Are you a Spender or a Saver?

Last month, Nirmala Sitharaman, our finance minister ticked off the toughest thing on her to-do-list—of accounting for every rupee she spent and the amount she plans to spend from the government’s books.

As she told us about how our taxes were spent, I thought of doing a post-mortem of my own spending in the last month.  I glanced through my account statement, my mobile wallets, and realized I spent 50% on groceries and food.

“Am I the only one who doesn’t keep a tab on how money goes out?” I thought to myself.

The guilt prompted me to know If I was the only one. Many women have a similar experience with spending.

“Are you crazy? Don’t we have enough things on our list already” laughed off one of them?

“Whatever we spend on, is for our home, family and its necessary.  What’s the need to count the money that we have to spend on?” asks another friend. I felt like probing further—”So do you know what percentage you spend on clothes or groceries?” I drew a blank.

With our hands full of responsibilities, keeping a tab on our expenses or keeping a tab on how much we spent, is such an overwhelming task–groceries, bills, activity classes, gifting, subscriptions, school fees, the list goes on.

From Kitchen Jars to Credit Cards

Let’s just flashback to our childhood. Whenever we demanded a new thing, our parents usually said “let’s wait for next month, Diwali, or let’s wait for few months”. Our parents, grandparents were disciplined in their spending habits. They knew if the doodhwala or newspaper wallah charged them an extra buck in the bill. They knew if they could do an extra expense in a particular month or not.

Nowadays we don’t feel the need to keep a tab on our expenses. With a comfortable cushion of income and savings, our mind tells us “I can spend without worrying about the future” And then we find reasons to spend…

Walk into the departmental store with 2-3 things in mind and always return with a cart full of stuff!

Got no shopping apps, yet we can’t resist the online shopping festivals!

Give into child’s demand for sake of keeping them up-to-date among their friends!

Have a friend who started her own business. we ought to encourage her and support her so we buy stuff.

The money just slips from our bank accounts, as one of my friends candidly tells me.

But do you think Ms Sitharaman can afford to say something similar…

“We spent too much on roads or ships so there is no money with the government to spend on education in next year”

Of course, she cannot let that happen as her job is to allocate money towards various goals like education, infrastructure, social welfare, and so on. The government departments spend the money within that limit. This exercise of allocating money before it is spent is called Budgeting.

Budget is about telling our money where to go at the beginning of the month

Rather than feeling guilty at the end of the month, a Budget helps us decide how much we want to spend at the beginning of the month and stick to it.

Budgeting is hard. It’s a tough habit to follow, given the distractions that prompt up in our notifications every now and then.  Psychologists say the moment we say let’s have a budget, our mind thinks of what we can’t buy or what we have to avoid, and we end up shopping more. Call it by another name, they suggest.

Perhaps they picked a leaf out of William Shakespeare’s famous quote, which I rephrase-

What’s in the name? That which we call a budget by any other name would do the same” 

 “A Spending Plan” is what we should have to curb our spending instincts. 

Ready to have one?  Write to us at thegreatgruhini@gmail.com. We will get our Budget Savvy Gruhinis to help you to stick to a Spending Plan.

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Rachna Monga Koppikar, is an AMFI Registered Mutual Fund Distributor and founder of this blog. She is on a mission to help Women create and preserve wealth through mutual fund investing.