Use the 30-day golden rule and change the way you spend

The next time you get tempted to swipe your credit card to make an impulsive purchase, pause and take a moment to think twice! Instead of returning home with the momentary triggered purchase, it is advisable to write down the things you desire in your journal and review your choices after a month. 

The 30-day rule will kickstart your journey towards saving and investing. It will help you build a corpus as you become more mindful of your spending. This method is a time-tested solution for all those who have a habit of splurging their money and hence cannot allocate their earnings in the right places.  

So let us introduce you to this simple rule. The first step towards mindful spending is to hold yourself back before buying anything expensive which is not needed. Once you are tempted to buy a costly not-so-necessary thing, hold yourself back and make a note of it with all of its details like description, price, and offers available. You can hang on to this note with yourself for 30 days. 

After the passage of 30 days, review the note and ask yourself if you still want to purchase it and is it worth the spend? In many instances, things that lured you at the mall window or on that online portal will lose their attractiveness, or you would have a replaced want that is cost-effective and more suited for your needs.

Also, holding on gives time to do your research and compare it with other options for landing on the best deal, which leaves you with more money and satisfaction. Such a portion of saved money can accumulate and give you a massive sum of savings, which can be used to make an expensive future purchase or plan a vacation you have always dreamt of.

The 30-day rule works wonders not because you are depriving yourself of your not-so necessary wants, but because you are merely delaying instant gratification. 

As the first step, we must be thoughtful about where we spend our money. It is also advisable to start getting into the habit of saving as early as possible, right from the first paycheque. Starting early at a young age gives most of the benefits of investment, the largest of which is compounding. Compounding is rightly addressed as the ‘eighth wonder of the world’ by investment experts. 

Secondly, draw your monthly spending budget and start SIP of the remaining portion of your income. Consistency will play an important role here. Hence, it is fine even if you invest Rs.500/1000 in SIP at the start.

The 30-day rule is a lifestyle change and will help you to navigate your trajectory towards financial discipline. Initially, you might feel the pinch if you have been splurging your money; however, it will be rewarding once you succeed in breaking the habit of impulsive spending. You will develop a long term discipline of setting aside the money before making any impulsive spending and start investing. Over time, it will no longer be a pinch but a natural way of spending that will reward you in future.

But for this rule to become successful, you have to be disciplined with yourself. You have to tell yourself that this is a ‘rule’ and not just a ‘suggestion’. This means you must follow it at all times and for all impulsive high-ticket purchases. 

Thirdly, you should follow the thumb rule of pulling out a fixed amount for savings, no matter how small the amount is, firstly from your income. An easy way to explain this using a formula is:

Expenses = Income Less Savings, and not Savings = Income Less Expenses

Savings and investment should first be pulled out from your income and not the other way round, investing the left-over amount of all the expenses. In the case of later, you will always struggle to build a corpus for meeting your financial goals. 

At last, widen the scope of the savings by starting to invest. Start by creating a financial goal for yourself, such as saving for higher education, buying a house or a car, etc., and begin a systematic investment plan (SIP) to help you achieve it. Decide the amount you will be required to invest to achieve your goal with the specified time frame. Track the progress of your portfolio; once you see how your investments grow and the proximity of your goal getting closer, you will feel motivated. 

While using the 30-day golden rule, remember to use a journal to track all the ‘not-so necessary’ purchases you kept on hold and later struck off. Highlight them in colours to keep you motivated for any future impulse purchases. When you watch your notebook highlighted with the colourful growing list, it will be fun. 

So what do you think about this rule? Don’t wait; start applying it from today. It is more straightforward than it appears, and once you find yourself on the other side of the financial discipline, it will be a better feeling. Change the way you spend and become moneywise. 

For any clarifications/feedback on the topic, please contact the writer at jyoti.arora@cleartax.in

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