to reduce your expenditure in a disciplined way. If you have, say, a record of past 3 months of your expenditures, then it will be much easier for you to analyze it to arrive at a workable strategy for reducing your expenditure.
First, segregate your expenses and subtotal them into categories. Examples: Food expenses at Home, food expenses eating out, drink expenses, gas and expenses for car/ owned vehicle, dress, capital purchases, smoking, partying expenses, gifts, travelling and lodging expenses, house rent, phone bill, impulsive purchases while visiting malls etc.
Now do an ABC analysis. That is, write your expense groups in descending order. Now you know what your major and minor expenses are. According to Pareto’s principle, 80% of your expenses will normally come from 20% of your expenditure categories. If you concentrate on these 20% of top expenditure categories and find out ways of economizing them, you will be able to reduce your expenses to a great extent.
Assuming that your greatest expenditure is on your gas and car maintenance expenses, you have to concentrate on every bit of spending to minimize it. For example:
- Going by public transport to office
- Planning for car pooling
- Reducing frequent long distance driving
- Changing to a car model that will guzzle far less gas
Likewise, we can go on elaborating how to reduce expenses in other categories like food, phone bill etc. But what is paramount is to have the patience to know where your money goes and the willingness to judiciously adopt ways to curtail your expenses on the “cream” of expenditure.
Spend in cash and minimize credit card use
Having more than one credit card is a sure way to boost your unnecessary expenditure. As for as possible, retain just one credit card and get rid of the rest. Also, whenever you have to spend money, try to spend it through cash. When you have to part with money physically, you will feel the pinch better when compared to swiping the credit card. You will definitely think twice before parting with your money and this way, you will definitely curtail your unwanted expenditure.
No worthy progress will be achieved unless some amount of sacrifice is made on what is enjoyable, convenient and cozy to you so far. A sustained and disciplined effort can only lead you to success to your mission.
A very ancient Tamil poem states this: “If a person’s expenses exceed income, over a period of time, he loses his respect, loses mental balance, gets tempted to stealing, paves way for a rogue’s life in the next seven births, and he tends to look a bad person in the eyes of good people”. Hence, beware of wasteful spending.