The Art of Disciplined Spending

You never make it big by NOT spending your money. Yes, you heard it right!! It is hard to come across a story where someone raised a huge wealth, just by saving the money – cutting down on almost all expenditures.  After all – the primary purpose of money is in spending. So what you need to practice is the – Art of Disciplined Spending – to make it big!!  I will show you a few of those in this post…

Spend on what you need, NOT what you want

This is the basic mantra of spending, any financial advisor would give you.  But, what you need is a very relative term.  Your needs may not be same as that of mine – for that matter, not even your spouse’s.  Here is a simple way to identify your needs and plan your spending accordingly.

• Track your daily expenses in a small handbook. You don’t need to be specific.  For instance all food related expenses can be grouped and marked as – Food –> 25$
• Consolidate your weekly expenses in a Spreadsheet. Spreadsheets are an excellent financial tracking tool (a separate post on this later)
• At the end of a month, analyze all you expenses.  Your focus should be – what is the amount spent on each category
• See if there are categories NOT important to you, taking a huge chunk of YOUR money. Instance could be – Movies –> 100$ – that you want but not essential.  Try to cut down on this, for the next month
• Just cut down only on 1 or 2 such categories, per month.  Don’t try it very hard every time

Spend using the Per-Diem System

Recently, I came across a post in Get Rich Slowly, that talked about the The Per-Diem System of spending money.

Essentially, it is very simple:

• Allocate a fixed sum of money, every month for your spending (this is over and above your recurring expenses)
• Divide it by “4” and arrive at your weekly spending targets
• Only use this money, for all your spending during the month
• If you exhaust the budget, practice frugality for the rest of the month (I am serious here!!)

This is a very disciplined approach and also helps you arrive at your money needs, on month-by-month basis.

Spend only using Cash or your Debit Card

I am always against the use of Credit cards, for anything and everything.  Credit cards have gone from being a convenience tool, to money-suckers.

To the maximum extent possible, use your liquid cash for all your spending.  Resort to credit card, only if something is essential and you don’t have liquid cash to use.

“30 Day Rule” of Spending

Whenever you plan on buying something costly, try to follow this rule.  Many a times, you will find it beneficial.

When you plan to buy a costly stuff – a furniture or a Macbook – wait exactly for the next 30 days.  Revisit your plan and see if you still need the stuff.  If Yes, go ahead and purchase it.  Else, skip the plan

Practicing this rule has helped me saved on many expenditures, which are not very essential.

Many of us have numerous tips and tricks, to manage our spending.  I would love if you could share yours, as comments to this post.  Also feel free to DM me on Twitter (@thotsunlimited) or mail me ()

Photo Credit: iChaz (Flickr)

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