The title may sound a little absurd. Why did I have to write "Not Fail" instead of just succeed? The opposite of failing is winning or in this case, if you are saving money, then you are winning in your savings, right? Well no. From the moment you get up till you got to sleep you are floating in the huge sea of things that are so appealing that you will blow up your entire salary in buying those. You may argue that it is illogical and I could not agree more with you. But just look around yourself and try and figure out all things you have and how many may you actually need. More than half the things make you wonder what they are doing in your house except for crowding a small place. That is what I am talking about, the impulsive nature of our purchases.
Every day is not about winning to save; rather it is an effort in not failing to save. Every time you say a no, you did not fail. A lot of time it works and a lot of time it does not work. You make repeated efforts and it does not necessarily help your bank account figure rise and stay constant. Rather it is always dwindling. What can you do to get better at not failing and make it a part of your life? Before we figure out how to get better at not failing, let us figure out why we fail!
The Phenomenon of Hyperbolic Discounting
"Hyperbolic Discounting" is a term which describes “present bias” behaviour. Individuals, when making choices over evaluate the present and under evaluate the future. Simply put, if you are offered
र 1000 today or 3000 after three days, you will go for the र 1000 today. As individuals, our buying choices are influenced by the instant gratification the product provides. The reward the future may reap is discounted because of the time period left for its fulfilment.
Consumers are known to be anchored in the present. This phenomenon leads to a lot of choices that will make the consumers’ future self question the same decision. However, the behaviour is so deeply rooted in the present moment and the future seems so far off that the purchase is made anyway. Hyperbolic discounting is attributed to one of the major reason for impulsive buying. For example, if you have to maintain balance for your SIP debit and you find yourself in the shopping mall during sale time, you know that your SIP is bouncing for this month. You may have started the investment for your retirement and in your 20s or 30s retirement hardly seems like a possibility. If this goes on a few years, you are already behind your retirement corpus.
Every day I get at least two to three emails with offers credit cards and the amazing benefits I am missing out on. I delete them right away. But I can only imagine so many of us opening them reading and applying for the credit cards. Having multiple credit cards is no big feat. However, having multiple credit cards does not help you save, rather creates an illusion of increased spending power. Just because you can spend a lot does not mean your purchasing power has increased. The way you can add credit cards, is not the same way you get salary increments.
Having multiple credit cards will just make you lose track of the amount you owe on various cards, entice you more for buying things that you do not require, missing deadlines for minimum payments and additional burden of interest rates on top of the borrowed amount. It also means that you will not be able to focus on your job or to do something you like because you are busy paying back debts and need all the financial support you can. This is when you should de-clutter your life, opt for only one credit card and use it judiciously and brining yourself a step ahead in this saving game.
Get Your Financials and Credit Consolidated
A lot of financial advisors will tell you, that trouble starts when you have no idea in which bank account you have kept what amount. Or the amount you own in various credit card. The first step to saving is to know how much you have and how you can get more. Doing away with debt is one of the sure shot ways of saving. Hence, try and transfer all your credit card debts to one card. This will give you the complete picture of how much you owe. Have one bank account to carry out all financial transactions. This may mean a little trouble initially but it pays to know exactly how much cash you have at a given point of time. Once you do this, two things become clear, how much you have and how much you owe.
If you are trying to clear debts from multiple sources, instead of taking the biggest debt head on, try paying of the small amounts. Once you have done that you get a psychological boost in being able to handle your own debts making the payment of the bigger ones a more doable task. Clearing debts is the stepping stone to start saving.
Measure Money against Time
We have all heard the saying 'Money is Time' but do we apply it in our daily lives? Everything we buy can be measured in terms of the time we spend. For example, you earn
र 30,000 a month or र 1,000 per day. Hence, for every र 1000 you spend you give up a day of your life for that purchase. You have to remember this, money can increase or decrease. However, the amount of time is fixed. So every time you make a purchase ask this simple question, is it worth giving up a day or a few days time? So if you have र 3000 and a sale is going on along with your investments, would you buy from the sale with three days of your time or would you rather invest those three days worth of money and convert it onto 20 days worth of money? Instead of shrinking your limited time try expanding it.
Practice the Art of Saying 'NO'
Saying yes is easy, saying no is an art. We all get ourselves in sticky and awkward situations because we just could not turn down yet another invitation. We keep practicing the art of saying no and failing. How do we become better when we do not even know how to say no to ourselves? We face a lot of temptations for instant gratification. All we have to do is say, “I will come back later!” is that simple! Once you are away from that particular stimulus you will not even think about it. Out of sight out of mind works in this case and you have saved money. Practice the art of saying no to yourself first and do not say a harsh no. Just delay the moment and you will be able to avoid it altogether.
Once you start saying no and have a clearer picture of your financials, you will see your bank account figures work differently. They tend to go upwards and not downwards. Give yourself small targets that you wish to save in a week. Set achievable goals and not grand ones that are meant to fail. Once practice this every day this will become second nature because man is a creature of habit. Try and not fail to save and soon you might feel like a winner!
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