Our spending has the ability to build or destroy our life and our hard earned money.The income stream(s) we have or created should always be enough for our expenses.To have a strong hold on our expenses,we must define and understand it clearly.A simple way of defining our expenses is to name it as Good and bad .It is as the name suggest ,expenses which are good for us and expenses which are not.Knowing in detail about our expenses and spending habit is as important as having different income sources .Expenses which are uncontrolled and doesn’t bring value to us,will lead us to inevitable personal finance tragedy.To avoid such personal financial tragedies and to build our personal financial tower,a value based and need based approach would definitely help us to get there.
Good expenses are expenses that brings value to our lives and helps to build it .Spending our money on healthy foods and cooking at home keep us healthy and active.Spending on books and online/offline courses build our skills and knowledge.Spending on our clothes that make us look good at office and other social gatherings.Good expenses enhances our influence and presence in society.When we start to respect the value of our hard earned money ,then we start to treat it like an asset.The Asset,our money as it should be used in such a way that it multiples into more assets or bring return in the form of skill development and gaining expertise in any chosen field.
Talking about bad expenses is quite tricky.Bad expenses are more linked with our mind’s instant gratification attitude.When we see an juicy spicy cheese-burst pizza or KFC fried chicken or any other foods in food delivery apps or ads or YouTube channel, instantly we add it to cart and proceed with payment.Instant pleasure to taste buds done.Malls were treasure house for all our instant gratification.We may have gone to sight seeing or window shopping but end up spending more than we asked for.Dresses,apparels,ornaments,perfumes and cosmetic beauty items put their spell on us.
Though Covid-19 has put a halt on going to malls,we turn our attention to online delivery apps like amazon,Door Dash(US),Uber eats(US),Swiggy(India) ,Zomato(India),Just eat (UK), etc.These apps make it more easy to buy things and fulfil our instant gratification.We can’t stop buying things though it doesn’t add value to our life.We should definitely watch the Hollywood movie “Confessions of a Shopaholic”.The movie depicts a girl’s overspending habit on clothes and accessories which puts her financial life and herself in more awkward and embarrassing situations.We can take away with valuable lessons from the movie.Please sure to watch it.
The question that always linger behind my mind when I think of personal finance is that “Is my earning enough for my spending habits?”. It is exactly opposite to everything financial planners say.We could hear the phrases like “Live below your means”,”Spend smartly to live richly”,”Budget is all what you want”. The fact that our spending should always be below our earning is true if we want to stay out of debt and to not live a life on paycheck to paycheck basis.
Categorizing our spending will put us in a clear POV(point-of-view) on our hard earned money’s departure.What are our major spending in life ?
- Rent (rented home) ,Mortgage & maintenance (Owned house)
- Functions and festivals
- Home appliances and luxury items
We can take our own expenses on food as a case study and learn how our spending is aligned with our values and know ways to avoid bad expenses.Let us define the objectives for our case study :
- To Know what are good and expense relating to food.
- To increase good expense ,reduce or avoid bad expenses and save money .
- To Know what are good and expense relating to food.
Good expenses and bad expenses may differ based on individual’s values but there is common value which everybody agree to follow,healthy foods. Expenses which are done to keep you fit and healthy are good expenses.Expenses which brings harm to our body are bad expenses.It is easier now a days to know which foods are good for us but following that good food habits are harder for many.Understanding foods and our food habits are very important to differentiate good expenses and bad expenses.Following tables illustrates some of good and bad food habits.
|Habits||Good food habits||Bad food habits|
|1.||Drinking 4-5 litres of fluids (water&fresh juice)||Consumption of less water and more alcohol|
|3.||Limit the Portion of food intake||Larger portion & faster intake|
|4.||Eating fresh vegetables and fruits||Eating fried,high oil,spicy foods|
|5.||Proper Meal planning||Improper Meal planning|
|6.||Use natural sugar||Lots of added white sugar|
|7.||Eating home cooked foods||Eating out many times|
|8.||Healthy snacks||Nighttime snacking|
|9.||High fibre content foods||Junk foods|
|10.||Mindful eating||Mindless eating|
2.To increase good expense ,reduce or avoid bad expenses and save money .
The main obstacle against achieving better at spending on food is lack of planning.The lack of planning for week’s or month’s groceries ,vegetables and fruits.There is also lack of self-control over eating out and regular ordering on food delivery apps.
Following are some of the things we can do to increase our good expenses ,reduce our bad expenses like eating out often and save money .
- Have a diet plan with breakfast,lunch,snacks and dinner for a week or month.
- Plan on needed groceries, vegetables and fruits for a week or month’s diet plan.
- Choose a wholesale shop or shop with discounted rates for grocery items.For vegetables and fruits ,find your suitable market shops on trial&error method or word of mouth method.
- Learning how to bargain or negotiate may also save us a lot in long run.
- Practice weekly or monthly fasting (intermediate fasting is good for physical and financial health).
- Avoid kitchen waste.Use all the vegetables,groceries items,fruits and dairy products wisely by knowing their expiring dates.We can know more about usage period of each of vegetables,groceries items,fruits and dairy products in detail in next coming blogs.
- Have a habit checking the fridge every morning and make sure everything is available for day’s diet plan.
Knowing is one thing and following is another.It will be always harder in the beginning but once we start to ripe the benefits of our pain and patience,it will be more rewarding and worthy than instant gratifications of primitive urges.We have to follow it consistently to make it a second nature of ourselves.
“If more of us valued food and cheer and song above hoarded gold,it would be a merrier world.”
– J.R.R. Tolkien.