Nothing beats the joy of seeing the salary credit message from the bank.
And once that message hits… the spending season begins!
You wish to splurge it all on in obtaining instant gratification like lifestyle shopping, latest gadgets, movies, weekend parties, luxuries, etc. While this is a much required motivation for all the hard work you have done the entire month it may end up threatening your long-term financial goals.
Completely curbing all your expenses may not be possible and may also de-motivate you. However, there has to be a balance between spending your money on pleasures and saving for your future long term goals.
Here are top 5 ways you can spend your salary wisely:
- Create a Budget: On a basic level, a budget is simply a plan on how are you going to spend your money. Start creating a budget at the start of the month itself. Write down your monthly income then start applying that amount to different things. Start with taxes (if it isn’t already taken out), expenses and savings. Then move to primary expenses which can’t be avoided such as housing, food, utilities, commute, etc. Finally, apply the rest of your income to other things you need or desire.
- Make a list of the things that you need. Take a moment to write down the things that are most important to you in life. Is it security for your family? Is it buying a house? Starting your own business? You likely have a combination of such things. List them down and then ask yourself this question: “Am I investing on the things that are most important to me?” And then ask yourself, “Am I spending my salary on things that aren’t my future goals or requirements?” This little exercise will give you some clarity and guide you so that you are consciously spending on things that really matter to you.
- Make a list of things you enjoy or desire. You work hard the entire month so you should be spending some amount of your money to bring joy to your life too. You define what brings happiness to you. Make a list your leisure activities, your short term requirements, etc. Identify those things and then ask yourself if you are spending your money in those areas and if yes, how much are you spending? The bottom line: avoid spending too much money on things that aren’t at the top of your “joy” list. For example, you may love traveling, shopping, exploring new eateries, etc. But it’s important that you bifurcate these expenses accordingly. So if you love travelling every month, you can reduce it to once in six months or a year. If you love shopping, ensure you don’t do it exorbitantly. This exercise itself will reduce your spends and give you more savings at the end of the month.
- Review your regular spending for things you can completely eliminate.When was the last time you wrote down your list of monthly bills? Take a moment to do a thorough spending review. Make a list of your required spending for the month which includes rent, EMIs, utilities, services, etc. Is there anything on that list that you don’t need or want? Is it possible for you to completely eliminate some of your expenses. For example, can you completely stop using your credit card, this will ensure that you don’t splurge on unnecessary items or services.