Cash v/s UPI: How Can You Check Impulsive Spending This Festive Season

Every year the festive season comes with endless offers, sales, discounts - all of which tempt people to spend more than they may have actually planned. While shopping online or paying at a store, consumers today have it easy without the need to carry cash.

With Unified Payment Interface (UPI) available just with a few touch on smartphone screens, purchasing is both quick and convenient.

One click on your UPI app or a quick swipe of your card makes transactions feel effortless. But that very ease can also push people into overspending without realising it.

Financial planner Ritesh Sabharwal, in a LinkedIn post recently, pointed out that cash still has its own value in helping control spending. “When you pay Rs 5,000 through UPI, it’s just an OTP away. But when you take out 10 notes of Rs 500 and hand them over, you feel the money leaving you,” he wrote. That psychological “friction” often makes people think twice before making an unnecessary purchase.

Convenience, on the other hand, can blur boundaries. UPI or Credit card on UPIs now make it easy to say yes to tempting festive deals, you may think “I’ll add just one item to the cart” and before you realise more money than planned is spent.

Such small transactions, like online festive purchases of Rs 500 or Rs 5,000, may seem insignificant, but they can eat into your budget. Sometimes, they may even drain the money you would ideally keep invested or saved.

So how do you enjoy the convenience of digital payments without losing control? Here are some practical steps to follow:

• Keep accounts separate: You can use one account for salary and investments, and maintain another solely for day-to-day spending. This would ensure you don’t dip into long-term funds.

• Set limits: Transfer a fixed sum to your spending account every month. When it’s exhausted, that’s your signal to stop.

• Use cash selectively: Especially for offline shopping, withdrawing a set amount before you head out can act as a guardrail. Physically seeing the money go makes you more mindful.

However, when it comes to credit cards on UPI, the risks are higher because of the credit cushion. This is why staying disciplined is even more important. Here’s what you can do:

• Link only one card with a reasonable credit limit instead of all your cards.

• It is better to limit your credit card purchases under 30 or 40 per cent of the limit. This should be a thumb rule even during festive season shopping. It would not only prevent you from burdening yourself with more debt but also protect your credit score.

• Last but not least, reviewing your weekly transactions to spot repetitive small spends, like food orders or quick impulse buys, can help you cut back immediately.

UPI and credit cards have already become a habit for many people because of their ease and convenience of quick transactions. However, using cash can still help you against overspending because the feeling of money leaving your hands can curb your impulses.

A bit of friction, whether it is in the form of cash payments or pre-set boundaries with UPI/Credit cards, can help you celebrate the festive season without carrying any guilt or regret of over-expenditure.