Make a resolution this year to improve your spending habits and save more.
1. I will not spend like a millionnaire if I want to be one
The one fallacy that has sustained over the years is that millionnaires spend a lot. On the contrary. Being a millionnaire is not about how much you spend or the size of your income, but about how much you save and where you invest. Some of the richest people in the world, be it Bill Gates or Azim Premji, became so because of their frugal habits, not their spending prowess.
So if you are aiming to join the millionnaire club in 2018, start by saving more than you spend and investing it in the right avenues. Given the falling interest rates of small savings schemes and the long-term high returns of equity, opt for the latter to make your dream come true.
2. I will not buy just because it's on sale
If the word 'sale' sends you into a spend hypnosis, you certainly need this resolve. While festive season is a good time to make the best of discounts and rebates, do not do so blindly. Just because you can avail of a 'buy two, get 50% off' offer on pullovers, doesn't mean you should purchase two even if you need one.
Similarly, it's not a good idea to go hysterical during the annual online sales. Unless you need a particular item and have kept a tab on the prices during the non-sale periods, it's unlikely that you will actually get a big discount. These are typically available only on preferred, select items and bulk of the other items are available at the same prices or at negligible discounts.
3. I will buy pre-owned cars, refurbished phones, laptops
Resolve this year to spurn the new and turn to 'pre-owned' or 'refurbished' gadgets and cars. These may lack the lustre of a freshly minted product, but low prices make them worth a buy. More so if you upgrade or change your gadgets and cars every two years. While a 'pre-owned' car has been used, it is typically in a good condition.
It is, however, advisable to go for 'certified pre-owned' cars, which have been checked by automakers or dealers and have original specifications. The 'refurbished' items have been returned after use, but have been brought back to their original condition with fresh warranty. Some manufacturers like Apple, Dell and GoPro have their own refurbished devices for sale at a discount. Go for these!
4. I will not spend notional money
This is the money you spend today, assuming you will get it at some date in the future. This could be in the form of a bonus, increment, profit from stock market trading or even bitcoin trading. This notional money is the basis of much of credit card spending and loan repayments. Many market investors too tend to take on liabilities assuming they will make a profit from the market uptick relying on expert projections.
If, however, the promised money does not materialise, you could easily fall into a debt trap or, worse, lose your savings. So unless you are in a steady job and industry, make sure you do not binge on your credit card or take huge personal loans as these are some of the most expensive loans.
5. I will not hoard stuff. I will sell it or give to charity
Unless you suffer from a loss aversion bias or are an unlikely collector of clothes, toys, furniture, gadgets, etc, you can be easily labelled a 'hoarder'. While much of the saving savvy comes from spending right, selling right may also help you raise your savings.
With several online portals that help sell used, unwanted household items, it is a good idea to earn while you dispose of. If, however, you want to pay back to the society, make charitable contributions to organisations like 'Goonj', which add value to the disposed of stuff. Remember, however, that you are unlikely to get any tax deduction for such charitable donations
