You just withdrew money at an ATM, went for a walk around the neighbourhood and, by the time you got home, your wallet’s cleaned out. Then your phone pings with a message from the bank reminding you of another totally unplanned, random purchase. And before you’ve reached the end of your pay cycle, you’re broke and wondering how you got there. Sound familiar? Well, then it’s time for a reality check. Start with accepting that most things you buy are completely unnecessary. Open any closet in your home, and staring at you is most likely a whole mess of things you haven’t used, looked at or even thought about in months. Once you recognize there’s a problem, you can get down to fixing it.
Spell it out
“Women tend to be impulsive buyers. So what you should do is note down your expenditure. Before buying anything, ask yourself if you really need it and whether you have space to keep it,” says Shikha Bhatnagar, executive vice-president, Bajaj Capital. With debit and credit cards and e-wallets, it has now become easier to spend. A study conducted by Dun & Bradstreet, a business services company, found that people spend 12-18 per cent more when they use plastic money instead of cash. Chartered accountant Dhananjay Paranjpe agrees. “Credit cards create liabilities. They commit your future income for what you buy today. Always ask yourself whether what you’re buying will be an asset or just an expense.” What you also need to do is identify areas you are splurging on—whether it’s dining, shopping, or even cabs.
Manage your mood
Psychotherapist Dr. Radhika Bapat believes splurging is a coping mechanism. “The occasional impulse buy is normal by itself. But chronic overspending might be an emotional tool. People come to depend on shopping to be happy, to fill those empty spaces, and to run away from themselves.” According to Dr. Lorrin Koran, professor at Stanford University School of Medicine, “People who overspend may also be suffering from other psychological issues. These include mood swings, anxiety and other impulse control problems or addictions.” Dr. Sonal Sheth, psychotherapist and counsellor at Bhatia Hospital, Mumbai, explains how this manifests. “Moods and money habits are related. When people are depressed, they spend money in order to feel in control. It reduces their sense of gloom,” she says. Shopping is also popular among those with low self-esteem. “Objects give people a sense of security,” says Dr. Vasant Mundra, consultant psychiatrist at Mumbai’s Hinduja Hospital. “From childhood, it has been ingrained in us that rewards are a token of love, so we identify objects with emotions. Rewarding oneself is a way of handling insecurity,” she adds. If you are a compulsive spender and think you might be depressed, make an appointment to see a mental health therapist. Find ways to get that ‘high’ that doesn’t involve spending money. You could call friends over for dinner or spend time with family. On your list of priorities, upgrade experiences and people and downgrade material possessions.
Long-term “Plan in such a way that the moment your salary is credited, a part of it goes into your savings. Only when you instill savings discipline can you cut down on unnecessary spending,” says Surya Bhatia of Asset Managers. He, however, warns that the belt shouldn’t be tightened overnight. “Target 30 per cent savings initially. This can go up to 40 per cent depending on your expenses,” he says. Once you get into the habit, cutting down on spending will be as easy as shopping once was.