Summary of this article
Impulsive spending is a sign of having little to no self-control.
Our brain is only able to detect big expenditure and ignore small and daily expenses.
CA Nitin Kaushik shared how he one can save on such miscellaneous expenditure.
Impulsive spending is not a sign of having enough money to cover your emergency funds, savings, and day-to-day miscellaneous expenditure. It is a sign of having little to no self-control on your spending habits. Getting your salary credited and seeing it disappear within days is, unfortunately, a very common pattern nowadays.
Nitish Kaushik, a chartered accountant, shared a thread on his X (formerly Twitter) account stating how these habits, and expenditure on lifestyle choices have an impact on people. He also shared how a consultant earning Rs 90,000 a month was also entrapped in this cycle of mindless spending. On a daily basis, she spends Rs 200 on coffee, Rs 300 on lunch, Rs 250 on snacks and Rs 2,500 on weekends, making this expenditure somewhere around Rs 20,000 a month and Rs 2.40 lakh per year.
According to Kaushik, our brain is only able to detect big expenditure and ignore small and daily expenses because they don’t seem too big. This lifestyle creep silently drains people’s salaries without them even realising it.
Simple Solutions To This Lifestyle Creep
Kaushik also shared how he one can save on such miscellaneous expenditure.
Divide Your Income: Start by dividing your income into four different channels. First, your salary hub, your primary income gets credited here. Second, have a separate account where you save for emergency funds and goal savings. Third, automate your SIPs and investments for a day after your salary gets credited. Fourth, make a budget for daily expenses, including your bills and small payments through Unified Payments Interface (UPI); this stays separate from your savings account.
Automate your Savings and Investments: He suggests automating SIPs and other investments for a couple days after the salary gets credited. This ensures that none of these transfers are missed for reasons, such as lack of funds.
For Freelancers and Irregular Income Earners: He suggests a buffer rule for such individuals. The buffer rule is simple, to create a safety net for times when the earnings are low. Each time you get paid, you add to this emergency cushion to ensure that this amount is also increasing to keep up with your expenses as well as inflation.
How These Solutions Help You
These habits reinforce savings and healthy financial habits. Even if you find yourself spending emotionally sometimes, you don't have to worry how you will make it to the month’s end.
“You move on from salary-survival to financial control,” Kaushik wrote in his post.
